When quick commerce started gaining traction in India, the big attraction was simple: get your order in 10 minutes.
Milk, bread, eggs, snacks, cold drinks, fruits and vegetables — things people needed quickly could suddenly reach their homes without a trip to the neighbourhood store.
For a while, the entire conversation was about speed.
Who can deliver faster?
10 minutes or 15 minutes?
But I think we are now looking at something much bigger.
Quick commerce is slowly becoming a new retail format.
The reason is quite simple. These platforms are no longer trying to solve only an urgent shopping need. They are trying to become part of the customer’s regular shopping behaviour.
Think about how people actually shop.
They don’t always wake up thinking, “Today I will visit a grocery store.”
They think, “We are out of milk.”
“I need snacks for tonight.”
“I forgot toothpaste.”
“Guests are coming.”
“I need a small gift.”
These are shopping missions.
Quick commerce is trying to capture these missions one by one.
And that changes the game.
The first generation of quick commerce was largely about groceries and everyday essentials. Today, the assortment is moving into many other categories — beauty, personal care, electronics, gifting, home products and more.
Once the customer starts buying these categories regularly, the platform is no longer just delivering products.
It is competing for the customer's basket.
That is where I believe traditional retailers need to pay attention.
Because the biggest change is not happening in delivery.
It is happening in inventory.
A 10-minute delivery promise sounds impressive to the customer. But behind that promise sits a much more complicated operation.
The product has to be available close to the customer.
The forecast has to be reasonably accurate.
The right quantity has to be stocked.
The order has to be picked quickly.
The product has to be packed correctly.
And someone still has to deliver it profitably.
If the retailer keeps too little stock, the customer sees “out of stock.”
Keep too much stock and the business starts carrying unnecessary working capital. Products age. Discounts increase. Fresh products get damaged. Wastage goes up.
This becomes particularly important in fruits and vegetables and other perishables.
A retailer cannot solve an availability problem simply by putting more stock into a dark store.
The quality of the forecast matters.
This is something I have seen repeatedly in retail. Inventory problems are often treated as a technology problem. In reality, the technology can only work as well as the demand data, processes and discipline behind it.
That is why I think the next competitive battle in quick commerce will not simply be about who delivers in 10 minutes.
It will be about who can maintain better availability without carrying excessive inventory.
That is a very different game.
Traditional retailers already understand many parts of this equation.
They have spent decades managing assortment, inventory, margins, store productivity, shrinkage, wastage and working capital.
What is changing is the operating model.
A traditional store waits for the customer to walk in.
A dark store waits for the order to come through the app.
The traditional store uses shelves to present products.
The quick-commerce platform uses the app to present products.
The traditional retailer measures sales per square foot.
The quick-commerce operator needs to think about sales, orders and contribution from each fulfilment location.
The customer sees a simple app screen.
Behind that screen is a fairly complex retail operation.
And this is where I think the conversation around quick commerce needs to become more mature.
Sales growth alone is not enough.
Quick Commerce Retailers need to ask harder questions.
What is the inventory turn?
What percentage of orders get fulfilled completely?
How often does the customer find the product unavailable?
What does picking cost?
What does delivery cost?
How much inventory gets damaged?
How much money is tied up in local inventory?
And perhaps the most important question:
Are customers coming back because the platform is genuinely useful, or only because someone is subsidising the order?
These questions will become increasingly important as the sector matures.
There is another change that I find particularly interesting.
The traditional argument used to be:
Online versus offline.
I don’t think that is the right argument anymore.
A physical store can also become a digital fulfilment point.
A customer can walk into the store and buy something.
Another customer, sitting two kilometres away, can order from the same inventory.
The same store can therefore serve both customers.
This changes the role of the store.
It can become a place for shopping, product discovery, experience, fulfilment and local inventory — all at the same time.
So, rather than asking whether quick commerce will replace traditional retail, I would ask a different question:
How quickly will traditional retailers learn to operate with the same level of convenience? and How efficiently QUick Commerce companies can run like a Retailer to ensure backend excellence and inventory availability at optimium costs
Because the customer has already changed.
Once someone gets used to receiving a product within minutes, asking that customer to wait two days for a basic product can feel very different.
Convenience changes expectations.
And expectations eventually change retail.
I don’t think the future of quick commerce will be decided by the fastest delivery time.
The 10-minute promise helped create the market.
But speed alone won’t build a sustainable retail business.
The winners will need to get several things right at the same time:
Right product. Right location. Right inventory. Right price. Right availability. Right cost.
That is retail.
Quick commerce has simply put that retail equation on a much smaller clock.
And perhaps that is the real story.
Quick commerce started by promising to deliver faster.
It is now trying to change the way we shop.
The next phase will tell us whether it can also change the economics of retail.
My take on the whole issue: Off late the income of Visa and Master card has dropped due to high usage of all kinds of transactions through UPI. The merchants are having multiple benefits- instant cash, no charges as merchant. Easy to maintain no need to keep enough cash and change for transaction closure. To run the UPI- UPI companies ,VIZA / Master card and banks also have to make money. Hence it is levied. When you read you will understand , how it is structured.
