admin
September 5, 2025
Shalinee Mishra, Exchange4Media
5 September 2025
Retailers in India are waking up to a hard truth: customer acquisition can no longer ride on advertising alone. Digital ad spends grew by 14-17% in 2024, touching nearly ₹50,000 crore (as per Pitch Madison report) and accounting for 46% of India’s total ad market. But with customer acquisition costs (CAC) rising 30-35% year-on-year and consumer attention fragmented across platforms, the ad-first growth engine is showing strain. What is emerging instead is an ecosystem where content in the form of video, celebrity-led storytelling, or creator-driven engagement is becoming the direct funnel to commerce.
Flipkart for instance is building influencer production hubs and embedding shoppable videos, Myntra has rolled out its video-first Glamstream, and Amazon has long blurred the line between streaming and shopping through Prime Video and Fire TV. From short videos to celebrity gossip, from beauty blogs to shoppable livestreams, e-commerce giants are no longer just marketplaces; they are evolving into media houses and the trend is only growing.
According to Mindshare’s latest Content Trend Report, India’s branded content marketing industry is now worth ₹10,000 crore, growing at nearly 20% annually, with video formats making up almost half of all spends.
India already has over 270 million online shoppers, a number that Bain projects will rise to 350 million by 2027, making it the world’s second largest e-retail user base. That scale is creating fertile ground for shoppable video and live commerce to take off.
Globally, branded content spend is projected to cross $500 bn by 2027. As per PwC estimates, India’s share is still <2% but among the fastest growing.
Video commerce today largely follows two prominent models. The first is driven by social platforms such as YouTube, Instagram, and Facebook, where shoppable posts allow users to move directly from content to purchase. The second is led by e-commerce platforms like Amazon, Myntra, Nykaa, and Flipkart and others which have added video sections to create immersive shopping experiences within their apps.
Within this, live commerce has emerged as a high-potential format. Meesho and Flipkart, for example, are leading the charge with 2-3% conversion rates, generating an estimated $150-200 million in GMV during festive 2024. Events like Flipkart’s Big Billion Days show how timed livestreams can capture active, purchase-ready audiences.
Meanwhile, influencer-led short videos are driving conversion rates as high as 63%, with beauty and personal care (BPC) and food & beverages (F&B) among the top categories benefiting from this shift. Redseer projects India’s live commerce market could touch $4-5 bn GMV by 2027, up from less than $300 mn today. This surge in shoppable video and live commerce is only the surface of a deeper structural change, one where content itself is becoming the moat that protects brands from rising ad costs, fragmented attention, and fickle consumer loyalty.
Beyond ads: Why content has become retail’s strongest defence
Chirag Taneja, co-founder of e-commerce enablement company GoKwik, framed the trend as a fundamental shift in ownership.
“It’s not just about enhancing top-of-funnel reach, it’s about owning demand, connection, and the touchpoint with end shoppers. For years, brands relied on ads to bring traffic. But acquisition costs have been rising, attention is fragmented, and privacy shifts have made targeting difficult. That’s why content is now the moat. When companies acquire content firms, they’re not just buying eyeballs, they’re securing access to communities that trust and engage with that content.”
According to him, content is collapsing the traditional funnel. “One short video or livestream can take a consumer from awareness to purchase in under a minute. That’s why we see D2C brands treating content as a compounding asset, not just an expense,” he added.
Devangshu Dutta, founder and CEO of management consulting firm Third Eyesight, echoed the sentiment.
“Large companies are buying or partnering with content-driven platforms to capture attention beyond transactional touch points. Short video, regional language content, and influencer-driven discovery are embedding commerce within entertainment. If you want to sell more than a commodity, storytelling is critical. Content builds credibility, differentiation, and trust in a cluttered and price-sensitive market.”
Flipkart bets big on media and creators
The shift is already reshaping strategy at India’s biggest retailers, and Flipkart has moved fastest. Its move to acquire a majority stake in Pinkvilla, a platform built on entertainment and celebrity news signals a clear push to deepen ties with Gen Z and millennials, a cohort that consumes content first and shops later.
“Our acquisition of a majority stake in Pinkvilla is a critical step in our mission to deepen our engagement with Gen Z. Pinkvilla’s robust content IPs and strong connection with its loyal audience base are assets that will accelerate our efforts to leverage content as a key driver of growth,” said Ravi Iyer, Senior Vice President, Corporate at Flipkart.
Flipkart in the last year has exited investments in companies like Aditya Birla Fashion & Retail, where it sold its 7.5% stake in the owner of Pantaloons, Van Heusen, Louis Philippe and Forever 21, as well as BlackBuck, the trucking marketplace that powers India’s mid-mile logistics.
At the same time, the company has doubled down on content and creators. Its Pinkvilla acquisition gives it access to a platform reaching over 60 million monthly users, while in-house features like Flipkart Feed already clock 5–6 million daily video views, highlighting how commerce and content are converging at scale.
Alongside this, Flipkart has launched Creator Cities in Mumbai, Bengaluru and Gurgaon, production hubs designed for influencers to shoot and scale shoppable content.
It has also introduced Flipkart Feed, a TikTok-style vertical video feature embedded in its app, offering bite-sized, influencer-led, fully shoppable videos. Myntra, its fashion arm, has developed Glamstream, with more than 500 hours of video-first shopping content across music, beauty, travel and weddings, featuring stars like Badshah, Tabu, Zeenat Aman and Vijay Deverakonda.
