Regulatory scrutiny for e-commerce and quick commerce firms is expected intensify. A report by Elara Capital has flagged off concerns of potential impact of regulatory hurdles at a time when allegation of predatory pricing by e-commerce firms have gained ground and there are rising concerns around gig workers’ welfare.

Recently, FMCG distributor body All-India Consumer Products Distributors Federation (AICPDF) approached the Competition Commission of India (CCI) and antitrust authorities to investigate quick commerce companies for alleged predatory pricing.

Elara Capital’s report noted that these developments could have a near-term impact on growth rates of e-commerce companies, although medium-term prospects remained ‘healthy’.

The report also pointed out to regulatory overhang on aggregator and e-commerce companies even as the Labour Ministry is considering a plan to increase benefits for gig workers of up to 5 per cent and employers may be asked to contribute 1-2 per cent of their annual revenue to a security fund.

At the same time, the Ministry also ordered aggregator platforms to onboard eligible gig workers on the eShram portal within three months. Meanwhile, Karnataka government is looking at imposing 1-2 per cent transaction fees on online aggregators to provide social security to gig workers.

“Our primary checks with legal experts, food tech and other India-origin eCommerce companies reveal they are already providing benefits of up to 2-3 per cent of earnings to each of their delivery partners via Mediclaim, term plan, and maternity benefits. An increased outgo of an additional 2-3% for welfare of delivery partners will have a mild negative impact on profitability, in our view,” Karan Taurani, Senior Vice-President, Elara Capital, stated in the report.

Referring to concerns raised by traditional retail bodies, he said, “With 15 million kirana stores on a pan-India basis and 80 million trader-based stores (the non-food vertical), there is a large portion of the country where livelihoods may see a negative impact once qCommerce scales up successfully in metros and beyond metros; thus, we believe any potential protests by kirana stores may have a negative impact on growth on this segment.

Taurani stated in the report that distributors on the ground are unable to recover dues from kirana stores due to the negative impact on kiranas by digital platforms. He said kirana stores are sitting with high levels of inventory and distributors are unable to receive money on time. “Emergence of modern trade did not see a big negative impact for kirana stores, as the former is led by bulk buying whereas kirana stores were always for impulse consumer buying. However, emergence of quick commerce companies could make a bigger dent, as buying for impulse verticals and products may see strong growth via qCommerce platforms, moving away from kirana stores,” he said.

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