But one point here merchants have already inbuilt their margins assuming debit card and credit card transactions. So cash and UPI was helpful in negating the losses out of credit card and debit card purchases.
In my view , here the US companies are going to get more benefits like Phone Pe and Google pay along with Banks, both are US backed companies like Walmart and Google combined have a market share of 78% appx. Ultimately this charge will come to customers only in some form. Ideally impact is very negligible when it comes to few transactions but in large transactions in numbers may be very high.
UPI Charges: What Has Changed, Who Pays and What It Means for Retailers
For years, UPI has been associated with one simple proposition: pay digitally without paying a transaction fee.
That model is now changing for certain merchant transactions.
MDR is a fee associated with processing a digital payment. It is a cost within the payment ecosystem rather than a separate charge that a customer necessarily sees on the bill.
For example, if a customer makes a ₹10,000 UPI payment to a merchant and the applicable MDR is 0.4%, the MDR works out to:
₹10,000 × 0.4% = ₹40
The customer does not automatically pay an additional ₹40. The cost is handled within the payment ecosystem and, depending on the applicable rules and commercial arrangements, becomes a cost for the merchant/payment participants.
That distinction is important.
Scenario 1: Customer buys groceries for ₹1,500
A customer purchases groceries from a local retailer.
Bill: ₹1,500 Payment: UPI MDR: Zero under the ₹2,000 threshold.
For the customer, nothing changes.
For the retailer, there is no MDR on this transaction.
This is particularly relevant for kirana stores and small-ticket retail where most transactions are below ₹2,000.
Scenario 2: Customer buys a television for ₹45,000
Now consider a consumer-durable purchase.
Bill: ₹45,000 Payment: UPI Applicable MDR: 0.4%
The MDR would be:
₹45,000 × 0.4% = ₹180
The customer still pays ₹45,000, assuming the merchant does not separately pass on the payment cost.
But for the retailer, ₹180 becomes an additional payment-processing cost.
This is where retailers need to start looking carefully at their payment economics.
Scenario 3: A customer buys jewellery for ₹1.5 lakh
However, where the transaction falls under the applicable ₹300 cap for transactions of ₹75,000 or more, the MDR would be capped at:
₹300
This makes the effective rate much lower than 0.4% for a high-value transaction.
For retailers handling large-ticket purchases, the cap becomes commercially significant.
Scenario 4: Customer transfers ₹25,000 to a friend
This is completely different.
Person A → Person BAmount: ₹25,000 Payment: UPI
There is no merchant involved.
Therefore, this is a P2P transaction, and the MDR framework for merchant payments does not mean that the customer suddenly pays a percentage on this transfer.
₹25,000 sent = ₹25,000 received.
This distinction between P2P and P2M is one of the most important points to understand.
Scenario 5: Restaurant bill of ₹3,500
Four people have dinner and the restaurant bill is:
₹3,500
They pay the restaurant through UPI.
If the applicable merchant MDR is 0.4%:
₹3,500 × 0.4% = ₹14
The customer does not necessarily see a ₹14 “UPI charge”.
But the restaurant now has to consider payment-processing cost when calculating its margins.
For a restaurant operating at a 5–10% operating margin, even relatively small payment costs can matter when multiplied across thousands of transactions.
Scenario 6: Fuel purchase
A customer buys fuel worth:
₹4,000
The transaction falls into an essential-sector category covered by a special fixed MDR structure.
Instead of applying a percentage in the same way as a normal merchant transaction, the applicable charge is specified at ₹5 per transaction.
So:
Fuel purchase = ₹4,000Applicable MDR = ₹5
This creates a very different economics from a normal 0.4% merchant transaction.
Scenario 7: Telecom payment
Suppose a customer makes a telecom-related payment of:
₹10,000
Telecom is among the specified essential sectors for which the framework provides a special ₹5 per transaction structure.
So the merchant’s payment cost is not simply:
₹10,000 × 0.4% = ₹40
Instead, the specified category-based charge applies.
This illustrates why retailers and businesses should not assume that one MDR rate applies to every UPI transaction.
Scenario 8: Mutual fund or securities transaction
Financial-market transactions have another structure.
For specified capital-market transactions, including mutual funds and securities-related transactions, the rate is 0.02%, subject to the applicable ₹300 cap.
For example:
Transaction = ₹5,00,000
At 0.02%:
₹5,00,000 × 0.02% = ₹100
So the applicable charge would be ₹100, assuming the transaction qualifies for this category.
Again, the category matters.
What does this mean for retailers?
This is where the issue becomes commercially interesting.
Retailers have traditionally looked at payment methods mainly from the customer’s convenience perspective.
That will increasingly need to change.