Flipkart has also partnered with YouTube Shopping, allowing creators with over 10,000 subscribers to tag Flipkart products in videos, Shorts and livestreams, enabling viewers to buy directly while creators earn commissions.
Amazon’s head start in content-commerce convergence Flipkart is not alone. Its biggest rival Amazon has long understood this convergence. Through Prime Video and its original programming slate, Amazon has built an entertainment ecosystem that doubles as a commerce funnel. The shows and films on Prime do not merely entertain; they drive shopping behaviour, influence trends, and lock audiences into Amazon’s larger universe of services. With Fire TV and Alexa integrations, the company has blurred the line between watching and buying, a model others are now racing to replicate.
D2C brands treat content as growth engine
Closer home, the Good Glamm Group, now closed, had pioneered a content-led commerce ecosystem in beauty and personal care. Through acquisitions like ScoopWhoop and MissMalini Entertainment, the group stitched together a portfolio where content platforms brought in audiences, who were then nudged towards its direct-to-consumer brands.
This “editorial-to-checkout” model demonstrated how cultural capital could be translated into purchase pathways. Alibaba has taken the strategy global. With stakes in Youku, a leading video-streaming platform, and Alibaba Pictures, the e-commerce titan integrates entertainment with retail operations. Taobao Live has shown how livestream shopping can dominate consumer behavior, particularly inAsia, creating billion-dollar shopping events entirely dependent on
entertainment-driven discovery.
Shopify, meanwhile, has invested in tools that empower merchants to become content creators themselves. Its partnerships with agencies like Sanity and investments in platforms such as Billo reflect a clear intent to enable retailers to embed storytelling, gamification, and user-generated content into their selling journey. Unlike large marketplaces, Shopify’s vision is not to own the content but to democratize access to it for small and mid-sized businesses.
From content to commerce
This content includes newsletters, creator partnerships, branded podcasts, and niche communities on social media. The idea, as industry experts note, is to treat content as an asset that compounds, not just as a cost.
Unlike ads, content continues to generate discovery and engagement long after it’s published. That’s why more D2C brands are making content central to their growth strategies.
Several big names are experimenting in this space. Durex, Plum, Mother Dairy, and HDFC Bank have launched their own podcasts where celebrities share stories along their brand journey. Founder-led podcasts too are on the rise on YouTube, with voices like Nitin Kamath and Deepinder Goyal drawing large audiences in India.
The big question, however, is whether content consumption can effectively be converted into product discovery and purchase pathways. “It’s already happening at scale,” said Taneja. “Content is redefining every aspect of the traditional funnel. In the past, you had awareness at the top, intent in the middle, and purchase at the bottom. Today, one short video or live stream can take a consumer through that entire journey in under a minute.
“From a D2C lens, this convergence is even more critical. D2C brands thrive on agility, the ability to turn trends, storytelling, and community engagement directly into sales. Platforms like Instagram, YouTube, TikTok, and even WhatsApp have embedded shoppable features, which means the content is no longer just ‘top-of-funnel.’ It’s the storefront. But the magic lies in authenticity and design. Consumers don’t want to feel ‘sold to’, they want to feel entertained, inspired, or educated. If the content does that well, conversion becomes a natural byproduct. For example, an athleisure brand showing a workout routine isn’t just demonstrating leggings, it’s giving value. The leggings purchase becomes an easy next step, not a forced pitch.”
The big question: Will content sustain sales at scale?
Taneja further reveals how content is driving sales and long-term growth. “The smartest brands, especially in D2C, have realized that high-quality
content is their most defensible growth engine. Performance marketing will continue to play a role, but the real long-term moat is the kind of content that builds relationships, trust, and recall. Consumers today are spoiled for choice. They don’t buy just products, they buy stories, values, and communities.
“High-quality content allows a brand to consistently show up in ways that feel relevant and credible. And from a business lens, it directly impacts unit economics: it reduces CAC because organic discovery compounds over time, improves LTV because content nurtures loyalty and repeat purchases, and builds resilience because brands with strong content ecosystems are less dependent on fluctuating ad platforms.”
The D2C ecosystem in India is already proving this point. Beauty and personal care brands now run editorial-led platforms alongside commerce, while fashion labels thrive on creator collaborations and storytelling-driven product drops. Their growth is not accidental but built on content strategies that treat every piece not just as a post, but as a business driver.
As an enabler, Taneja adds, the results are visible across platforms. “Brands that invest in content see better conversions on our checkout stack, lower cart drops, and stronger repeat cohorts. Content doesn’t just spark sales it sustains them.”
For all the optimism, the test for content-driven commerce will lie in scale and sustainability. Rising conversions in beauty, fashion, and food show the model works, but questions remain on whether every category can replicate that success, or whether consumers will tire of content-heavy shopping pitches.
(Published in Exchange4Media)
admin
September 3, 2025
Aakriti Bansal, Medianama
3 September 2025
The Goods and Services Tax (GST) overhaul simplifies India’s tax structure and lowers prices for many goods. However, for e-commerce sellers, the change arrives at the worst possible moment. Platforms and sellers must adjust billing systems, invoices, and inventory records just as the festive season begins.
