Quick commerce valuations face tougher checks

India’s consumer goods distributors have called for stricter oversight of quick-commerce companies planning public listings. They warn that ongoing losses and heavy discounting disrupt traditional retail networks.

The All India Consumer Products Distributors Federation, representing 4.5 lakh fast-moving consumer goods distributors, urged regulators to halt initial public offerings from unprofitable quick-commerce firms until valuation methods and investor safeguards improve. The request follows reports that Zepto, a leading quick-commerce startup, faced a valuation cut after institutional investors raised concerns about its financial health.

In a statement released Monday, the federation said the discrepancy between Zepto’s desired valuation and the lower figures investors considered fair raises issues that need regulatory attention. It asked the Securities and Exchange Board of India and the central government to enforce strict scrutiny, transparency, and investor protection before allowing any loss-making quick-commerce company to list.

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Aggressive discount-driven competition from these platforms has strained India’s traditional retail sector. Neighborhood kirana stores, wholesalers, distributors, and small businesses have faced financial pressure, while millions of livelihoods connected with the general trade ecosystem have come under increasing pressure.

The federation also highlighted delayed payments to suppliers and partners linked to unprofitable quick-commerce firms. It argued that India’s economy cannot depend on a model that replaces sustainable livelihoods with short-term digital jobs.

The group pressed the Food Safety and Standards Authority of India to set mandatory storage rules for quick-commerce dark stores—warehouses fulfilling online orders without customer access. Many of these facilities pack 60,000 to 70,000 stock-keeping units into cramped spaces, creating unsafe conditions like poor ventilation, improper product storage, pest risks, and hygiene failures.

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The federation proposed a minimum size requirement of 20,000–25,000 square feet for such warehouses, subject to scientific validation.

The federation demanded a national policy to protect general trade and level the field between digital and neighborhood retail. It threatened peaceful protests outside SEBI’s headquarters if regulators fail to act.

The push for stricter IPO rules reflects a broader debate on valuing companies that prioritize growth over profits. The federation did not set a date for potential protests but warned that stronger regulatory accountability would be demanded without action.