A retailer should now look at:
Sales value → Payment mix → MDR → Payment cost → Gross margin → Net contribution
Imagine a retailer doing:
₹10 crore annual sales through UPI
If the average effective payment cost were 0.4%, the theoretical annual payment cost would be:
₹10 crore × 0.4% = ₹4 lakh
That is not necessarily the actual cost because the effective MDR depends on transaction size, category, caps, merchant classification and applicable arrangements.
But the example shows the scale of the issue.
Who could gain?
The change creates a clearer revenue mechanism for participants in the payment ecosystem.
Banks, payment service providers and other participants can potentially earn from qualifying merchant transactions.
The broader objective stated by the Government is to make the UPI ecosystem financially sustainable as transaction volumes continue to grow.
That matters because UPI is no longer a small payment system. It has become a major part of India’s retail-payment infrastructure.
Who could feel the pressure?
The pressure is more likely to be felt by businesses with:
High-value UPI transactions
Large transaction volumes
Low gross margins
Heavy dependence on UPI
Limited ability to absorb payment-processing costs
A ₹10 or ₹20 payment-processing cost may look insignificant on one transaction.
Multiply it by 10 lakh transactions and the number becomes commercially meaningful.
The bigger retail question
The interesting question for retailers is not:
“Will customers stop using UPI?”
The more relevant question is:
“What will UPI cost my business after the new MDR structure?”
Retailers should start tracking payment costs just as they track:
Card charges
Marketplace commissions
Delivery costs
Discounts
Shrinkage
Banking charges
Logistics costs
Payment cost is becoming another operating-cost variable.
For a retailer, the right dashboard could therefore include:
UPI sales % | Average UPI transaction value | Number of UPI transactions | MDR paid | MDR as % of sales | Net margin impact
This will tell management whether the cost is material or negligible.
One simple way to remember the change
Think of UPI in three buckets:
P2P: Person → Person Generally free.
Small-ticket P2M: Customer → Merchant Up to ₹2,000 → Zero MDR under the framework.
Specified higher-value P2M: Customer → Merchant Above the threshold → MDR may apply depending on transaction category.
So the headline “UPI will now be charged” is too simplistic.
The real story is:
UPI remains free for ordinary person-to-person transfers, while specified merchant transactions can carry a regulated payment-processing cost.
For retailers, banks, fintech companies and consumers, the real impact will depend on transaction value, category, payment mix and how businesses ultimately manage the cost.
Note: The examples above are illustrations based on the notified rates and categories. Actual merchant charges can depend on the merchant’s classification, transaction type and applicable commercial arrangements.
India’s Skincare Market: Who Is Winning, Who Is Struggling and What Comes Next?
India’s skincare market is growing. But the bigger story is not growth. It is the redistribution of growth.
Consumers are moving away from generic skincare and demanding ingredients, efficacy, transparency and convenience. At the same time, digital-first brands are moving offline, legacy FMCG brands are upgrading their portfolios, and global companies are acquiring successful Indian brands.
So, who actually dominates the market today?
And more importantly — which brands are building the strongest position for 2026 and beyond?
This article looks at the current state of India’s skincare industry, the leaders, the challengers, their key problems, what is driving growth and where the market is heading.
What you should learn from this article
Who currently dominates Indian skincare?
Which brands are gaining momentum?
What is driving consumer demand?
Why are some D2C brands struggling despite high sales?
What will shape the skincare market from 2026 onwards?
1. First, understand the market
Estimates put India’s skincare market at roughly $2.7–3.2 billion in 2025, depending on how skincare is defined. Facial care represents approximately 85% of the category.
The market is growing at roughly 7–10% annually, but growth is becoming increasingly fragmented.
The structural picture
HUL remains the clear company-level leader with around 28% retail value share in 2025.
But there is an important warning:
HUL’s share has fallen from around 37% in 2020 to 28% in 2025.
That tells us something important.
The leader is still leading — but the market is becoming much more competitive.
Market leadership snapshot
HUL ████████████████████████████ 28%
Top 5 players combined ██████████████████████████████████████████████████ ~50%
Others █████████████████████████████████████████████████
Note: Brand-level market shares are not consistently publicly disclosed. The 28% figure refers to HUL’s company-level skincare value share, not Ponds alone.
The competitive battlefield now includes HUL, Beiersdorf, L’Oréal, P&G, Honasa and fast-growing independent brands such as Plum, alongside strong Ayurvedic and prestige players.
2. Who is winning?
The market can broadly be divided into four groups:
Legacy FMCG: Ponds, Lakmé, Vaseline, Garnier Global premium-mass: Nivea, Olay, L’Oréal Paris Digital-first challengers: Mamaearth, The Derma Co, Minimalist, Plum Ayurvedic/premium heritage: Himalaya, Forest Essentials, Biotique, Kama Ayurveda
The interesting part?
The fastest growth is increasingly coming from brands that combine science + digital discovery + omnichannel distribution.
3. Brand-by-brand: Current State
Ponds — Strong leader, but facing disruption
Ponds remains one of HUL’s biggest skincare engines and benefits from enormous distribution across general trade, modern trade, e-commerce and quick commerce.
HUL has been repositioning Ponds away from its traditional tone/fairness associations toward science-led premium skincare.