The festive period drives the highest order volumes of the year, and even minor disruptions in invoicing or compliance ripple through the system. Refunds get delayed, seller–platform relations strain, consumers face frustration, and penalties under GST law escalate. Moreover, the episode shows the fragility of India’s e-commerce compliance infrastructure.
Larger sellers can rely on manpower and technology, but smaller businesses remain disproportionately exposed. Platforms, meanwhile, cannot act as neutral intermediaries when their invoicing systems directly control seller compliance. The question now is whether the government, platforms, and sellers can move fast enough to make structural reforms without turning them into seasonal flashpoints.
What’s the News?
The GST Council, chaired by Finance Minister Nirmala Sitharaman, is meeting today and tomorrow (September 3–4), according to a report by Hindustan Times, to decide on a major overhaul of India’s tax system. The timing has already unsettled e-commerce. Platforms like Amazon, Flipkart, and Meesho are holding back on announcing festive sale dates, while sellers report uncertainty about how to handle inventory already billed at old rates.
Shoppers are delaying big-ticket purchases such as smartphones, televisions, and appliances, creating a visible slowdown in demand. Retailers are carrying higher stock levels, waiting to recalibrate pricing once the Council clarifies the new slabs. The pause comes just before the festive sales period, which typically contributes about a quarter of annual revenues for e-commerce platforms.
What the GST Reforms Are
The government has proposed collapsing the four-tier GST structure of 5%, 12%, 18%, and 28% into two slabs of 5% and 18%. A new 40% tier would apply to luxury and sin goods, replacing the existing compensation-cess mechanism.
If the Council approves, several categories will see rate changes. White goods such as washing machines, air-conditioners, smartphones, refrigerators, and televisions would move from 28% to 18%. Small petrol cars and motorcycles would also shift from 28% to 18%. Essentials including ghee, nuts, namkeen, packaged drinking water, and medical devices would drop from 12% to 5%. Everyday consumer products like toothpaste, shampoo, soap, and ready-to-eat foods would also move into the 5% bracket.
The 40% tier would target high-end cars, premium electric vehicles, tobacco, and pan masala. States have pushed back, warning of revenue losses, and discussions are underway on whether higher levies on luxury items or cess surpluses can offset the shortfall.
Implementation Challenges
Satish Meena of Datum Intelligence, a market research firm, flagged the absence of a transition window as “very tricky.” “Everyone wants to make the change because this is the peak sale time,” Meena explained. “But the challenge is how it will be implemented for goods already in warehouses. Once inventory has moved from the company to the warehouse under the old GST, how will you pass on the benefit to the customer?”
Devangshu Dutta, chief executive of Third Eyesight, a retail consulting firm, pointed to similar risks. “Sellers will need to rapidly adjust pricing strategies and inventory details, keeping in mind that the festive season is upon us,” Dutta explained. “One would hope that the changeover of rates doesn’t create supply unpredictability in this critical season.”
Abhishek A. Rastogi, founder of Rastogi Chambers, a law firm specialising in indirect tax and regulatory matters, warned about compliance fallout.“From a compliance perspective, the biggest challenge will be ensuring real-time alignment between product listings, tax rates, and invoices generated. Even a minor mismatch in billing, particularly during the high-volume festive season, could result in serious exposure,” Rastogi said.
Impact on Smaller Sellers
Experts agreed that smaller sellers carry the heaviest burden. “Larger sellers with manpower and technology will cope faster. Smaller sellers will face particular challenges,” Meena noted.
Dutta explained why smaller businesses feel the squeeze. “Businesses of all sizes face the burden of compliance and accurate reporting, but smaller businesses feel the impact disproportionately as their management resources are far more limited. Often it is the owner-manager, the most critical human resource in a small business, whose time gets sucked into ensuring the changes go through smoothly,” he said.
Moreover, Rastogi advised small sellers to act defensively. “Smaller sellers must ensure they maintain proper records of their communications with platforms, raise tickets on billing mismatches, and document tax advice received. Such proactive record-keeping will protect them if litigation arises later. They should also consider contractual safeguards when signing with platforms,” he said.
Platforms Under Pressure
Platforms also operate under strain. Meena pointed out that festive sales remain unannounced. “Typically, the sales should be in the week of October 13–14, or the following week. That has not been announced till now because of this GST issue,” he said.
Dutta argued that platforms must step in to steady sellers. “Sales, inventory, and return reconciliation is an ongoing issue and potential point of dissatisfaction among sellers. To avoid adding to this, e-commerce platforms need to provide enhanced seller support to smooth out the turbulence during the GST changeover,” he said.
Rastogi underlined that platforms share liability. “Legally, the burden to discharge GST liability lies on the seller. However, given that invoicing systems are often managed by e-commerce platforms, there is a shared responsibility to ensure the correct GST rate is applied. Any platform-level error that causes sellers to become non-compliant could become a contentious issue,” he explained.
He also laid out remedies. “Sellers impacted due to platform-level glitches can seek remedies under contract law and indemnity clauses in their agreements with the platform. They may also explore legal recourse if non-compliance is triggered without their fault. Ultimately, disputes of this nature will test how liability is apportioned between sellers and platforms,” Rastogi mentioned.
Consumer and Market Effects
The uncertainty already shapes consumer behaviour. “There is already a decline in demand over the last two weeks as customers are delaying purchases, waiting for festive discounts,” Meena observed. “If sales are pushed too close to Diwali, customers may move to offline stores where delivery is immediate and pricing on appliances can match e-commerce.”
