FMCG distributors voice concerns against quick commerce industry, seek government intervention

The All India Consumer Products Distributors Federation (AICPDF) has raised a number of issues regarding the emergence and popularity of quick commerce companies, seeking an investigation into the models of such platforms. The industry body represents a number of dealers, distributors and stockists of FMCG products. 

"Serious concerns voiced by the AICPDF are being diluted, with key issues being sidelined in the name of technology, convenience, and the Indian ownership of some firms," wrote the association in a note.

The industry body sought immediate government intervention in five areas: 

Are dark stores an intelligent way of surpassing inventory-based e-commerce law? 

Quick commerce companies operating through dark stores seem to be intentionally bypassing regulations governing inventory-based e-commerce. These companies exercise significant control over their inventory, which directly violates the law, both in letter and spirit. The question that arises is whether it is ethical to hide behind the claim of being an Indian company to create a monopolistic ecosystem aimed at wiping out millions of small retailers and traders. Can convenience and technology be used as an excuse to dismantle the traditional retail sector?

Do Indian firms have the right to operate unethically? 

While the debate often centers on promoting Indian companies, we must ask whether being an Indian firm gives them the right to defy laws on numerous counts. Unethical business practices such as predatory pricing, deep discounting, and monopolistic tendencies are rampant in this sector, endangering the very fabric of traditional Indian retail.

Is predatory pricing the only business model for e-commerce? 

The dominance of predatory pricing and deep discounting in the quick commerce sector raises the question of whether there is any other viable business model. These practices are leading to unfair competition, making it impossible for traditional retailers to survive.

Labour violations and lack of accountability 

Quick commerce companies are adopting a 'hire and fire' policy, circumventing labor laws by placing employees on third-party payrolls. This shields the companies from any responsibility for their workforce, leaving employees without basic protections like EPF and ESIC. In addition, the long working hours and lack of facilities for employees on the ground are serious concerns. Who will be held accountable for the welfare of the field force in these companies?

Franchise Models: Lack of due diligence and franchisee protection 

Quick commerce companies have also expanded using franchise models without any due diligence. In cases where a franchise is discontinued, the retailer is left in a precarious situation, losing both their business and reputation. AICPDF strongly urges the establishment of a standard franchise act, akin to the franchise laws in the US, to protect the rights of all parties involved. Currently, the agreements are largely one-sided, exploiting the lack of legal frameworks for franchisee protection in India.

Calling upon the government to ensure that all quick commerce platforms abide by existing e-commerce regulations, the association sought a review of quick commerce companies' operations to assess their compliance with inventory-based e-commerce laws. It also sought the implementation of stronger labour protections, the introduction of a comprehensive franchise law that safeguards franchisees, and the curtailment of predatory pricing and deep discounting practices to foster a level playing field for small retailers.

“The quick commerce industry is eroding the foundation of traditional retail and creating a monopolistic ecosystem under the guise of convenience. We call for immediate intervention and a comprehensive review of the practices in this sector. Indian firms should uphold the law and contribute to a healthy, competitive market environment, rather than exploit legal loopholes," said AICPDF National President Dhairyashil Patil and Chief Patron Dr PM Ganeshraam. 

The AICPDF said it remains committed to defending the interests of small retailers and traders.