Distributors seek urgent measures from FMCG firms, say e-commerce distorting market

File photo

Distributors and retailers of fast-moving consumer goods have sought a level playing field against e-commerce players and have asked the country’s biggest FMCG players to come out with a plan to check predatory pricing or face a nationwide stir.

In a letter to the country’s top FMCG firms such as Dabur, ITC and Nestle, they said “deep discounting” was disrupting the market and sought a meeting with the senior managers of these companies on April 30 and asked them for a plan to address their concerns. Moneycontrol has reviewed a copy of the letter.

"We have sent this letter to 25 top FMCG companies including Marico, Dabur, ITC and Nestle, we are awaiting their responses for further action," All India Consumer Products Distributors Federation (AICPDF) national president Dhairyashil Patil said.

In the letter, AICPDF has called for "urgent corrective measures to restore balance in the marketplace", failing which it will launch a "nationwide non-cooperation movement".

The distributors have been ratcheting up pressure against the e-commerce companies, alleging that the promotional tactics they are using are distorting market parity.

In FY24, quick commerce contributed to about 35 percent of online FMCG sales, a joint report by consulting firm Deloitte and industry body the Federation of Indian Chambers of Commerce and Industry (FICCI) said.   The report said 16 percent of consumers preferred to purchase food and beverages through quick commerce in comparison to 14 percent opting for e-commerce.

In February, AICPDF moved the Competition Commission of India (CCI) against quick delivery players such as Swiggy, Zomato, and Zepto over alleged predatory pricing and deep discounting.

The organization has been speaking out against quick commerce firms’ alleged deep discounting and also filed complaints with the commerce ministry and the department for promotion of industry and internal trade (DPIIT).

The general trade is facing an existential crisis due to “unethical deep discounting and predatory pricing that fuel artificial price wars, erodes margins and unsustainable business models that threaten distributors and retailers, and preferential treatment to quick commerce and e-commerce platforms that sidelines traditional trade”, the letter said. If the trend continues, it will not only jeopardise millions of livelihoods but also dismantle the very ecosystem that built these success stories," the letter, dated March 25, said.

The letter comes when e-commerce firms face increased scrutiny over pricing and anti-competitive practices. A CCI probe in September found that Amazon and Walmart-backed Flipkart violated local competition laws by giving preference to select sellers on their platforms.

Food aggregators Swiggy and Zomato, too, were found to have breached competition laws, with their business practices favouring restaurant chains listed on their platforms.

In the quick commerce space, Zomato-backed Blinkit is the market leader with a 41 percent share followed by Zepto and Swiggy Instamart, a recent Citi report showed. These companies have been on an expansion spree to gain a bigger market share.