admin
July 10, 2025
Alka Jain, Outlook Business
10 July 2025
Just when Blinkit, Instamart and Zepto were slowing down in their quick commerce game, Amazon’s entry may spur them towards a more aggressive race. The ecommerce giant has begun offering deliveries in as little as ten minutes in Delhi after Bengaluru, under the name ‘Amazon Now’.
“We are excited with the initial customer response and positive feedback, especially from Prime members. Based on this, we are now expanding the service over the next few months addressing immediate customer needs while maintaining Amazon’s standards for safety, quality and reliability,” the company said in an official statement.
Till now, the company was moving at its own pace with the idea that Indian consumers would wait a day or two for their deliveries. But the game has changed now—convenience is king here. Online shoppers want everything from milk to mobile chargers within a few minutes at their doorsteps.
And the big three of the quick commerce market—Blinkit, Instamart, Zepto—have cracked the consumer code perfectly. This trend has nudged Amazon and Flipkart to enter the 10-minute delivery segment. It started as an experiment in the larger ecommerce sector but has now become a necessity for online retailers.
Kathryn McLay, chief executive of Walmart International—an American multinational retail corporation—revealed that quick commerce now accounts for 20% of India’s ecommerce market and is growing at a rate of 50% annually. According to a Morgan Stanley report, the market is expected to reach $57bn by 2030.
Hence, Amazon could not afford to stay on the sidelines. The company has already pumped $11bn into Indian market since 2013 and recently announced another $233mn to upgrade its infrastructure and speed up deliveries. In addition, it has also opened five fulfilment centres across the country.
Despite continued investment, there are doubts if Amazon can disrupt the quick commerce game. Industry experts state that the ecommerce major’s late entry could upend the fragile unit economics of the space. It can even reignite discount wars and increase burn rate (a company spending its cash reserve while going through loss) for the incumbents, once the ecommerce giants begin to exert pressure and begin to capture market share.
Open Market, Thin Margins
Given the growth momentum and market size, quick commerce start-up Kiko.live cofounder Alok Chawla believes that there is definitely headroom to accommodate another player in the quick commerce market. However, margins may remain negative for a couple of years due to high business and delivery costs.
As per data, the average order value of ₹350–₹400 yields a gross margin of approximately 20% but high fulfilment and delivery costs (₹50–₹60 per order) significantly reduce overall profitability, often cancelling out most of the gains.
“Indian customers will not be willing to pay high shipping charges for convenience. But the market will continue to grow due to cart subsidies and shipping discounts. On top of this, profitability also remains quite some time away,” he says.
Even a survey by Grant Thornton Bharat, a professional services firm, shows that 81% of Indian quick commerce users cite discounts and offers as one of the main reasons they shop on platforms like Blinkit and Instamart.
But the fact is Amazon has extremely deep pockets, which means, the trio will once again have to get into aggressive discounting to protect their turf, said Chawla, indicating the possibility of higher cash burn quarters ahead.
In February, reports revealed that Indian quick commerce companies, including new entrants, were burning cash to the tune of ₹1,300–₹1,500 crore on a monthly basis. But a few months later, Aadit Palicha, chief executive of Zepto, a fast-growing 10-minute delivery platform, claimed that the company had slashed its operating cash burn by 50% in the previous quarter.
Still, the path to profitability remains shaky. Though Amazon can get an advantage of its existing huge customer base that is habitual of making online purchases including those in similar categories.
The real challenge lies beneath the surface because ecommerce and quick commerce operate on fundamentally different engines.
E-Comm vs Q-Comm: A Different Game
It may seem like a simple extension of what Amazon already does: deliver products. But in practice, the logistics, timelines and cost structures behind traditional ecommerce and quick commerce are different, said Somdutta Singh, founder and chief executive of Assiduus Global, a cross-border ecommerce accelerator that helps brands scale on global marketplaces through end-to-end solutions.
She explains the difference using a hypothetical situation: let’s say you order a phone case in Mumbai, which is picked from a nearby fulfilment centre. It will be added to a pre-routed delivery run with 30-50 other stops. This batching on the basis of route optimisation, keeps last-mile costs low, somewhere around ₹40–₹80.
But if you order the same item in a smaller town like Alleppey, it may first travel mid-mile from a hub in Cochin, then be handed off to a local partner like India Post. This increases the delivery time but keeps costs manageable through scale and planned routing.
This setup suits well in ecommerce business, which is built for reach and variety, not for speed. However, quick commerce runs on a completely different playbook because speed becomes priority here.