What Ponds needs to do: Convert its enormous reach into stronger relevance among Gen Z and premium skincare consumers.
Lakmé — Powerful ecosystem, but skincare must keep evolving
Lakmé benefits from its strong brand recognition, modern trade presence, salons, e-commerce and mass distribution.
Its expansion into products such as retinol shows the shift toward science-backed skincare.
Current state: Strong legacy brand with a powerful beauty ecosystem.
Key challenge: Maintain relevance as consumers increasingly evaluate products by ingredients and efficacy rather than brand heritage alone.
Nivea — Mature growth, excellent profitability
Nivea generated approximately ₹1,540 crore revenue in India in FY25, while net profit jumped sharply.
That is an important signal.
Revenue was almost flat, but profitability improved dramatically.
Current state: Mature but financially strong.
Key challenge: Reignite volume/value growth in a slowing mass market.
Its Sanand manufacturing facility also shows how localization can reduce import dependence and improve supply-chain resilience.
Olay — Strong premium positioning
Olay remains an important premium-mass skincare player, particularly in anti-ageing and brightening.
Its challenge is not brand awareness. It is winning the modern Indian skincare conversation against highly visible serum and active-based challengers.
Current state: Strong premium positioning.
Key challenge: Deliver enough innovation and local relevance to justify its premium.
Garnier & L’Oréal Paris — Winning through innovation and accessibility
L’Oréal is benefiting from strong skincare momentum, particularly through Vitamin C, UV protection, glycolic acid and brightening products.
Garnier has another advantage: it can take ingredient-led skincare into mass markets through affordable formats.
Current state: One of the strongest combinations of science, marketing and distribution.
Key challenge: Maintain innovation while protecting affordability.
Mamaearth — From growth-at-any-cost to profitable growth
Mamaearth is perhaps the most important D2C case study.
Honasa’s FY25 revenue reached approximately ₹2,067 crore, but PAT declined 34% to ₹73 crore while advertising remained extremely high.
Then came FY26.
Revenue increased approximately 16% to ₹2,392 crore, while PAT jumped 175% to ₹200 crore.
This is a major lesson:
The D2C model is not dead. Undisciplined D2C economics are.
Current state: Recovery and restructuring.
Key challenge: Sustain growth without excessive advertising and channel costs.
The Derma Co — One of the strongest challengers
The Derma Co represents the new Indian skincare consumer better than almost any other brand.
Its proposition is simple: actives, efficacy and dermatological credibility.
It crossed approximately ₹750 crore ARR and was recognized as India’s No. 1 sunscreen brand by Euromonitor for CY24.
Current state: High-growth challenger.
Key challenge: Scale offline without losing its science-led identity and profitability.
Minimalist — A strategic success story
Minimalist has become one of India’s strongest examples of ingredient-led skincare.
Founded in 2020, it reached more than ₹500 crore ARR and remained profitable before HUL acquired a 90.5% stake for approximately ₹2,706 crore.
The acquisition says a lot about the future.
Global-scale FMCG distribution + D2C innovation is becoming a powerful combination.
Current state: High-quality challenger backed by HUL.
Key challenge: Scale dramatically without diluting consumer trust and brand authenticity.
Plum — Quietly building a healthier model
Plum grew approximately 28% to ₹515 crore in FY26 and had already turned profitable in FY25.
Its model is increasingly omnichannel, with offline contributing around 30% of revenue.
Current state: One of the more balanced D2C success stories.
Key challenge: Scale while maintaining unit economics.
Himalaya — Heritage remains a competitive advantage
Himalaya continues to benefit from strong pharmacy and general-trade distribution, Ayurvedic credibility and international presence.
Unlike many newer brands, its heritage itself is an asset.
Current state: Strong mass and international presence.
Key challenge: Make traditional herbal positioning relevant to a younger consumer increasingly asking for clinical evidence and active ingredients.
4. What is actually driving the market?
Five forces are reshaping skincare:
1. Ingredient awareness Consumers now actively search for niacinamide, Vitamin C, retinol, salicylic acid and SPF.
2. Premiumization Consumers are moving from basic creams toward serums, sunscreens, targeted treatments and multi-step routines.
3. Social discovery Influencers, dermatologists and social media increasingly shape product discovery.
4. Quick commerce Beauty sales through quick commerce are growing dramatically. Face wash, sunscreen and other repeat-use products fit the model particularly well.
5. Omnichannel expansion The winning model is no longer pure D2C.
It is:
D2C + marketplaces + modern trade + general trade + quick commerce.
5. The biggest challenges ahead
The industry has six major pressure points:
CAC inflation: Advertising-led growth is becoming expensive.
Margin pressure: Quick-commerce commissions and visibility costs can erode profitability.
Channel conflict: Different prices across websites, marketplaces and stores can damage brand economics.
Generic natural positioning: “Natural” alone is no longer enough.
Import dependency: Specialty actives, UV filters and other ingredients remain vulnerable to global supply chains.