Notably, Dutta pointed out that offline businesses could benefit. “Small offline businesses that don’t have GST numbers and don’t need to compile GST returns may be able to quickly benefit from lower input costs and may be able to become more price competitive,” he said.
Need for Government Clarity
Both Dutta and Rastogi called for immediate guidance.
Dutta warned that reforms must not create “supply unpredictability in this critical season.”
Rastogi pressed for intervention. “There is a strong case for the government to issue clarificatory circulars or transitional relief, particularly given the festive season volumes. Without such guidance, both sellers and platforms face a high risk of disputes, and the compliance ecosystem may be overburdened,” he noted.
Why It Matters
The GST reforms land as festive season spending sets the direction for the retail year. E-commerce platforms draw about a quarter of their annual revenues during this period, and sellers use these weeks to recover margins. Datum Intelligence estimates that online shoppers will spend around Rs. 1,20,000 crore in 2025, up 27% from 2024, with quick commerce taking 12% of that share. At this scale, even small invoicing or compliance errors can lock up billions of rupees in disputed sales.
The reforms already shape consumer behaviour. Shoppers hold back purchases while they wait for clarity on tax rates, and platforms face pressure to adjust quickly. If festive sales move closer to Diwali, buyers may switch to offline stores that match appliance prices and provide immediate delivery.
The rollout will show whether platforms and sellers manage a nationwide tax change in the middle of their busiest season or allow it to disrupt India’s largest online retail channel.
(Published in Medianama)
admin
August 5, 2025
Aakriti Bansal, Medianama
August 5, 2025
MediaNama’s Take: Swiggy is shifting from individual convenience to workplace capture. With DeskEats and Corporate Rewards, the company is embedding itself directly into the workday. This move is not just about food delivery. It is about becoming part of employees’ daily routines. More repetition leads to more orders, stronger retention, and access to a new layer of user behaviour: professional identity.
This approach draws from older models like office canteens and Sodexo meal cards. However, Swiggy reworks it for the app economy. Instead of fixed menus or closed ecosystems, it offers personalized choices tied to employer-subsidised benefits. That creates stickiness. When a company supports one app and offers discounts, switching becomes less likely.
The key question now is whether this integration creates lasting value or opens up new responsibilities. These include questions around consent, profiling, and where to draw the line between workplace systems and digital platforms.
What’s the News
Swiggy rolled out DeskEats, a curated food delivery collection for working professionals, in 30 cities and over 7,000 corporate hubs, according to Storyboard18. MediaNama also reviewed the feature on the Swiggy app. The collection includes categories like Stress Munchies, Healthy Nibbles, One-Handed Grabbies, and Deadline Desserts, aimed at common workday cravings.
During the pilot, DeskEats reached 14,000 companies and 1.5 lakh employees. Users can find it in the app by typing “Office” or “Work.”
Swiggy also launched Corporate Rewards, which lets users access benefits by verifying their work email. These include flat Rs 225 off food orders, Rs 2,000 off on Dineout, and Rs 100 off on Instamart.
On LinkedIn, Swiggy VP Deepak Maloo described Corporate Rewards as the professional version of its earlier Student Rewards program which offers perks like free deliveries, flat Rs 200 discounts, and deals starting at Rs 49, tailored for students aged 18–25 across India.
Financial Context
Swiggy may have launched DeskEats while under pressure to control its burn. In Q1 FY26, it spent Rs 1,036 crore on ads—a 132% jump and posted a loss of Rs 1,197 crore. DeskEats and Corporate Rewards offer a way to stabilise repeat orders without over-relying on discounts or ad spending.
The company’s adjusted Earnings Before Interest, Taxes, Depreciation and Amortisation (EBITDA) loss widened to Rs 813 crore. Overall, food delivery revenue grew by 20.2% year-over-year to Rs 2,080 crore, with order volume growing by 23.3%. At the same time, newer formats like ultrafast Bolt and SNACC are aimed at increasing consumption frequency and improving retention. These efforts signal Swiggy’s larger bet on everyday integration to drive value.
Platform Strategy and Corporate Integration
DeskEats gives Swiggy access to dense, time-sensitive demand during work hours. Devangshu Dutta, founder of Third Eyesight, says this helps streamline operations: “By integrating directly with workplaces, Swiggy can anchor itself in employees’ daily routines and provide a more predictable stream of orders.”
He adds, “Scheduled office meals create habitual consumption patterns and increase customer lifetime value, especially when the employer endorses a single platform and offers a favourable price-value mix.”
“This is the age-old model followed by contracted office canteens or cafeterias as well, but updated to the mobile app era, with more flexibility in terms of the items that an individual can order based on their own preferences”, Dutta added.
Furthermore Dutta opined, “Adoption is likely to be more in the larger cities where there is a greater concentration of demand and out-of-home consumption is higher among migrant professionals with high discretionary spending power.”
Data, Consent, and Workplace Targeting
To access Corporate Rewards, users verify with their work email. Swiggy hasn’t said whether it collects additional employee data or whether employers see usage metrics. It’s also unclear if enrolment is opt-in or automatic.
