Advertising key profit lever as quick commerce scales: Elara Capital’s Karan Taurani

Advertising revenues are set to become one of the most critical profitability drivers for India’s quick commerce platforms, as brands increasingly shift spends away from traditional and digital media towards hyperlocal, data-led marketplaces such as Blinkit and Instamart, according to Karan Taurani, analyst at Elara Capital.

Speaking during “Internet on Eternal” playbook session, Taurani said quick commerce platforms offer significantly superior return on ad spends compared to social media, video advertising and even large e-commerce platforms, driven by deep micro-market intelligence and AI-led consumer targeting. “More than 90–95 percent of incremental monetisation across platform businesses in India today is coming from advertising,” he said.

Unlike food delivery, where nearly 90 percent of ad revenue is sourced from restaurants with limited spending capacity, quick commerce caters to a far wider set of categories including FMCG, beauty, personal care, apparel, small appliances and D2C brands. As a result, ad revenue as a share of gross order value for quick commerce could rise to 7–8 percent, compared to 3–4 percent for food delivery, Taurani noted. He added that global peers such as Amazon already derive 6–8 percent of gross operating profit from advertising, underscoring the scalability of this lever.

For D2C brands, Taurani said effective take rates on quick commerce platforms can range between 40–50 percent, factoring in commissions, advertising spends and brand-led discounting. “While the headline number appears high, the ROI is significantly better because platforms understand micro-markets far more deeply than any other media channel,” he said, adding that brands are increasingly reallocating budgets from traditional trade and digital advertising towards quick commerce.

Q-comm structurally stronger than food delivery

Taurani said quick commerce is structurally better positioned than food delivery to deliver margin expansion over the long term. While food delivery platforms face limitations on raising restaurant commissions beyond the current 30–31 percent range, quick commerce platforms can command take rates of 15–40 percent from brands, depending on category and market.

He also pointed to the inventory-led or first-party model as a major differentiator. Blinkit’s shift to an inventory-led model has already resulted in a 50 basis point improvement in EBITDA margins, with another 40–50 basis points of upside possible, he said. Taurani added that Swiggy is also expected to move in this direction, as inventory control allows platforms to optimise assortment, pricing and fulfilment, something traditional e-commerce players struggle to replicate.

“Quick commerce is not just faster e-commerce. It’s a fundamentally different DNA built on dark stores, platform intelligence and inventory control,” he said.

E-commerce and new entrants pose limited threat

Taurani said large e-commerce players are not a meaningful threat to quick commerce at present, given their fulfilment centre-led models and inability to shift meaningfully to a first-party inventory structure. He added that while Flipkart has engaged in some discounting, Amazon remains focused on execution rather than price wars.

He noted that Blinkit, Instamart and Zepto continue to command over 80 percent market share in quick commerce, and e-commerce players would need to scale to at least 10–12 percent market share to pose a real competitive risk.

On Rapido, Taurani said the platform has failed to gain traction despite having last-mile capabilities and access to capital. “Order volume share is less than one percent, restaurant selection is limited and global QSR chains are not present. There is no compelling reason for customers to shift away from Zomato or Swiggy,” he said.

ONDC, too, was described as a “non-event” due to the lack of integrated last-mile logistics, which has hurt consumer experience despite lower commissions.

 Gig worker code impact manageable

Addressing concerns around the proposed gig worker code of conduct, Taurani said the draft bill could result in an incremental cost of Rs 2–3 per order for platforms such as Eternal and Swiggy, assuming the payout remains capped at 2 percent of revenue or 5 percent of gig worker payouts.

“This is not a material risk and can be passed on to consumers over time,” he said, adding that Eternal is better placed due to higher margins and a more premium customer base. However, he cautioned that if payouts were raised significantly beyond current proposals, cost recovery could become challenging.

Taurani said recent gig worker strikes in December had minimal impact on order volumes, despite higher incentives being paid on those days. He noted that only around 7–8 percent of gig workers in food tech and quick commerce participated in the strike.

Zepto vulnerable as discounting persists

Among the major players, Taurani flagged Zepto as the most vulnerable, citing its reliance on deep discounting to drive growth. “We have seen historically that trying to drive both growth and profitability simultaneously does not work. Blinkit is the only platform currently able to expand aggressively while nearing break-even,” he said, adding that Zepto could lose market share once discounts are scaled back.

### Non-metro expansion key risk for QCOM

Taurani said the biggest long-term risk for quick commerce is its ability to scale meaningfully beyond metro markets. While platforms are seeing early traction in select non-metro cities, throughput remains 40–50 percent lower than in metros, prompting cautious expansion.

India currently has just 8,000–10,000 dark stores compared with 13–14 million kirana outlets, highlighting significant headroom, but adoption will determine the pace of rollout, he said.

View on Nykaa and valuations

On Nykaa, Taurani said the company continues to execute well, delivering 27–28 percent GMV growth, though core beauty and personal care growth excluding eB2B remains below 25 percent. He said quick commerce has had some impact on margins but not on growth.

“Valuations are premium, but growth of around 25 percent and a 35 percent EBITDA CAGR in the core business make it a strong franchise,” he said, adding that accumulation would make sense at lower levels.

Competitive landscape remains execution-led

On the possibility of global players such as Meituan entering India’s quick commerce space, Taurani said late entry into a land-grab market poses structural challenges. “Price wars are not sustainable. The winners will be platforms that focus on execution, micro-market understanding and inventory control,” he said.

He concluded that while competition will continue to intensify, quick commerce platforms that monetise effectively through advertising and prioritise profitability over discount-led growth are best positioned to emerge as long-term winners.