Trust: Counterfeits, grey-market inventory and poor storage can damage consumer confidence.
The next phase will therefore reward operational discipline as much as marketing creativity.
6. What changes from 2026 onwards?
I see six major trends.
1. Science will beat vague claims
“Natural” will not disappear.
But natural + evidence will outperform natural alone.
2. Sunscreen becomes a major battlefield
Daily SPF adoption is still expanding, creating a large opportunity for brands that can combine efficacy, texture, affordability and education.
3. Quick commerce becomes a strategic channel
Brands will stop treating Blinkit, Zepto and Instamart only as distribution channels.
They will increasingly treat them as media + retail + convenience platforms.
4. D2C brands will consolidate
The market will favour brands with strong repeat purchase, healthy contribution margins and differentiated products.
Revenue alone will no longer impress investors.
Profitable growth will.
5. M&A will accelerate
The HUL–Minimalist transaction and global interest in premium Indian beauty demonstrate the strategic value of Indian skincare brands.
Expect more consolidation.
6. India can become a skincare manufacturing and export hub
Ayurvedic heritage, local manufacturing and cost-efficient formulation can create an export opportunity — particularly in GCC, Africa and other emerging markets.
The final takeaway
India’s skincare market is not simply growing. It is changing shape.
HUL still dominates structurally.
Nivea remains financially strong.
L’Oréal is winning through innovation.
The Derma Co is building serious momentum.
Minimalist has already attracted strategic acquisition.
Mamaearth is demonstrating that disciplined D2C economics can work.
Plum is proving profitability can coexist with growth.
Himalaya continues to leverage heritage and distribution.
The real winner of 2026 and beyond, however, will not necessarily be the brand with the biggest advertising budget.
That is where India’s next skincare battle will be fought.
This study is an assessment of a writer. Please do your own research and decide way forward. Don’t depend alone what we are writing and expressing our views.
Before you blame your people for poor performance, ask yourself one question: Have you given them a process that allows them to succeed? Most business performance problems are not people problems. They are process problems. You may recruit highly skilled, capable people. But without clear processes, even the best talent cannot perform at its full potential. People need clarity: what to do, when to act, who owns the decision, and which framework should guide that decision. When these are unclear, decisions slow down. Employees naturally fall back on personal judgment, past experiences, and practices learned in previous organizations. The result is inconsistent execution. And inconsistency eventually reaches the customer. Different employees create different experiences, send different signals, and shape different perceptions of the same brand. You may invest heavily in customer acquisition, Customer Lifetime Value (CLV), retention, or Net Promoter Score (NPS), yet customers may still leave through gaps created by poorly defined processes. While one part of the business brings customers in, another may be pushing them out. This is why scalable organizations do not grow simply by adding more people. They grow by creating clear operating processes, defined decision-making frameworks, accountability, and consistency across the customer journey. People perform better when expectations are clear and decisions follow a structured path. A chaotic environment creates delays, confusion, inconsistent outcomes, and unnecessary pressure. Before questioning whether your people are capable, evaluate the system in which they are expected to perform. The right people create results. The right processes make those results repeatable, scalable, and sustainable. Fix the process before blaming the people.
Customer acquisition costs are rising. Competition is increasing. Online marketplaces are crowded. Consumers have endless choices. And customer loyalty is becoming harder to earn.
So the real question for a D2C brand today is not:
“How do I sell more online?”
It is:
“How does my customer actually make a purchase decision, and where should I be available when that decision happens?”
That requires looking beyond the D2C label.
The D2C customer is not one customer
One of the biggest mistakes brands make is treating their online customer as a single segment.
India has very different consumer groups—from affluent consumers to upper-middle-class, middle-income and value-conscious households.
But income alone does not determine behaviour.
Category determines behaviour.
A consumer may be extremely price-sensitive when buying groceries but may pay a premium for skincare.
The same person may compare five furniture brands before buying a sofa but purchase a familiar FMCG product almost automatically.
That is why customer behaviour has to be understood category by category, occasion by occasion and need by need.
Consider a few examples.
Fruits & vegetables
Freshness, availability, convenience and price can dominate the decision.
Furniture
Durability, finish, design, comfort, quality, price and confidence in the product become important.
Beauty & cosmetics
Product efficacy, ingredients, packaging, reviews, colour, price, trust and brand image can all influence the decision.
There is therefore no universal D2C customer.
There are category-specific customers with different reasons to buy.
The customer knows more—but not necessarily enough
The digital consumer today has extraordinary access to information.
With a few clicks, customers can compare:
Prices
Reviews
Features
Competitors
Offers
Influencer opinions
Product demonstrations
Customer experiences
But information availability does not automatically create understanding.
The customer may see ten products but still struggle to decide which one is right.
That is where trust, reviews, brand credibility, product experience and availability become critical.
And this is where physical retail still has an important role.
A customer can touch a product.
See its finish.
Try it.
Speak to someone.
Understand the difference between two products.
And sometimes, simply seeing the brand in a physical environment creates confidence.
