Editorial: Come Un-Dunzo

One of the oddities of Internet capitalism is that it deems as fit the so-called competition between whales and minnows. Corporate giants such as Google have been lionised for elbowing out the street-corner painter of signs and hogging the advertising budget of the local barber. Amazon has run thousands of mom-and-pop stores out of business across America. And today in India, we witness venture capital firms lavishing billions on quick commerce companies as they eat up the business of neighbourhood kirana shops and vegetable vendors.

In their recent business results, several quick commerce companies reported revenue growth above 35 per cent across operations at a time when consumption in India has been flagging and large FMCG companies are happy with 3-4 percent. Obviously, consumers are migrating from brick and mortar to convenience shopping. With even big retail stores like D Mart acknowledging that quick commerce is eating their lunch, what chance does the kirana shop have?

Nearly 200,000 kirana stores have closed down in the past year due to the aggressive expansion of quick commerce platforms, a new report says. These platforms offer ultra-fast delivery along with deep discounts and financing options that traditional stores cannot match. As a result, quick commerce is reported to have taken away $1.28 billion in sales, amounting to 25-30 per cent of the business, from kirana stores in 2024. Nearly 46% of quick commerce buyers have reduced their purchases from kirana shops.

The future is looking bleak for India’s 30 million kirana stores as venture capital money allows quick commerce companies the luxury of deferring profitability and prioritsing customer acquisition and operational expansion. By setting up dark stores, using new logistics technologies, these companies are able to match or surpass the delivery speed of local businesses. Data analytics and algorithms help them predict and shape customer behaviour in ways unseen.

Commerce Minister Piyush Goyal has previously criticised the business practices of the e-commerce industry in India, including predatory pricing and violation of competition laws. But lip service is not enough. India must look at the whole gamut of consequences, near and long-term, to consumers, traditional retailers and communities alike.

One criticism levelled at e-commerce companies needs to be examined closer. They claim to have brought in boatloads of FDI, but have they created any infrastructure or long-term assets? Rather, these funds have been used to cover business losses, control supply chains, manipulate customer behaviour with algorithms and leverage deep discounts with a view to capturing market share. Another point worth looking into is whether dark stores are a workaround to dodge retail FDI rules and neighbourhood zoning laws.

A major consideration with the government is the aspect of job creation by quick commerce companies. They claim to have generated about 15.8 mn jobs across the country and opened up business opportunities for about 1.76 mn retail enterprises. While this is substantial, it needs to be set off against the disruption they have caused to conventional distribution ecosystems which employ just as many, if not more.

Quick commerce comes with the promise of convenience but also extracts unseen costs. Algorithm-based consumption tends to produce a monoculture of buying preferences and militates against local products, local brands and cost-effective supply chains. Plus, convenience purchasing can lead to adverse social effects. As Goyal warned, “we could end up becoming a country of couch potatoes, watching OTT, and having food at home every day."