This concern mirrors recent questions raised about Zepto, which began recommending mood-specific product bundles like “Crampy” or “Ragey” based on user searches for PMS. Critics pointed out that such inferences may not be accurate and are often made without the user’s explicit awareness. Zepto’s privacy policy permits broad data collection, including health and behavioural patterns, but lacks clear disclosure on profiling. While Swiggy may not be doing this visibly, the direction of workplace-linked behaviour data raises similar concerns under India’s Digital Personal Data Protection Act (DPDPA), which still doesn’t regulate inferred or behavioural data clearly.
As this model scales, it raises questions under India’s DPDPA especially around purpose limitation and workplace-based profiling.
Why This Matters
Swiggy’s push into the workplace mirrors a broader shift across the food delivery market. Zomato recently launched ‘Zomato for Enterprise,’ a corporate food expense management platform that allows employees to charge business orders directly to their companies. With features like budgeting, ordering rules, and account toggling between work and personal use, Zomato is positioning itself as a paperless, digital alternative to legacy players like Sodexo. According to CEO Deepinder Goyal, over 100 companies have already onboarded the platform.
This move signals intensifying competition in the enterprise food space. While Zomato focuses on billing and reimbursements through employer-tied accounts, Swiggy is targeting recurring workplace consumption through curated menus and behavioural nudges. Both platforms appear to be building business-facing verticals that go beyond consumer ordering, aiming to lock in institutional clients and expand platform dependency within the workspace.
Unanswered Questions
MediaNama reached out to Swiggy with the following questions. The article will be updated when we receive a response:
Is Swiggy positioning DeskEats and Corporate Rewards as part of a larger shift into corporate benefits?
How do companies sign up for Corporate Rewards? Are there different plans or models based on company size?
What employee data does Swiggy collect when someone signs up using their work email?
Are DeskEats and Corporate Rewards linked to Swiggy One or any other paid subscription?
How many companies and users are currently active on DeskEats?
Does Swiggy plan to scale this into a standalone B2B vertical?(Published in Medianama)
Devangshu Dutta
June 30, 2025
In every strategy meeting today, one metric is invariably mentioned: Customer Acquisition Cost (CAC). Whether you’re a well-funded corporate retailer, or raising your first angel round, or a well-established digital duopolist brand scaling Series C, CAC is one of the key performance metrics. “Real” spend that is neatly broken down by channel, optimised by funnel tweaks, scrutinised to the last rupee or dollar.
But there’s a metric we almost never hear about that could be costing brands far more in the long run.
Let’s call it Customer Forfeiture Cost (CFC), the residual lifetime value that is lost when a customer walks away from your business not because of price, competition, or even shifting needs, but because of a “burn”: a delivery missed or messed up, a refund that took weeks, an arrogant customer service call, or a product that failed spectacularly against the promise. In other words, when your brand hurts someone enough to make them walk away. Probably for ever.
It’s a paradox: brands are pumping thousands of crores into acquiring users, but they’re bleeding value at the other end. Yet, while CAC is a line item in every financial statement, CFC is invisible in management dashboards. CEOs don’t announce, “We’ve cut our forfeiture cost by 20% this quarter.”
Yet. every CXO knows it exists. The NPS scores, the social media complaints, the “never again” comments in reviews, the sinking feeling when repeat purchase rates fall.
Why CFC Matters More Than Ever
In every business, during the early stages each sale is a victory. Whether it was the retail chains that grew in the 1990s and early-2000s or the digital upstarts that came up through 2010s and 2020s, scale has been the mantra, and investors have poured money into scaling through the growing consumption of India 1 and India 2 customers.
Today customer acquisition isn’t cheap. The same person who clicked impulsively in 2020 now thinks twice before confirming payment. In this landscape, retention isn’t optional, it’s existential.
Every lost customer isn’t just a refund processed, or a cart abandoned. It’s the long tail of future repeat purchases that will never happen, negative word of mouth and brand distrust in the customer’s circle of influence, and increased future CAC due to declining organic reach.
Way back in 1967, management consultant Peter Drucker wrote in his book “The Effective Executive”: “What gets measured, gets managed”.
Today your CAC may be Rs. 500-1,000. If the average customer life time value (LTV) is Rs. 10,000, and a single burn causes churn after just one order worth Rs. 2,000, your CFC is Rs. 8,000, and that doesn’t even include reputational spillover.
Why We Don’t Measure It
Yes, CFC is hard to quantify. It’s not as easily attributable as ad spends. There’s usually no neat model telling you why someone never returned, because tech stacks aren’t typically designed to track emotional exits. And let’s face it, introspection about broken relationships is uncomfortable, even for management teams.
But that doesn’t mean it’s not real. If a customer leaves because your delivery executive messed up, or because your app crashed during checkout twice in a row, that’s on you, not the market. And in a business climate where sustainable growth is the mantra, LTV is king.
Ignoring CFC is like watching your roof leak and blaming the rain.
Toward a New Discipline
Brands and retailers must start measuring CFC, the value lost when customers disengage due to friction, mistrust, or neglect, and then start working on reducing it. This can be done by:
The Competitive Edge We’re Not Using
In a crowded space where everyone’s vying for eyeballs, trust is the true moat. Customers don’t expect perfection – they do expect accountability, authenticity, and recovery when things go wrong.
Brands that understand and act on Customer Forfeiture Costs will quietly start building a powerful edge: deeper brand loyalty, lower CAC over time thanks to referrals and repeats and greater lifetime value per user.
In other words, real, compounding value.
As the Indian brand ecosystem matures, Customer Forfeiture Cost needs to be as visible and valued as CAC. Acquisition is the invitation; experience is the relationship. Relationships, once broken, are expensive to rebuild; if they can be rebuilt at all.