The biggest D2C problem today: Customer acquisition
Digital platforms have made customer access easier.
They have also made competition much more intense.
A D2C brand is competing for attention on the same platforms as hundreds or thousands of other brands.
Meta, Instagram, YouTube, Google and marketplaces can generate enormous reach.
But reach comes at a price.
As more brands compete for the same audience:
Customer acquisition becomes more expensive.
And if the customer makes one purchase and never returns, the economics become even more difficult.
India’s retail expansion story is entering its next phase.
The question is no longer:
“How many stores can we open?”
The question is:
“How intelligently can we expand while protecting productivity, profitability and customer relevance?”
Between 2024 and 2026, India’s leading retailers significantly increased their physical footprints while quick commerce simultaneously created a completely different retail proposition: availability at the doorstep within minutes.
Now the real battle is moving towards Tier 2, Tier 3 and emerging consumption centres.
And I believe the next two years will be less about the race for store count and more about the race for better retail economics.
What happened between 2024 and 2026?
Three examples illustrate the direction.
Reliance Retail
Reliance Retail increased its store network from 19,340 stores in FY2025 to 20,160 stores in FY2026, while gross revenue increased from ₹3.31 lakh crore to approximately ₹3.71 lakh crore. Its Smart Bazaar network crossed 1,000 stores, with a significant part of that network serving Tier 2 and smaller markets.
More importantly, Reliance is combining physical stores, digital commerce and hyperlocal commerce rather than treating them as separate businesses.
Trent’s Zudio
Zudio reached 963 stores across 313 cities by FY2026, compared with 765 stores in FY2025 and 545 stores in FY2024. The company’s own reporting highlights accessibility, sharp price points, in-house merchandise and rapid expansion as key elements of the model.
Avenue Supermarts
Avenue Supermarts, the operator of the DMart chain, moved from 365 stores in FY2024 to 415 in FY2025 and 500 in FY2026.
The FY2026 expansion is particularly interesting: 85 stores were added, including 45 stores in Tier 2+ markets, while the company entered 39 new cities, 34 of them Tier 2+. It also entered Uttar Pradesh, Haryana, Odisha, Uttarakhand and Goa.
The message from these examples is clear:
India’s organised retail opportunity is moving deeper into the country. This we all know.
But there is another force changing the game.
The Quick-Commerce Challenge
Quick commerce has changed the consumer’s definition of convenience.
The customer no longer thinks:
“I need to visit a store.”
The customer increasingly thinks:
“I need it now.”
Blinkit, Swiggy Instamart and Zepto have built large dark-store networks, while Amazon and Flipkart are now increasing their investments in rapid delivery.
In June 2026, Reuters reported that Amazon planned to expand its rapid-delivery service to 300 Indian cities, while Flipkart was targeting approximately 1,500 quick-commerce locations.
This creates an interesting future scenario.
Traditional retailers will increasingly have stores.
Quick-commerce companies will increasingly have dark stores.
E-commerce companies will increasingly combine warehouses, marketplaces and rapid fulfilment.
The consumer will simply choose whichever channel delivers the best combination of:
The physical store therefore needs to become more than a transaction point.
It needs to become a customer-experience and fulfilment asset.
—
4. Dark stores will face an operational-quality test
There is another issue that I believe deserves far greater attention.
A dark store is still a retail operation.
Technology can manage orders.
Technology can generate inventory alerts.
Technology can optimise delivery routes.
But people still have to manage:
Expiry → FEFO → hygiene → temperature → receiving → storage → pest control → picking → product handling.
Recent food-safety enforcement in Maharashtra illustrates the risk. Authorities inspected quick-commerce establishments and suspended permits at 12 warehouses after identifying issues including cockroach infestations, rodent droppings and other sanitation problems.
This should not be viewed only as a quick-commerce problem.
5. E-commerce and direct-to-consumer brands will push deeper into smaller cities
This is another major structural change.
Smaller-city consumers are not waiting for physical stores.
They are discovering brands online.
According to Unicommerce data reported by the India Brand Equity Foundation, Tier 2 and Tier 3 cities were expected to contribute around 66% of new direct-to-consumer orders in FY2026.
This changes the expansion equation.
A brand can now enter a city digitally before opening a physical store.
That creates an important consulting opportunity:
Digital-first → Data validation → Pilot store → Cluster expansion
Instead of:
Store first → Hope for demand → Correct later
This can significantly reduce expansion risk.
—
What should retailers do now?
Action 1: Build a micro-market expansion model
Don’t approve a new store only because the city looks attractive.
Create a scoring model covering:
Demand + competition + rent + catchment + logistics + digital demand + store economics.
—
Action 2: Establish a 12–24 month store maturity dashboard
Every new store should be tracked against:
Sales per sq. ft./ GMROF
Gross margin.
GMROI.
Inventory turns.
Inventory cycle
Conversion.
Average basket value.
Shrinkage.
Manpower productivity.
Contribution margin.
This allows management to distinguish between a temporary maturity issue and a fundamentally weak location.
