Why India’s FMCG giants are teaming up with the upstarts looking to disrupt them

What could have been a battle pitting David versus Goliath—or fast-moving consumer goods companies versus quick-commerce startups—is playing out as a story of collaboration rather than competition.

Even FMCG giants such as Godrej Consumer Products Ltd, Marico Ltd, and Dabur Ltd are learning to adapt to what will work best on quick-commerce platforms, although these startups are yet to pose a major threat to their business or offer a significant opportunity.

Godrej Consumer Products, for example, had designed Cinthol foam body wash and Park Avenue gift sets to be sold on quick-commerce platforms. It has also graduated from despatching small packs to be sold on these quick-delivery platforms to selling larger variants, such as 3-litre laundry liquid bottles rather than 1-litre packs.

“Compared to last year, Godrej Consumer Products has seen a 2 times increase in quick commerce (sales),” said Krishna Khatwani, head of sales (India), Godrej Consumer Products.

“The company is testing new launches and innovations on these platforms and partnering with platforms to unlock events. For instance, gifting has seen an exponential growth in quick commerce,” Khatwani said. “In the initial days, quick commerce was more of a convenience and topup-led format. With the channel now scaling up, we sell a large part of our assortmenton these platforms.”

Khatwani, however, added that he expected growth on quick-commerce platforms “to taper once the rate of expansion stabilizes”.

Quick commerce’s quick draw

To be sure, quick commerce’s share of overall FMCG sales remains relatively small. But given their growing popularity, especially in urban markets where consumption has slowed, quick commerce has become an attractive sales channel for FMCG companies.

Business consultancy Redseer pegs the size of India’s quick-commerce market to expand to $9.95 billion by 2029 from $3.34 billion in 2024.

Mumbai-based Marico has started offering different pack sizes of oats, cooking oil and hair oil across price points suited to quick commerce.

“Quick commerce obviously is the biggest driver of growth and we have realized that we need to have a differentiated portfolio in quick commerce… The growth in quick commerce is over 50%,” said managing director and chief executive Saugata Gupta during Marico’s post-earnings announcement call with analysts on 31 January.

Also read |Quick commerce in India: Boon or bubble waiting to burst?

Nestle India Ltd is also tailoring its portfolio to suit online channels.

“We have a portfolio that is tailored to the shopper needs, a portfolio that is focused on e-commerce and quick commerce,” Nestle India chairman and managing director Suresh Narayanan said during a call with analysts earlier in February. “I think one of the advantages of quick commerce has been that our capability, our supply chain management has dramatically improved.”

A supply chain upgrade

Quick commerce startups such as Zepto, Swiggy’s Instamart, and Zomato’s Blinkit are all just a few years in business and still finding their way through to sustainable growth and profitability.

But their speed—doorstep deliveries of a range of products from groceries and electronics to even food in 10-15 minutes—is forcing FMCG companies to rethink ways to bring about greater efficiencies in their own supply chains.

“We have to challenge ourselves because the consumer challenges us. Blinkit asks us a question saying I deliver in eight minutes, why should you take two days?,” said Narayanan of Nestle India. “So Nestle puts its hat on it, works, puts systems, puts practices, and ensures that at least we get it down to one day, and, hopefully, now we will get it down to a couple of hours.”

E-commerce platforms currently contribute about 8.5% of Nestle India’s domestic business.

Also read |Campa, Smoodh and now, Amul Tru: India’s ₹10 beverage market is starting to get crowded

Dabur India, too, is initiating joint business planningand creating new products for online commerce platforms.

“We are strengthening our relationship and bondages with e-commerce and quick-commerce players and doing joint business planning with them, creating new products for them, connecting with them on a monthly, quarterly basis and seeing that we continuously grow shares in quick commerce and e-commerce portals, be it marketplaces like Amazon, Flipkart or be it quick commerce channel like Swiggy, Instamart, Blinkit and Zepto,” Dabur India chief executive Mohit Malhotra said during the company’s earnings call in November.

All that said, quick commerce remains a big-city phenomenon. In India’s top nine metros, quick-commerce retailers have a market penetration of 8% when it comes to FMCG products, according to market research firm Kantar’s data for 2024.

“In metro markets, FMCG companies hold a market share of around 6-8%, but on a pan-India scale, it drops to less than 2%,” said Karan Taurani, senior vice president–research, at Elara Capital.

Quick commerce is poised for rapid expansion within the FMCG sector, he emphasised, largely because traditional retail channels are either stagnating or experiencing slow growth.