In the end, growth isn’t just about who comes in. It’s about who stays, and why.
(Written by Devangshu Dutta, Founder of Third Eyesight, this was published in Financial Express on 2 July 2025)
admin
June 5, 2025
Aakriti Bansal, MediaNama
June 5, 2025
A restaurant owner recently took to X (formerly Twitter) to publicly slam Zomato for “mystery charges” and unauthorised ad placements, reigniting concerns over how the platform treats its small business partners. The tweet, accompanied by screenshots of the restaurant’s earnings dashboard, claimed that despite months of listings, his restaurant received zero payouts, and Zomato allegedly ran ads without his consent.
“Dear @zomato @deepigoyal I’m finally pulling my restaurant off your platform. Congrats! Your mystery service charges, surprise ad placements (without consent), and a POC who ghosts like it’s a talent show—truly inspiring. Small outlets deserve better,” restaurant owner Manish posted on X, under the username @maniyakiduniya.Zomato responded: “We hear you! As mentioned earlier, please share your restaurant ID with us via DM, so that our team can get in touch with you.”
The post has struck a chord among restaurant owners who say Zomato’s ad model bleeds their business dry. In conversations with MediaNama over the week, two restaurant owners and a former manager with Zomato independently confirmed that the platform’s advertising system leaves little room for transparency, choice, or sustainable profit.
The names of the restaurant owners and the former Zomato manager have been withheld to protect their anonymity.
Forced Ad Spending and Diminishing Returns
Restaurant owners say visibility on Zomato is tightly tied to how much they spend on advertising.
“If you don’t run ads, your restaurant won’t even show up unless someone searches for you by name,” one owner told MediaNama. He further added, “From what I’ve seen, the top 10 restaurants you see when you open Zomato are all paying for that spot.”Even ratings and reviews don’t help. For instance, if a user searches for ‘noodles’, only those who have paid for the ad category will show up in the list.
Restaurant owners explained how the ad budget starts small, around Rs. 300–400 per week, but grows rapidly. In one case, as seen by MediaNama in a restaurant’s ad dashboard, spending jumped from Rs. 9,000 to Rs. 15,000 per week in just two to three weeks.
“Some are spending Rs. 18,000 to Rs. 20,000 weekly now on ads just to stay afloat,” an owner explained, noting that these costs are hard to bear for restaurants with weekly sales as low as Rs. 2,500.
“When everyone is pushed to advertise just to stay visible, it raises serious questions about how fair the competition is on the platform,” they said. “It’s not about food quality or ratings anymore, it’s about who pays more,” they added.
A screenshot shared by a restaurant owner showing a decline in sales from ads, offers, and orders with applied discounts, highlighting concerns over the effectiveness of Zomato’s advertising model.
Click Charges with No Sales
Zomato charges restaurants based on clicks, not conversions. This means a restaurant is charged whenever a user taps on its listing after seeing a sponsored ad, regardless of whether the user places an order.
One owner explained, “A single click can cost around Rs. 6. Even if a customer just views the restaurant by clicking on it and doesn’t buy, that money is deducted.” He showed a dashboard with 4,877 clicks – most of which occurred before noon – but no conversions. “They exhaust our daily limit by 12 PM and then tell us to increase ad budgets,” he added.
Another restaurant owner echoed similar concerns in a Reddit conversation reviewed by MediaNama. The owner stated that Zomato counts a ‘visit’ even when a user scrolls past an ad and places an order a day later. “That is on purpose,” he wrote, calling the model “scammy for sure”. He also confirmed that restaurants receive no detailed data on who placed orders via ads versus organically.
Furthermore, the owner noted that Zomato lacks a clear grievance redressal mechanism for ad-related issues, as complaints are often ignored by a restaurant owner’s point of contact.
“There’s no formal audit or independent review if an ad campaign fails,” he said.The Legal Escape Hatch: You Signed the Contract
Restaurant owners say Zomato deducts ad spends automatically, citing terms buried in the onboarding agreement – terms many admit they didn’t fully understand before signing. Once enrolled, there’s no clear way to pause or cancel.
“There’s no way to opt out once it starts, and no refunds either,” one merchant said. “Zomato just says, ‘You came to us,’ whenever we raise concerns,” he added.
But is this consent truly informed? “It’s a honeytrap,” the merchant said. “There’s no other option but to keep spending on ads if you want to stay relevant on the platform,” he explained.
Price Parity, Platform Pressure, and Squeezed Margins
Another major source of concern is Zomato’s price parity push. According to one owner, the company convinced restaurants to upload their table-rate menu on the platform by offering to lower commission fees. However, this strategy has backfired for many.
“They promised lower commission if we maintained the same prices online and offline. But now we pay Good and Services Tax (GST), high commissions, and ad spends on top of that. Our margins are cut down to 5–10%,” he said. Commissions alone can go up to 35–40% every month, forcing smaller restaurants to comply just to remain competitive.
In effect, merchants are footing the bill for everything: discounts, ads, visibility, and commissions, while Zomato gains from each layer.
Coupons and Data Obscurity
The dashboard Zomato offers shows data like clicks and visits, but it hides key financial insights that would help merchants make informed decisions. “They will show you how much you sold, but not how much you are paying to the platform,” one owner said.