—
Action 3: Design the store and dark store together
The future will increasingly require omnichannel operating models.
A physical store may serve:
Walk-in customers + online orders + click-and-collect + local fulfilment.
Right Market × Right Format × Right Assortment × Right Inventory × Right Execution = Profitable Growth
—
Final Recap
The last two years proved that physical retail is not disappearing.
It is changing.
Reliance Retail has crossed 20,000 stores.
Zudio has reached nearly 1,000 stores.
Avenue Supermarts has reached 500 stores and is pushing deeper into Tier 2+ markets.
At the same time, quick commerce and e-commerce are moving rapidly into smaller markets.
So the next two years will not be about choosing between stores and digital.
They will be about building the right combination.
For retailers, my recommendation is straightforward:
Analyse before expanding.
Pilot before multiplying.
Cluster before spreading.
Measure productivity before celebrating footprint.
Audit operations before scaling.
And most importantly:
Build the organisation’s capability at the same speed as you build its footprint.
Because in the next phase of Indian retail, opening the store may be easy. Running 500 or 5,000 stores consistently will be the real competitive advantage.
Eight years ago, a customer cost you ₹100. Today the same customer costs ₹322 — and converts no better. Globally, CAC has climbed roughly 222% over eight years, and 60% in the last five alone. Shopify’s 2026 data across 4.8 million merchants puts average CAC at $318, up 16% in a single year. In India, Meta-sourced CAC for D2C brands jumped from about ₹380 to ₹502 — 32% in twelve months.
Here is the uncomfortable part: nobody is buying more customers. They are simply paying more for the same ones.
Why the meter keeps running
1. The auction got crowded — and richer. Ad inventory is finite; bidders are not. Google CPCs rose ~12.9% and Meta CPMs ~20% in 2025. Globally, deep-pocketed marketplaces bid on the same keywords as a 30-crore D2C brand. In India, every funded brand in skincare, coffee, supplements and fashion is buying the same 200 keywords and the same three lookalike audiences. Auction inflation is not a marketing problem — it is a supply-and-demand problem.
2. Signal loss made targeting expensive. Post-ATT, only about a quarter of iOS users allow tracking. Cookies are dying. Platforms now need far more spend to learn who your buyer is, and you pay for that learning phase every single campaign.
3. Search stopped sending traffic. Zero-click searches are now ~65% of all queries, and ~93% inside Google’s AI Mode. The free top-of-funnel that subsidised paid acquisition for a decade has quietly shut. Brands that were cited inside AI answers, however, saw 35% more organic clicks and 91% more paid clicks — visibility moved, it did not vanish.
4. Quick commerce became a paid channel. Uniquely acute in India. Visibility on Blinkit, Zepto or Instamart can consume 10–15% of GMV in platform advertising and fees. Brands that entered q-commerce to escape Meta’s CAC discovered they had simply changed landlords.
5. Retention neglect. When repeat rate is weak, every month starts at zero. High CAC is often a symptom, not the disease.
What actually works
Fix LTV before you fix CAC. CAC is only expensive relative to what a customer is worth. Doubling second-order rate does more for unit economics than a 10% CPM saving ever will. Measure CAC payback in months, not ROAS in a day.
Rebuild the channel mix. Brands that moved to roughly 35–40% paid, 30% email/WhatsApp, 20% organic and community, 10% affiliate held CAC flat while LTV improved 12–18%. In India, target a blended CAC 30–40% below paid CAC. If your blended and paid CAC are the same number, you have no owned channel.
Own the WhatsApp layer. Automated abandoned-cart recovery on WhatsApp recovers 30–40% of carts at ₹0.50–₹1.50 per message. Compare that to ₹502 to re-acquire the same person. This is the single highest-ROI intervention available to an Indian D2C brand today.
Build for citation, not clicks. Structure content so AI engines quote you: clear entity definitions, comparison tables, FAQs, original data. Being the source inside an AI answer is the new page-one ranking.
Use referral and community deliberately. Referred customers show 16% higher LTV and 37% better retention. Communities lift repeat purchase 40–60%. Both convert customers into an unpaid acquisition channel.
Apply Six Sigma to the funnel. Most CAC problems are variation problems. Run a Pareto on CAC by SKU, geography and creative — typically 20% of campaigns burn 60% of waste. Kill them. Then attack conversion rate: a move from 1.4% to 2.1% cuts CAC by a third without touching ad spend.
Negotiate q-commerce like a trade term, not a media buy. Tie visibility spend to guaranteed share-of-shelf and data access. Treat it as vendor negotiation, because it is.
Case study: a personal care brand in NCR
(Composite of client work, figures disguised.)
A ₹42-crore ARR personal care D2C brand ran 78% of revenue through Meta and Google. CAC had gone from ₹410 to ₹640 in eighteen months. Contribution margin was negative on first order; the business survived on Series A cash.
Diagnosis, not campaign tinkering:
Pareto on 340 campaigns — 22% of spend produced 71% of profitable orders. The rest was switched off in week two.
