Companies are setting aside a part of their digital ad spends for these platforms, in line with the growth in quick commerce firms. While the share of ad spends is relatively smaller than what companies spend on Meta, Google or large marketplaces such as Amazon, it is increasing rapidly.
For packaged foods company Parle Products, e-commerce (excluding quick commerce) contributes 4.5-5% of the company’s sales. The company has been investing in quick commerce in line with the sales growth on such platforms.
“Quick commerce is shaping up quite well for us. From less than 1% of our business two years ago, it is now contributing to close to 2% of our overall sales. Because revenues are going up, our spends and investments are also improving,” said Krishnarao Buddha, senior category head at Parle Products.
Last week, quick commerce platform Zepto said it expects advertising revenue to touch ₹1,000 crore in the next 12 months. The company’s advertising revenue has already hit ₹400 crore.
“The advertising business is scaling rapidly and is growing at the rate of 150% year-on-year, driving up margins steadily,” Zepto co-founder and chief executive officer Aadit Palicha said in an earlier interview with Mint.
Also Read: Flipkart’s q-commerce entry weeks away, will take on Zepto, Blinkit, Instamart
Typically, FMCG companies promote new products or push offers at large retailers as well as online platforms. They advertise on e-commerce platforms in the form of banner ads and run promos or offer discounts across Amazon, Flipkart, Big Basket, Nykaa or Zepto.
Scaling up
Quick commerce platforms are gaining scale—at least in India’s top cities. India’s quick-commerce market grew 77% in 2023 to $2.8 billion in gross merchandise value, accounting for 5% of India’s overall e-commerce market, according to consulting firm Redseer.
GMV, a key metric in e-commerce, tracks the total value of all goods sold on a platform, excluding discounts and other expenses.
Beauty products company Plum said its marketing expenses across e-commerce platforms, including quick commerce, are proportional to the size of the channels. The company gets 20% of its e-commerce sales via quick commerce.
“The overall economics with regard to how much we invest on any platform is pretty much the same. Since the primary motivation for shopping on quick commerce is not price, discounts are lower, so whatever money is saved on discounting tends to be ploughed back into marketing on the platform,” said Shankar Prasad, founder & CEO of Plum.
Quick commerce firm Blinkit’s ad revenue grew 220% year-on-year in the third quarter of the last fiscal, according to the company’s earnings release. It said companies advertise with the intent of building visibility for their products for a highly engaged and fast-growing customer base with spending power.
Blinkit declined to comment on its advertising business.
Also Read: Competition’s heating up but Blinkit’s got the edge
Ad revenue could become an important income stream for quick commerce platforms as they sell newer categories, said Karan Taurani, senior VP at Elara Capital.
“There is a strong potential for quick commerce companies to grow their ad revenue by over 50-60% and also outperform overall e-commerce ad revenue growth rates,” he said.
Accessories company Baggit spends 8-10% of its sales towards advertising on e-commerce on business-as-usual days, and 12-13% during the festive season and other sales. It will “wait and watch” before allocating significant budgets to quick-commerce platforms.
“Consumer brands tend to spend a lot more money on e-commerce platforms since they host a range of brands and it’s important to stand out. For quick commerce, we will wait to see how demand picks up. When the competition in the category picks up and we see these platforms becoming lucrative channels, we will decide the marketing budget,” said Nina Lekhi, founder and MD of Baggit.
Nikhil Rao, chief marketing officer of Mars Wrigley India, said the company actively invests in the growing e-commerce channel, especially in paid search and on banner advertising.
“This helps drive shopper conversion as well as brand building when done well. We are also looking at unconventional ways of driving search via organic and other marketing activations like sampling and bespoke activation with our partners. While we anticipate continued investment on e-commerce platforms to meet the sustained momentum in online shopping trends, we are careful to not overspend and make it unsustainable for us,” he said.
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