For instance, you order a pack of chips and a cold drink via Zepto in Andheri. These items are already stocked in a dark store within one to two kilometers of your home. The moment you place the order; someone picks it off the shelf. A rider is dispatched almost immediately and heads directly to your address.
There is no mid-mile movement, no routing logic and no batching. Each trip is a solo run. Delivery often happens within 10 to 15 minutes. This kind of speed relies on a dense network of local stores and a steady flow of short-range riders. But it also means higher costs.
“With no bundling of orders and lower average cart sizes, usually ₹250 to ₹300, the delivery cost per order can shoot up to ₹60 to ₹120. That is a heavy operational burden. Unlike traditional ecommerce, where cost efficiency scales with distance and order volume, quick commerce is constrained by geography and time pressure,” she explains.
So, it becomes more than just a category expansion for e-commerce platforms like Amazon and Flipkart. It marks a pivot in their “logistics thinking” and signals a broader shift in entry strategies. What once worked must now be retooled for hyperlocal and real-time operations.
Speed over Scale Not Easy
There are multiple challenges ahead for Amazon to make its presence felt and stay competitive in the quick commerce space. Firstly, it must build an operations and logistics layer that enables sub-15-minute deliveries, along with a technology stack to support it, according to Mit Desai, practice member at Praxis Global Alliance, a management consulting firm.
Second, it needs to build a dark store network to succeed in the space which is crucial to meet the 10-15 minutes delivery promise. Experts believe that a hybrid model will be the most successful in India—a mix of micro warehouses, partner stores and dark stores.
Desai states that Amazon’s existing capabilities can give it a base to build on, but it would also have to account for complexities and differences that come with the quick commerce business.
“For Amazon, the challenge will be operations. Can they build 700+ dark stores? Can they go hyperlocal? Can they navigate the chaos of Gurugram rain, Bengaluru traffic or the lanes of Dadar?” wonders Madhav Kasturia, founder and chief executive of Zippee, a quick commerce fulfilment start-up focused on hyperlocal deliveries and dark store management.
Another challenge can be repeat, loyal customers. As of now, customers check prices across platforms, and order where prices are the lowest. So, Amazon will have to spend heavily on discounts to gain market share. Chawla says retention will remain a problem because Zepto’s growth has also slowed down after a reduction in discounting burn.
However, Singh highlights that Amazon may not roll out everything in one shot. “We will likely see small-scale pilots, co-branded dark stores, local partnerships, new rider networks, tested in top cities before any nationwide push. They will also reveal whether it is viable to retrofit scale-driven e-commerce infrastructure into something that runs well in a hyperlocal loop,” she added.
Profitability Remains a Concern
While the quick commerce space is becoming increasingly dynamic with new entrants, the core question remains: is it a sustainable business model? The path to profitability is still fraught with operational complexity, margin constraints and uncertainty in consumer behaviour.
“Margins in quick commerce were never pretty to begin with,” says Kasturia. Yet he remains optimistic about the market because India’s grocery market is still largely untapped online.
As per data, India’s grocery and essentials market is over $600bn, of which online commerce is just three to four percent. Even quick commerce is sitting at ₹7,000–₹9,000 crore gross merchandise value today. So, the market isn’t crowded. It’s just early.
“We are barely scratching the surface,” he says, arguing that whoever wins customer behaviour, will lead the game. For example, in tier 1 cities, users no longer compare prices—they compare time.
For Amazon, this is both an opportunity and a constraint. Experts believe that the ecommerce giant can stand out by focusing on trust, hygiene and reliability—areas where existing players sometimes falter.
Kasturia says that the platform should not even chase everything, rather focus on profitable categories like fruits, dairy and personal care. “Build strong private labels. Nail density before geography and don’t discount blindly,” he adds.
The key is to build for reorders, not virality. That’s when customer acquisition cost (CAC) drops, margins compound and a player stops bleeding money per order. And to reduce the cost of dark stores, Chawla suggests an alternative route.
“Riding to neighbourhood stores for long-tail stock keeping unit can cut real estate and wastage costs,” he says, adding that it can decentralise inventory without owning all of it.
To follow this playbook, Devangshu Dutta, founder of Third Eyesight, a management consulting and services firm, says that every player needs to invest hundreds of crores before the model begins to show surplus cash. It will demand multiple, interlocked shifts—in pricing strategy, tech backbone, category mix, and even brand positioning.
Amazon’s entry doesn’t merely add another contender in the 10-minute delivery race—it rewrites the playbook for every player. The real question now is: can the frontrunners hold their turf, or will Amazon’s scale and deep pockets tip the balance of power?
