India’s quick commerce boom is entering a more complex phase for FMCG companies, as the channel’s once-attractive profitability begins to thin under the weight of rising advertising costs. What started as a high-margin, premium-led sales avenue is now delivering returns closer to those seen in kirana stores and organised retail, according to senior industry executives.
Quick commerce platforms have increasingly leaned on advertising as a key revenue lever, auctioning prime digital shelf space, search rankings and high-traffic time slots. With consumers making purchase decisions in under a minute on these apps, brands are compelled to pay more to remain visible. Executives say this pressure has sharply increased the cost of doing business, narrowing margins across categories.
Angshu Mallick, executive deputy chairman at AWL Agri Business, noted that brands outside the top three or four listings in price-sensitive categories risk losing relevance altogether. With shoppers typically spending just 30 to 40 seconds browsing, sustained visibility now demands higher marketing investments. Advertising spends on quick commerce platforms have nearly doubled during peak windows such as early mornings and early evenings, executives said.
As a result, margins in segments like biscuits and snacks have slipped to around 13 to 15 percent, broadly in line with modern trade. Premium products still command higher margins of 20 to 22 percent, but even these have dropped by three to five percentage points over the past three to six months.
Zydus Wellness chief executive Tarun Arora said quick commerce initially delivered superior margins due to premium product mix, faster inventory turns and lower distribution costs. That edge has reduced as platforms prioritise their own profitability and drive harder commercial negotiations with brands. Even so, he said the channel remains commercially viable given its strong sales momentum.
Despite margin compression, quick commerce continues to be the fastest-growing channel for FMCG companies including Hindustan Unilever, ITC, Dabur, Marico and Emami. For HUL, quick commerce sales doubled in the first half of the current financial year, even as general trade continues to account for the bulk of revenue.
As platforms monetise scale through advertising, FMCG firms are recalibrating their strategies, balancing growth against profitability in a channel that is no longer the easy margin win it once was.
