Quick disruptors: Will q-comm bite into e-comm’s ad business?

India’s digital advertising story is at the cusp of being rewritten. The quick commerce platforms, which are barely three-four years old, have emerged as a disruptor for well-established e-commerce leaders like Amazon and Flipkart.

Not just business, q-comm apps are denting e-tailers’ advertisement business as well. Sample this: Zepto has surpassed Rs 1,000 crore in annual advertising revenue last fiscal, according to co-founder and CEO Aadit Palicha’s LinkedIn post which has now gone viral.

The announcement follows Zepto’s launch of Jarvis, an in-house advertising platform designed to help brands and sellers improve visibility and drive sales on the platform.  After all, Zepto has evolved into a $5 billion business in just three years of existence and Jarvis could help it to expand its advertising business, which is currently 4 percent of its total revenue.

Q-comm players do not report ad revenue separately as of now. However, industry experts estimate that Blinkit is heading towards similar numbers or even more. “Blinkit earned over Rs 400 crore from advertisements alone in FY24. We won’t be surprised if it crosses the four-digit mark in FY25, industry experts say.

Swiggy too is cashing in on its advertising space. Its Draft Red Herring Prospectus (DRHP) revealed that the company’s ad revenue has significantly contributed to its revenue growth. The company plans to increase the contribution of advertising revenue further by enhancing its advertising tools.

Industry observers believe that ad revenue of major q-comm firms put together could be in the range of Rs 3,000 Cr, which is roughly one third of the ad revenues generated by e-commerce majors.

Notably, Amazon and Flipkart pocketed Rs 6,649 crore and Rs 4,972 crore in FY2024 respectively by merely selling their digital ad space for products they sell. Their combined ad revenue crossed Rs 11,600 crore this year, a 33% increase from the previous fiscal year.

Changing digital landscape

Quick commerce has emerged as one of the most transacted online categories in India, capturing the attention of brands eager to engage with a highly active and fast-growing customer base with significant spending power. So much so that the FMCG brands’ ad spends on ecommerce and quick commerce have surpassed their TV spends, marketers told e4m.

As these platforms grow their urban user bases and fine-tune their targeting strategies, their ability to deliver highly personalized ads is proving successful, industry leaders remark.

“Q-comm growth in India over the last three years has been phenomenal. However, advertising on quick-commerce platforms differs markedly from other channels, resembling low-budget below-the-line (BTL) marketing efforts. Consumers on these platforms already have a strong purchase intent and make decisions quickly," explains Rajiv Dubey, Vice President and Head of Media at Dabur India.

Dabur currently allocates a significant part of its digital advertising budget to e-commerce and quick-commerce platforms, with the share for quick commerce expected to increase in the future, says Dubey.

Adds Rahul Vengalil, CEO, Tgthr, “Advertising has always been to drive the consumers to POS. it used to the brick & mortar store one, then it evolved to market places & e-commerce, then now it’s q-commerce.

The bottle of the funnel spends of categories that are on q-commerce will allocate more & more budget from the existing pie into these platforms, especially in the urban centres. Some of the latest ads from Manyavar, Decathalon, Whisper, etc are all promoting their q-commerce availability, ie, brands have realised the potential of last mile availability with q-commerce.”

India's quick commerce sector has experienced remarkable expansion, with sales surging by more than 280% over the past two years. The Gross Merchandise Value (GMV) skyrocketed from USD 0.5 billion in FY22 to USD 3.3 billion in FY24. This rapid growth outpaces that of traditional e-commerce, reflecting a rising preference for swift delivery services, as highlighted in a report by financial services firm Chryseum.

The report highlighted that India’s e-commerce sector is growing at an annual rate of 14%, while quick commerce has surged at an impressive 73% annual growth rate in FY 2023-24. This underscores a notable shift in consumer preferences toward faster and more convenient delivery solutions.

Further, existing Monthly Transacting Users (MTUs) are expected to spend around 20% more on q-commerce, driven by stronger trust and habit formation towards platforms, and experimentation with newer propositions, such as sustainable products, health focus, and cafe).

“Retail media and CTV platforms have increasingly attracted FMCG advertisers, with CTV catering primarily to top-of-funnel objectives and retail media focusing on middle- and bottom-funnel strategies,” shared Sajal Gupta, CEO of Kios Marketing.

Gupta adds, “By leveraging consumer intent signals derived from purchase behaviors and content consumption patterns, these platforms enable advertisers to strategically position their content. This approach has consistently delivered higher engagement rates and improved return on investment (ROI) for advertisers.”

“In the retail media segment, advertising revenue generated by quick commerce (q-commerce) platforms is currently estimated at approximately ?3,000 crore. This figure is projected to maintain its upward trajectory, potentially surpassing ?5,000 crore by the end of 2025.  For q-commerce businesses striving for profitability, advertising revenues have provided a much-needed financial boost, helping to offset operational losses and support sustainable growth,” Gupta explains.

“As AI-driven personalization and shoppable ad formats grow, q-commerce will redefine how brands engage consumers. These platforms are not just transaction-based but are becoming integral to India’s digital advertising strategy, bridging convenience and relevance for both brands and users," noted Sayak Mukherjee, Director at Brandwizz & Creatorcult Media.

E-comm players turning q-comm

Alarmed with quick delivery services’ success, e-comm players have decided to take them head on. Flipkart rolled out its 10-minute delivery service 'Minutes' in August. Amazon India is planning to launch its service by next month. Reliance Retail has started offering quick commerce services through JioMart in select areas of Navi Mumbai and Bengaluru this month.

Categories like smartphones, groceries and beauty and personal care (BPC) are poised for faster growth, driven by quick commerce platforms. This trend intensifies competition for vertical e-commerce players like Nykaa, Tira and Purplle, prompting them to prioritize same-day deliveries to stay relevant.

‘Social Media Ads will lose steam’

According to Nimesh Shah, Head Maven, Windchimes Communications, “As Zepto, Blinkit and others grab more of people’s time and money, they will continue to draw ad revenue from advertisers. However, I think Amazon and Flipkart will only marginally lose their ad revenue to quick commerce and that also for the short term. There are two reasons for that. Firstly, they still have a huge set of customers visiting their sites for purchase. Secondly, they have launched their version of quick commerce.”

“It's the generic websites advertising and social media ads that will lose their share of the advertising revenue pie. One because platforms like Facebook are losing active users daily and secondly, advertisers will want to spend money on platforms where customers are making purchase decisions. For groceries and such products, those platforms happen to be quick commerce sites. Overall, the advertisers have got one more distribution advertising opportunity that they can use to improve their ad ROI,” Shah explains.

“In the next few years, the quick comm space will become increasingly important for brands. We'll see innovative ad formats and customisation…more emphasis will be laid on ROI metrics. Brands will need to adapt and optimize their ad spends to effectively engage consumers across converging platforms,” quips Pramod Maloo, CEO, Kreative Machinez.

Kirana stores being shut

The rapid expansion of quick commerce in India has led to the closure of around 200,000 kirana stores in the country in the past one year, India’s biggest retail distributors association the All India Consumer Products Distributors Federation said last week.

“Deep discounting, combined with predatory pricing, has created an unfair playing field, eroding the customer base and profitability of kirana stores that have anchored our retail landscape for generations,” the Federation said.