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
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)
admin
March 7, 2025
Shailja Tiwari, Financial Express
March 7, 2025
This is what happens when you hit the gym after a long pause. On your first rebound day, the same weights seem heavier, the same set of squats tires you quicker. You might feel frustrated – nothing seems the way you left it.
The same scenario faces brands looking to make a comeback. Those “muscles” – read brand loyalty -have lost strength due to long absence. The brand’s “stamina”- customer loyalty – have declined with neglect. All of which essentially means you need a relook at the entire “regimen” – the product, price, place and promotion – that seemed to work the last time around.
Men’s fashion brand Reid & Taylor is facing the same dilemma.
Launched in India in 1998, the brand vanished from the market in 2018 after S Kumars – which held the rights to manufacture and market the Scottish brand in India went bankrupt. Reid & Taylor is making a gradual comeback now, under the aegis of its new owner Finquest Group, complete with a campaign featuring new brand ambassador Vicky Kaushal and tagline, “Man on a Mission”.
Finquest Group has invested over ₹750 crore in revitalising the brand. Reid & Taylor is available in more than 1,200 multi-brand and exclusive brand outlets across the country, as per a company announcement.
In January, Reid & Taylor also announced its partnership with the Unicommerce to knit together the brand’s website, warehouses, physical stores, and other online platforms in one integrated network. The tech integration followed the launch of Reid & Taylor’s brand website and its growing presence across various online marketplaces, a clear signal the company is gearing up to address the needs of today’s customer and give its competitors a run for their money.
Kapil Makhija, CEO and MD, Unicommerce, explains how this will enable Reid & Taylor to modernise its operations: “In addition to a consistent customer experience, this integration enables efficient inventory management through a centralised platform that allows ship-from-store service, where the brand can switch orders between warehouses and stores, offering a broader assortment for sale and faster order fulfilment. It also helps Reid and Taylor connect with the more online savvy audience.”
The Indian menswear market, encompassing formal, casual and traditional apparel, had crossed ₹2 trillion in 2023 and is expected to reach ₹4.3 trillion by 2027, as per a Statista report. Experts say that the menswear category has grown exponentially since Reid & Taylor’s first outing. It has a host of local and international brands such as Raymond, Mufti, Allen Solly, Louis Phillipe and Manyavar offering stiff competition.
In other words, Reid & Taylor has its task cut out.
Makeover strategy
The greatest challenge for the relaunched brand is to establish relevance and share-of-mind with a new set of consumers, observes Devangshu Dutta, CEO of Third Eyesight. “In its initial avatar in India, it rode on the brand’s past goodwill, but since its fall a few years ago, the market has changed significantly. Ready-to-wear apparel, growth of modern retail, online commerce and a set of consumers who have no past history or association with the brand are all significant factors at play, remarks Dutta.
At its best in the early-2000s, the brand was positioned mostly within the wedding segment, a category that is also rapidly changing. The styles that dominate wedding apparel are changing among younger cohorts, points out Ajimon Francis, MD India for Brand Finance. Formal three-piece suits and safari suits are no longer style statements.
Consumers are opting either for designer wear like a Tarun Tahiliani or for mid-segment offerings where brands like Raymond operate. “Formal suits are becoming an ‘uncle’ or ‘dadaji’ segment, and the wedding lines showcased by most brands are geared towards traditional wear. Formalwear for weddings now includes sherwanis and kurtas, where brands like Manyavar and FabIndia rule,” he points out.
Reflecting on the brand’s exit earlier from the Indian market, Francis says that its owners’ (S Kumars) inability to adapt the brand to changing consumer behaviour led to its downfall. The Finquest Group will need to clearly redefine its new positioning since Reid & Taylor now offers a mix of styles across casual and formal menswear.
Legacy brings credibility but it can also be baggage, remarks Rutu Mody Kamdar, founder of Jigsaw Brand Consultants. The challenge for Reid & Taylor lies in shaking off the heritage brand’ tag and making itself relevant to younger buyers who value modern style over nostalgia. “It needs to own the ‘quiet luxury’ space, timeless tailoring with a contemporary edge. That includes modern cuts, cultural collaborations, omnichannel presence, and aspirational storytelling,” suggests Kamdar.
E-commerce strategy will be key too. The brand will need to blend strong visuals with smart pricing and seamless strategy. Kamdar adds that Reid & Taylor needs to look at e-commerce as not just a sales channel but also a brand building platform.
(Published in Financial Express – Brandwagon)