admin
July 1, 2025
Sankalp Phartiyal, Bloomberg
1 July 2025
Just last week, Amazon.com Inc.’s India unit announced the launch of five new fulfillment centers to speed up e-commerce deliveries across the South Asian country’s smaller towns and cities. The online shopping giant’s statement included the words fast, faster and fastest nine times. That’s because delivery speed has never mattered more in India than it does now.
Homegrown firms such as Eternal Ltd.’s Blinkit, Swiggy Ltd.’s Instamart and Zepto are now delivering everything from pricey herbal skincare to Bluetooth speakers in just 10 minutes, making Amazon’s overnight shipping look comparatively lethargic. With one of the world’s fastest-growing major economies and a swelling middle class that’s looking for instant gratification, India is growing ever more important — and demanding.
It’s no surprise that the as-yet-unprofitable Amazon India is investing another $233 million to boost its delivery network and infrastructure in the country this year. It’s already committed more than $11 billion in India, the bulk of which has gone toward building online retail from the ground up. Its upstart rivals, also in the red, are driving a behavioral shift and are quickly building up their order volumes to the point where they’ll be able to strike distribution deals with consumer brands at an Amazon-like scale. That’s the mood music I’m hearing from local investors and it’s why Amazon is actively trying to counteract these nascent fast-commerce players.
Take me as an example of changing habits. Last week, I found myself bereft of shaving supplies on the morning of a day that featured an important meeting. I ordered a razor, brush and shaving cream via Swiggy and they were with me within 10 minutes. That sort of convenience is (probably) why I neglected
to restock my bathroom cabinet in advance — I simply don’t need to spend time planning small purchases anymore.
What does this mean for Amazon? Well, beyond everyday conveniences, Amazon and Walmart Inc.’s Flipkart may also lose out on higher-ticket purchases such as smartphones and other consumer electronics. Why wait in line or for days for the latest iPhone if an army of scooter riders is ready to drop it off at your doorstep almost instantly? And, specific to Amazon, how compelling will Prime delivery be if there are superior alternatives?
The Seattle-based online retailer was once driven out of China by regulations promoting domestic names, “which had deep and patient capital, and strong capabilities,” said Devangshu Dutta, head of retail consultancy firm Third Eyesight. “Because of this, it becomes that much more important for Amazon to succeed in India, as it’s now the world’s largest market by users. The consumption numbers will also grow with time.”
It’s no overstatement to say that quick commerce could redefine online shopping for Indians, setting a precedent unique to the country. We’ve already seen that happen with UPI, the state-backed peer-to-peer digital payments system that’s outshined credit cards. The company that best adapts to and serves the demands of India’s growing online consumer base will command a share of a rapidly growing e-commerce arena that’s today worth $60 billion in gross merchandise value, according to Bain & Co.
Amazon’s already shifting gears in a highly visible way. Last month, it launched “Now,” a 10-minute delivery service, in some parts of the southern tech hub of Bangalore. That marks its experimental foray into quick commerce. The company is also taking baby steps to plug the money bleed, now charging all
online shoppers 5 rupees ($0.06) in marketplace fees. That’s negligible per transaction, but need I remind you that India is the world’s most populous country and hundreds of millions shop on Amazon?
Even while operating from a position of considerable strength, Amazon sees the rise of its more quick-witted rivals and the shift in consumer behavior, and it’s taking action. To avert those young companies building a comparable retail empire to its own, Amazon will have to show it still has the agility to outrace all comers.
–With assistance from Brunella Tipismana Urbano.
To view this story in Bloomberg click here:
https://blinks.bloomberg.com/news/stories/SYPVYEDWLU68
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)
admin
June 1, 2025
Sharleen Dsouza, Business Standard
Mumbai, 1 June 2025
Reliance Consumer Products is in a sweet spot – and it intends to stay there. Launched barely three years ago, the company has already entered the list of India’s top 10 fast-moving consumer goods (FMCG) players by revenue in the 2024-25 financial year (FY25).
After making headlines by acquiring Campa Cola in 2022 — and taking the brand overseas in under two years — Reliance Consumer Products quickly expanded into food and non-food categories under the ‘Independence’ brand. Now, it has trained its sights on a new frontier: Confectionery.
This marks the company’s third major focus area after gaining traction in beverages and staples. Though present in biscuits and namkeens, its immediate priority is grabbing a share of the Indian consumer’s pocket change — via candies, chocolates, and toffees.
