With the surge in demand for quick-commerce platforms, niche D2C companies operating in sectors such as fast-moving consumer goods, beauty and personal care, and health and fitness are now agreeing to a commission rate of 30-45% on sales. Additionally, they are investing in advertising and offering discounts on these platforms.
This is in stark contrast to the 10-20% fee paid by large, established FMCG firms to quick-commerce platforms such as Blinkit, Zepto, & Swiggy Instamart. This disparity reflects the intense rivalry for presence on these platforms.
According to over half a dozen D2C startup founders spanning various segments, the listing process typically spans months for most small brands and frequently ends in disappointment. They emphasized the growing importance of personal referrals in standing out amidst the crowd. They acknowledged the rush to secure listings on these platforms driven by the traffic they attract, which facilitates the discovery of new brands.
These individuals requested anonymity due to their commercial agreements with the platforms. Requests for comment from Blinkit, Zepto, and Swiggy Instamart went unanswered.
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When it comes to new listings, senior executives of quick-commerce enterprises highlighted that a brand’s size and comparison to competitors are critical factors. “Annual or semi-annual revisions are made to terms, even for legacy brands,” stated an executive. When analysing a new brand, other elements to consider are what consumers are searching for, sales on other platforms, brand buzz, and the breadth of that category on the site. Executive stated that brands are significant stakeholders and will discontinue selling on the platform if something occurs that does not benefit both parties.
In addition to commissions, brands often spend roughly 20% of their overall revenue on platform marketing and discount their items by 20-25%. “We get calls and emails every week asking us to advertise more — sometimes it’s for a festival, sometimes it’s for a major IPL match,” one of the founders of the company stated.
An entrepreneur operating in the beauty and personal care sector disclosed agreeing to a 45% commission rate on Blinkit. Meanwhile, another entrepreneur in the FMCG sector reluctantly accepted a 30% commission rate on Zepto, in addition to allocating 27% of their budget towards marketing and discounts.
“Diwali came and went. The expense of not being listed was significant, so we acquiesced to their terms,” stated the second entrepreneur. Additionally, they highlighted that despite the overall cost of selling on e-commerce platforms being 5-8 percentage points lower, quick commerce sales volume surged to 70% of the firm’s total sales within a year. This starkly contrasts with the less than 10% contribution from major e-commerce platforms over a span of four years, the individual emphasized.
“It took us 53 weeks to finally secure a listing on Blinkit, and we diligently followed up with them every single week,” shared a D2C founder operating in the FMCG sector.
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Nevertheless, it’s not solely about sheer effort. According to individuals familiar with the matter, quick-commerce firms are strategically leveraging search metadata to identify demand for specific brands and products as they venture into new categories. This approach mirrors the category expansion strategies seen in e-commerce over half a decade ago.
After securing a listing, the battle shifts to maintaining one’s presence.
“The demands for discounts and advertising expenditures are constant, and if your product fails to perform, the threat of being replaced becomes imminent,” noted the aforementioned founder.
The volatility is further heightened by the nature of the business — many D2C brands operate with short notice periods on their contracts and supply to the platforms via weekly or bi-weekly purchase orders. Dark-store space is limited and subject to continuous experimentation, intensifying the need for consistent performance.
Furthermore, brands frequently lack access to crucial data. According to multiple founders, although both Instamart and Blinkit offer seller dashboards, these platforms do not offer comprehensive insights into which products perform best and in which geographic regions.
Nevertheless, D2C firms enlisted on quick-commerce platforms assert that they have witnessed remarkable benefits in remarkably brief periods, highlighting a growing dependency on these platforms due to their successes.
One brand operating in the beauty and personal care sector has experienced a threefold increase in sales month-on-month since being listed on Zepto, while another in the FMCG domain saw sales surge by over fourfold across various platforms in 2023. Additionally, a third FMCG brand achieved a fourfold growth between its listing in December 2023 and the present on Swiggy Instamart.
According to their founders, this surge in sales is reshaping the essence of these firms. The second firm mentioned now derives over 60% of its sales from quick commerce. As for the third firm, over 70% of sales for the SKUs listed on quick commerce platforms stem from these channels, with this segment anticipated to soon become its primary contributor to total sales.
Reports suggest that non-grocery categories have been experiencing three- to four-fold sales growth on quick-commerce platforms.
According to founders, the payment settlement process is also more streamlined on these platforms.
One of the founders expressed, “They revolutionized the game for us, and our earnings gradually improve as volumes increase, despite the significant expenditure on commissions and advertisements. However, it’s still an incredible concentration of power, where they hold increasing sway over the success or failure of entire businesses.”
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