Restaurant owners also said they have little to no control over how Zomato spends their ad budget. “We don’t know when our ads are shown, or to whom. There’s no data on which campaign worked better, or what to change,” one merchant said. Without visibility into targeting and performance strategy, many feel they are blindly spending in hopes of visibility.
Coupon codes, too, are deducted from the restaurant’s share, even if the platform offers them without informing the merchant. “Whatever discount a customer sees, it’s cut from our side. Zomato’s share is tiny, about 15%. We bear the rest,” the merchant added.
If a platform issues discounts unilaterally but bills restaurants for them, is that a fair bargain?
Opaque Categories and Manipulated Targeting
Merchants also highlighted how Zomato divides ad rates by cuisine categories — North Indian, Chinese, etc. — and even by customer frequency. “There are eight to 10 customer categories, each with a different ad rate,” an owner said. “Frequent buyers are more expensive to target”, he added.
The platform nudges merchants to buy targeted ads by showing graphics and dashboards that suggest potential boosts. But when profits drop, and merchants reach out, they are told that competition has increased significantly since they last got in touch with Zomato and they should spend more.
“It’s a vicious cycle. They’ll say: ‘Try a brand title ad or pay Rs. 300 extra to reach daily customers.’ The game never ends,” revealed the restaurant owner.Inside Zomato: How Ads Shape Visibility
A former Zomato manager told MediaNama that restaurants not running ads don’t get deliberately penalised, but they do end up losing visibility. “Those who run ads automatically rise in rankings. So the others fall behind,” he said. Even a high-rated restaurant may slip if competitors outspend it.
For context, how much a restaurant pays for ads often depends on their rapport with the specific Zomato account manager and their business goals. “If a restaurant wants aggressive growth, we push it to the top line: high spend, high return. Others stay in the down line: lower investment, slower scale,” he said.
Ad pricing, he said, is not standardised. “It varies depending on what the manager thinks the client can afford and how much they are willing to push.”
He added that Zomato’s discovery algorithm changes every five to six months, which makes it difficult for restaurants to adapt or plan long-term. “The idea is to keep the system rotating so one client doesn’t dominate.”
Performance tracking for restaurants, he said, is mostly transparent except for one missing piece: acquisition data. “Zomato doesn’t show how many customers came through advertising. That’s where it becomes murky.”
He admitted Zomato doesn’t intervene if a restaurant complains about bad ad results. “It depends on the manager’s willingness but hardly anyone did it because of too many internal disputes on this issue.”
Why Ad Revenue Matters So Much
Ad revenue, the former Zomato manager said, is especially crucial in Tier 2 and Tier 3 cities.
“In big cities, order values are high, so aggregators can survive on commissions. But in smaller cities, ad income is the main driver as the order values are comparatively low”, the former manager added.Zomato’s Q4FY25 Shareholders’ Letter reflects this reliance: the company’s advertising and sales promotion expenses rose to Rs. 1,972 crore on a consolidated basis in FY25, up from Rs. 1,432 crore in FY24. While these are expenses borne by the platform, they highlight how advertising has become a structural lever in both customer acquisition and revenue generation.
Elsewhere, an HDFC Securities report states that quick commerce companies have theoretical levers to improve margins, such as increasing take rates, including higher ad income. It also observes that Blinkit would need to improve its take rates from 18.5% to 22% to reach a 5% adjusted EBITDAM (Earnings before Interest, Taxes, Depreciation, Amortisation, and Management Fees), with ad revenue identified as a key lever to meet that target.
However, the report notes that heightened competition may keep some of these levers non-operational.
Zomato‘s Response
In response to MediaNama’s queries, a Zomato spokesperson shared the following statement:
“All marketing collaborations such as ads, promotions, and discounts etc., as well as commercials, are mutually discussed with our restaurant partners before being switched on, switched off or modified. Our multi-factor authentication system ensures that partners retain full control and give explicit consent which is registered before any changes go live. We also maintain robust escalation mechanisms, allowing partners to raise concerns and receive prompt, satisfactory resolutions through the Restaurant Partner App as well as centralised helpline numbers.
We continue to see restaurants having confidence in our partnership and are taking a proactive step to improve and enhance our interactions and processes. For our smaller restaurant partners, we work extra hard to make it easier for them to grow with us. There are always opportunities to improve and we are committed to working on them, on-time.”
While Zomato says it maintains robust escalation mechanisms and explicit partner consent, restaurant owners who spoke to MediaNama described a different reality: one of automatic deductions, limited control, and opaque ad operations.
What Zomato’s Policy Says and Doesn’t
According to Zomato’s Sponsored Listing Service terms, merchants are expected to make full payments in advance. Refunds are not guaranteed, and Zomato has full discretion on ad placements, sizes, and category changes.
The company “assumes no liability or responsibility for any… click frauds, technological issues or other potentially invalid activity that affects the cost of Service.” It also “does not warrant the results from use of Service, and the Merchant assumes all risk and responsibility.”
The Sponsored Listing Service terms grant Zomato broad rights to use merchant content, brand names, and logos, while limiting the company’s liability to the amount of fee paid during a term. These terms become legally binding once the Service Request Form (SRF) is signed.
While Zomato offers a merchant dashboard to track visits, it does not disclose the full breakdown of how ad money is being spent or how much value is being returned. One merchant noted that visibility data only started appearing in the last five to six months. Before that, they had no metrics at all.