Its entry into the confectionery business began quietly in 2022 with a pilot of Joyland candies in Uttar Pradesh. It soon went on an acquisition spree — first picking up the 30-year-old Maharashtra-based Toffeeman brand in 2023, followed by a 51 per cent stake in Lotus Chocolates, and then acquiring the 82-
year-old Ravalgaon, home to nostalgic brands like Pan Pasand, Mango Mood, and Laco. It has been steadily building a formidable candy arsenal.
However, the Mukesh Ambani-led company isn’t limiting itself to Re 1 or Rs 2 price points. According to a source, it is developing an end-to-end confectionery portfolio — across toffees, candies, and chocolate-based products — and plans to enter sub-segments like gums, jellies, and lollipops. It is also betting on old-school favourites, launching chocolate-based confections such as eclairs, Lotus Symphony (toffee with a chocolate centre), and Lotus Zellers (moulded chocolate miniatures).
It is piloting distribution in five states — Maharashtra, Karnataka, Telangana, Andhra Pradesh, and Uttar Pradesh — with plans to go pan-India this fiscal and reach one million outlets, the source added.
Why the big bet? The Indian confectionery market is expected to grow from Rs. 37,900 crore in 2024 to~59,700 crore by 2033, at a compound annual growth rate of 5.2 per cent, according to global consultancy IMARC Group. North India leads the market with a 32.8 per cent share. IMARC adds that modern retail formats, better digital connectivity, and product innovation are driving market penetration in both urban and semi-urban areas.
India’s sweet tooth has deep roots. Parle began selling candies in the 1920s, followed by Ravalgaon —now part of Reliance Consumer Products’ growing portfolio – in the 1940s.
Experts say the company’s strategy from the start was clear: Dominate. And it has the war chest to play the long game.
“Over two decades, Reliance has gained consumer-side experience and enormous momentum through various retail formats, and has figured out vertical integration in procurement,” said Devangshu Dutta, chief executive officer of consultancy Third Eyesight.
“Its experience in staples comes from private labels, and starting with Campa, its acquisitions in food, beverage and FMCG have grown. As a group, it has the muscle and a long-term approach to make a mark in the market.”
Dhanraj Bhagat, partner at Grant Thornton India LLP, pointed out thatthe FMCG market is notoriously tough — especially when scaling regional brands nationally. “But Reliance has deep pockets for brand building,” he said. That’s what sets it apart — it can spend big and be patient, he added.
While the company is making a dent via its distribution penetration strategy, it also needs to spend on publicity, Bhagat added. “Reliance has the money, so it is a different ball game for it as this gives the company the ability to spend and play the long-term game.”
Reliance Consumer Products is also offering higher margins to distributors in categories like Campa and confectionery, giving it a competitive edge. Its aggressive incentives have forced rivals to raise their own distributor margins — a sign of how this sweet battle is heating up.
(Published in Business Standard)
admin
May 25, 2025
Gargi Sarkar, Inc42
25 May 2025
SUMMARY: Swiggy and Zomato are scaling back non-core bets such as 10-minute food delivery, private labels, and event logistics to sharpen focus on core businesses and improve profitability. Both companies are betting on platform fees and selective verticals like quick commerce and ticketing, but analysts warn that financial discipline, not endless expansion, is key to long-term sustainability. The foodtech duo is stuck in a balancing act of rationalising what works and doesn’t. However, going ahead, this rationalisation game is only going to get more pronounced as they will strive to shield their core bread and butter businesses
For foodtech giants Swiggy and Zomato (now Eternal), the last few years have been about engaging in a battle for expansion, so much so that it has become difficult to tell them apart.
From quick commerce and cloud kitchens to intercity food delivery and even selling tickets for events and concerts, the two companies appear to be aping each other’s every move to be everything everywhere all at once.
However, what began as a bold bet to dominate every possible vertical falling under the ambit of food, lifestyle and entertainment is now undergoing a major course correction.
For starters, both are reconsidering their blitzkrieg, and while at it, they are gracefully stepping away from non-core bets, diluting underperforming or experimental units to focus on core operations to drive profitability.
For context: Zomato, which once saw the future of food logistics in ultra-fast deliveries, gave up on its 15-minute food delivery service, Quick, four months after its launch in January. It has also pulled the plug on its home-made meal service, Zomato Everyday. Tailored for office-goers and budget-conscious consumers, the service was floated in January 2025.
