Indian consumer product wholesalers have filed an antitrust action against major fast-delivery companies Zomato, Swiggy, and Zepto, seeking an inquiry into suspected deep discounting tactics, according to legal documents.
How things are priced online has drawn much attention to India’s e-commerce industry. According to a previous year’s antitrust inquiry, Amazon and Walmart’s Flipkart use “predatory pricing” to favour certain sellers at the expense of smaller businesses. The businesses have refuted the claims.
As consumers use apps to get everything from milk to pulses, quick commerce—where businesses transport consumer goods from local warehouses in ten minutes—has angered smaller stores. According to Bernstein, India’s rapid commerce industry would grow from $200 million (about Rs. 1,740 crore) in 2021 to $35 billion (approximately Rs. 3,04,658 crore) in 2030.
The All India Consumer Products Distributors Federation (AICPDF) has requested a probe into the business practices of Zepto, Swiggy’s instalment, and Zomato’s Blinkit, including the distribution of discounts, in a case filed with the Competition Commission of India.
“An alarming trend of predatory pricing and deep discounting practices by Q-commerce platforms resulted in unfair pricing models,” said the group’s filing, which is not public but was reviewed by Reuters.
Swiggy or Zomato did not answer requests for comment from Reuters. Zepto chose not to comment. The CCI remained silent.
Zomato and Swiggy may have more headaches as a result of the filing. Their meal delivery firms were found to have violated competition regulations in a separate CCI inquiry last year. The matter is still pending.
After obtaining money last year at a valuation of $5 billion (about Rs. 43,520 crores), Zepto is getting ready for an initial public offering (IPO).
After reviewing the case file, the watchdog has the authority to direct its investigation section to conduct a thorough probe. Companies may need to explain their operations, which might take several months. If it determines that the lawsuit has no merit, it may dismiss it.
With 400,000 distributors as members, AICPDF provides 13 million retail stores in India with goods from companies like Nestle, Unilever, and Tata.
According to a recent Datum Intelligence survey of 3,000 Indian consumers who buy online, 46% of respondents have reduced purchases from small independent businesses, while 36% have decreased their supermarket spending.
Local physical retailers “cannot match” the rapid commerce giants’ discounts, according to the AICPDF’s filing. It contrasted the prices of 25 online and offline products—including those from Nestle and Hindustan Unilever.
According to the filing, a Nescafe coffee jar variety that a small independent Indian retailer sells to businesses for around 622 rupees ($7.14 or Rs. 620) is available on Zepto for 514 rupees, Swiggy Instamart for 577 rupees, and Blinkit for 625 rupees.
Amazon and Flipkart are imitating the concept of providing quick delivery in certain regions, as is the wealthiest Asian man, Mukesh Ambani.
According to Datum, Zepto has more than 900 outlets and a 29 per cent market share in India’s rapid commerce sector, while Blinkit has 1,007 small warehouses and a 40 per cent market share. Instamart, a service Swiggy offers, has a 26% market share.