Swiggy’s Self Serve Ads: A More Transparent Model?
Swiggy says its ad platform puts control in the hands of restaurant partners. Through the Self Serve Ads tool, restaurants can create their own campaigns, adjust daily spends, and track how those campaigns perform. The company promotes the tool as flexible and cost-effective, with no upfront payments.
The onboarding process is laid out step-by-step: restaurants upload documents like GST and Food Safety and Standards Authority of India (FSSAI) certificates, complete Know Your Customer (KYC), and sign a Partnership Agreement after a verification visit from a Swiggy representative, As per Swiggy, commissions are based on location and whether a restaurant opts for extra promotions.
Compared to Zomato’s Sponsored Listings model, which some restaurant owners say they didn’t fully understand when signing up, Swiggy’s approach looks more structured and consent-driven, at least on the surface.
But that clarity doesn’t always hold up. One of the restaurant owners told MediaNama that Swiggy’s model isn’t entirely different from Zomato’s. “You have to pay them if you want your restaurant to show up in search. It’s the same thing, just framed differently,” the owner said, suggesting that visibility on the platform often comes at a cost, regardless of how the ad system is marketed.
Advertising as a Structural Lever in Quick Commerce
Restaurant owners have flagged the rising costs and opacity of advertising on platforms like Zomato. But industry research shows that this isn’t just a revenue stream but it’s central to how delivery platforms, especially in quick commerce, are designed to operate.
A September 2024 report by CLSA, titled App-racadabra- Magic Behind Instant Delivery Liberating Customers, found that ad revenue makes up around 3.5% to 4.5% of gross merchandise value (GMV) on Zepto. That figure is only expected to grow as more brands start recognising the significance of quick commerce.
Interestingly, Zepto doesn’t just run ads for brands that sell on its platform. It also allows companies to advertise even if they aren’t listed, using spaces like the order tracking page, according to the report.
Quick commerce platforms can also use past purchase data to deliver more targeted ads and push higher-value products – what the report calls driving “premiumisation” of fast-moving consumer goods (FMCG).
Zomato’s quick commerce arm, Blinkit, is expected to lean heavily on ads to hit profitability targets. CLSA notes that Blinkit’s margins could eventually exceed those of food delivery, given the larger potential for ad revenue and the shift toward higher-margin categories.
The report adds that quick commerce is especially useful for smaller or direct-to-consumer (D2C) brands. These businesses can tap into a pan-India audience without having to build their own distribution networks.
The CLSA findings reinforce how advertising isn’t just about visibility, but it is baked into the business model. As margins tighten, discovery on these apps is no longer organic but paid.
Expert View: Power, Visibility, and Platform Dependence
These patterns mirror broader trends across retail and platform ecosystems, not just food delivery.
Devangshu Dutta, the Founder and Chief Executive of specialist consulting firm Third Eyesight, told MediaNama that these dynamics are not unique to Zomato or even food delivery.
“Advertising and promotion focussing on specific brands or products is standard across various platforms and formats. It is an outcome of the balance of power between the platform and the supplier brand, and is equally true of physical retail chains, online marketplaces and aggregation platforms such as Zomato,” he said.
Brands or restaurant chains with deeper pockets tend to secure greater visibility—whether through premium shelf space in physical stores or prominent placements like sponsored listings and banners on delivery platforms.
“Demand-side concentration inevitably favours larger suppliers and brands who can fund visibility, whether it is through endcap displays in a retail aisle or sponsored banners or top-of-search-list positions on an app,” Dutta stated.However, he noted that some established brands may choose to bypass platform dependence altogether.
“If brands are well-established or have other means to ensure that their message and product reaches the target consumer, they may choose to opt out of the channel, as many restaurants have done with Zomato and Swiggy,” Dutta explained.
How Can Restaurants Push Back?
In the context of restaurants displaying resistance to food delivery apps, one of the restaurant owners said that small restaurants need to come together.
“There should be local unions who can stand up to Zomato. And there should be a blanket rule on how much ad spend is allowed, so merchants don’t fall into this trap,” the owner said.He added that Zomato seems to earn more from merchants than from customers. “Whatever we pay to be visible, it all goes into the platform’s pocket”, he explained.
Further, he argued that without collective action, individual pushback rarely works. “The minute we stop ad spend, our listings drop to the bottom. So we need to walk together. If even 30% of merchants stop ads at once, it will force a reaction.”
Why This Matters
As India’s online food delivery market continues to grow, so does the reliance of small businesses on platforms like Zomato. However, these platforms are acting as gatekeepers by deciding who gets seen, how often, and at what price.
By tying discovery to opaque algorithms and costly ad spends, they tilt the playing field in favour of businesses that can afford to pay more. In such a system, can small restaurants survive?
And the issue goes beyond advertising. Zomato recently paused its 50:50 refund-sharing policy after public backlash and partner complaints. Restaurant owners said the company auto-enabled the policy and deducted money without consent or clear explanation. As with ads, there was no transparent opt-out process or formal appeal.
Together, these practices raise broader concerns: Should platform-led monetisation come with stricter disclosure norms? Can regulators step in to ensure pricing fairness and transparency in merchant contracts? And what role can merchant collectives play in counterbalancing this power?
For now, many restaurant owners feel caught in a system that offers visibility and participation at a cost they cannot afford and exit without impact.
(Published in MediaNama)