Swiggy, too, has made similar retreats. It suspended Swiggy Genie, its courier and pick-up-and-drop service that had gained popularity during the pandemic. The company also gave up on its private label food business by entering a strategic agreement with Kouzina, a chain of virtual restaurants, granting it exclusive rights to operate Swiggy’s digital-first food brands.
So, what has triggered this metaphorical fission in strategy?
One possible reason could be the growing realisation that profitability hinges on diversifying smartly rather than untamed expansion.
A market analyst, who did not wish to be named, pointed out that the duo’s attempt to rule their customers’ wallets for everything from food to groceries and entertainment to lifestyle has been quite ambitious. “The course correction was overdue,” the analyst said.
He believes that foodtechs are now forced to burn the visceral fat in the form of non-core businesses because those have been slowing them down, also eating into the revenues of core businesses and impacting operational efficiencies.
“Moreover, the more the segments, the higher the chances of operational hiccups. Managing logistics, customer experience, and quality control across a wide array of verticals inevitably leads to fragmentation and strain on core operations,” he added.
State Of Eternal Affairs: Zomato’s Diversification Saga
Eternal’s push to transform Zomato into a broader lifestyle platform in 2024 was not only about ambition but also a strategic response to a slowing core business — food delivery, according to industry observers.
Also, a glance at the table below reveals how the company has seen a marginal QoQ increase in its monthly transacting users.
In terms of monthly transacting customers, Zomato’s food delivery growth began strong with a 6.84% QoQ jump in Q1, but momentum quickly slowed, and Q2 saw only a 1.97% sequential rise, followed by a slight decline of 0.97% in Q3. This dip signalled stagnation, and although Q4 showed a mild recovery (1.95%), overall FY25 growth of the company’s monthly transacting users (food delivery) was modest at just 2.96%
Interestingly, Eternal founder and CEO Deepinder Goyal, too, acknowledged a slowdown in the company’s food delivery business while announcing the company’s Q4 FY25 results. He said the slowdown was due to rising competition from quick commerce platforms and weak discretionary spending. Goyal added that services like Zepto Cafe, Swiggy Snacc, and Blinkit Bistro, too, were eating into demand for restaurant deliveries.
In terms of Zomato’s food delivery numbers, average monthly transacting numbers grew to 20.9 Mn in Q4 FY25 from 20.5 Mn in Q4 FY24. Net order value (NOV) growth also remained subdued at 14% YoY versus the 20% YoY growth guidance.
Hence, the company was under pressure to unlock new revenue streams. Blinkit’s success became the reference point, and the company started envisioning similar success stories with other verticals too, a former Zomato employee said.
This was when the company got engulfed in the wave of diversification, paving the path for Zomato’s yet another bold move (besides Blinkit) — the INR 2,078 Cr acquisition of Paytm’s movies and events ticketing business, Insider, in August last year.
The acquisition that was planned with the launch of the ‘District’ app meant but one thing — declaration of war against BookMyShow, the lone behemoth in the realm of the entertainment ticketing segment. Even the company knew the path wouldn’t be all rainbows and sunshine.
In its Q4 FY24 earnings call, the management acknowledged that while the gross order value (GOV) of the going-out vertical continues to grow at over 100% YoY, the business still operates at an adjusted EBITDA loss of -2 to -2.5% of net order value (NOV).
Besides, given that the transition of users from Paytm’s ticketing business and Zomato’s dining out platform to the District app requires sustained investment, the company doesn’t expect the business to turn profitable in the near term.
But Zomato expects losses to eventually see stability at current levels.
“However, even with plateauing losses, the company will have to keep spending on creating supply. This means: curating new event experiences, forging partnerships and acquiring new users for the District app… and all of this translates into one thing — prolonged burn,” the market analyst added.
Moving on, Zomato’s ambition to become a lifestyle super app didn’t just manifest into flashy verticals like events, entertainment, and ticketing — it also showed up in its renewed aggression in food delivery, the very space where it first made its name.
Therefore, Zomato began piloting a 15-minute food delivery service in select parts of Mumbai and Bengaluru early this year.
But the company now finds the initiative extremely difficult to operationalise as it has failed to generate incremental demand.
“Customers do not necessarily want food fast, they just want it reliably. A 10-minute turnaround without full control over the supply chain leads to poor customer experiences, operational stress, and negligible upside. Instead of delighting users, it makes the company vulnerable to inconsistent quality and frequent delays,” a Zomato insider added.
Satish Meena, the founder of Datum Intelligence, opined that without controlling the entire supply chain, delivering food items within 10 to 15 minutes cannot be a profitable proposition.
Swiggy’s U-Turns
In 2024, also the year of its public listing, Swiggy aggressively expanded its service offerings, launching several new verticals to diversify beyond its core food delivery business.
Among the most prominent launches was Bolt, a 10-minute food delivery platform. Initially launched in Bengaluru, Chennai and Mumbai, Bolt quickly expanded to over 400 cities, with over 40,000 restaurants, including KFC, McDonald’s and Starbucks.
To complement Bolt, Swiggy introduced Snacc, a separate app for instant delivery of snacks, beverages, and small meals within 15 minutes.
Continuing to diversify its portfolio, Swiggy launched Pyng, an AI-powered platform that bridges users with verified experts like yoga teachers or chartered accountants.
With this, Swiggy marked its entry into the on-demand services marketplace, making professional services easier to access.
Apart from these customer-facing services, Swiggy also entered events via Scenes and the B2B space with Assure, to keep pace with Zomato.
Interestingly, Swiggy, too, has begun consolidating its operations. The company has shut down Genie, its hyperlocal courier business, which competed with Porter, Borzo and Uber.
According to a competitor, sourcing delivery riders specifically for packages is a challenge, particularly in cities like Bengaluru. For Swiggy, which was already managing fleets for food delivery and quick commerce through Instamart, sustaining a separate rider network for Genie only added to the complexity.
In another such move, Swiggy exited its private label food business by transferring exclusive rights for its digital-first brands, including The Bowl Company and Homely, to cloud kitchen operator Kouzina.
Balance Sheet Blues
Imperative to highlight that the rollbacks by Zomato and Swiggy are rooted in the growing pressures on their respective balance sheets.
After diversifying at a breakneck speed, they are now faced with the hard realities of cost structures that don’t always align with revenue potential.
In Q4 FY25, Zomato and Swiggy both reported robust top-line growth. Zomato’s revenue surged to INR 5,833 Cr, largely buoyed by its three core pillars — the food delivery business (INR 1,739 crore), Blinkit’s quick commerce arm (INR 769 Cr), and Hyperpure, its B2B supply chain vertical, which posted a 99% YoY growth in revenue to INR 1,840 Cr.
However, despite the momentum, the company’s net profit declined sharply to INR 39 Cr in the quarter, largely thanks to ongoing investments in Blinkit and newer bets like the ‘District’ lifestyle app.
Meanwhile, Swiggy clocked INR 4,410 Cr in revenue in Q4, up 45% YoY, but saw its net loss nearly double to INR 1,081 Cr. The widening losses were fuelled by surging operational expenses.
“All of this explains the strategic pullbacks witnessed lately, Swiggy exiting Genie and private labels, Zomato pulling the plug on services like Quick and Legends. The rationalisation marks a reset, indicating that while growth via diversification was necessary, financial discipline and profitability are in the spotlight,” the market analyst said.
Platform Fee To The Rescue… But For How Long?
While it won’t be easy for Zomato and Swiggy to suddenly change course, the future of these two foodtech giants is all about heading towards a more focussed set of revenue streams driven by value rather than FOMO.
In the process, both foodtech giants appear to have struck gold with the platform fee, which has grown from just INR 2 in 2023 to INR 10 today.
But the real question is: Can rising platform fee help the duo neutralise the impact of aggressive expansion? Or is rationalisation the only way forward?
Devangshu Dutta, the founder of Third Eyesight, thinks otherwise. He believes that the companies will not stop looking for new revenue streams, even as they will continue to amputate the ones that offer little value.
“All of these companies have to look for growth, which is a given. If their existing businesses are not delivering the kind of growth they need to justify their stock price or valuation, then they have to look at new avenues.”
According to him, we are bound to see a flurry of experiments, trials of different services and new verticals as these companies attempt to expand their addressable markets.
At the end of the day, the foodtech duo is stuck in a balancing act of rationalising what works and doesn’t. However, going ahead, this rationalisation game is only going to get more pronounced as they will strive to shield their core bread and butter businesses.
[Edited by Shishir Parasher]
(Published in Inc42)