Repeat rate was 11% against a category benchmark of 26%. The leak was retention, not acquisition.
A WhatsApp lifecycle engine was built: cart recovery, day-21 replenishment nudges, restock alerts.
Assortment cut from 61 SKUs to 28, concentrating spend behind three hero products with the best AOV and repeat behaviour.
Referral programme launched to existing buyers only.
Nine months later: paid CAC ₹598 (barely moved — the auction was never going to be kind), but blended CAC ₹386, down 40%. Repeat rate 24%. LTV:CAC moved from 1.4:1 to 3.1:1. Contribution margin turned positive in month five.
They did not win the auction. They stopped needing to.
The lesson: in 2026, you cannot out-bid rising CAC. You can only out-retain it.
Sources: Shopify Global Commerce Report 2026 (via Focus Digital), Indian D2C benchmark data 2026, zero-click search statistics 2026, q-commerce fee analysis 2026.
India’s quick-commerce, D2C and e-commerce ecosystem entered July 2026 in the middle of three simultaneous storylines: a scramble by Amazon and Walmart-owned Flipkart to muscle into 10-15 minute delivery, a wave of public-market listings led by Zepto’s imminent IPO, and a regulatory reckoning over dark-store food safety. Globally, the European Union closed its duty-free loophole on low-value parcels, directly hitting Shein, Temu and AliExpress. This update compiles verified developments reported and dated within July 2026, with the underlying data points and figures needed for planning and client conversations.
A report released by Equirus on July 7, 2026 confirmed that quick commerce will continue to outpace overall digital commerce growth through 2026, expanding at more than double the rate of the broader online retail market as operators keep pouring capital into dark-store networks and rapid-delivery infrastructure.
India digital commerce market size (2026 est.): ₹8 lakh crore
Combined dark stores — Blinkit + Instamart + Zepto (May 2026): 5,026 locations, up from 3,405 a year earlier
Top seasonal growth categories: Ice cream, beverages, face-care products
Emerging repeat-purchase categories: Personal care, beauty, electronics accessories, medicines, gifts, pet supplies
Flagged risk factor: 46% rainfall deficit and potential food-inflation pressure on consumer demand
Separately, Bain & Company’s outlook — cited widely in July coverage — projects India’s quick-commerce market will grow to $65-70 billion by 2030, contributing 45-50% of incremental e-retail gross merchandise value over the next five years, after roughly doubling annually over the past two years.
• Equirus report via ANI News, July 7, 2026 — aninews.in
• NewKerala, Quick Commerce Growth 2026 summary
• Business Standard, “Why quick commerce has become a battle no retailer can afford to lose,” July 6, 2026
2. Zepto’s IPO Moves Closer as the Top-Three Battle Intensifies
Zepto is racing toward what would be the largest quick-commerce listing in Indian history. Having received SEBI’s formal observation-letter approval on May 8, 2026, the company filed an updated Draft Red Herring Prospectus (U-DRHP) on June 8, 2026, and multiple financial trackers reported through early July that Zepto is targeting a listing within the July-September 2026 quarter, though an exact date has not been announced.
Fresh issue size: ₹8,010 crore
Offer for sale (OFS): 11.35 crore equity shares from existing shareholders (Nexus Ventures, Contrary, Razor Ventures, Kaiser Permanente Group Trust and others)
Total estimated issue size: ₹11,000-12,000 crore (~$1 billion)
FY26 revenue from operations: ₹22,624 crore
Average daily orders (FY26): 17.5 lakh
Store count (as of March 31, 2026): 1,139 dark stores; 48 million users
Lead bankers: Goldman Sachs, Morgan Stanley, JM Financial, Axis Capital, HSBC, IIFL Securities, Motilal Oswal
The listing push comes as the competitive order in India’s quick-commerce top three continues to shift. Blinkit still leads on scale, processing 91.6 crore orders in FY26 (roughly 25 lakh orders a day) from a dark-store network of 2,243 stores as of March 31, 2026 — nearly double its closest rivals. Zepto overtook Swiggy Instamart on order volumes in the January-March FY26 quarter. Instamart itself posted FY26 revenue of ₹3,859 crore (up 81.2% YoY) but carried an adjusted EBITDA loss of ₹3,511 crore, trailing both peers on profitability. Together, Blinkit, Zepto and Instamart control roughly 85% of the quick-commerce market.
• Kotak Neo, “Zepto Files Updated IPO Papers,” July 2026
• Upstox / Storyboard18, Zepto vs Blinkit vs Instamart operating-metrics comparison, 2026
3. Amazon and Flipkart Go All-In on the “Minutes” War
The most consequential shift in July 2026 is the entry of India’s two e-commerce giants into quick commerce at full scale. CNBC and Business Standard reported on July 2, 2026 that Amazon and Walmart-backed Flipkart are both accelerating delivery-in-minutes operations to defend their core online-retail base against Blinkit, Zepto and Instamart.
Amazon’s new India investment: An additional $13 billion in AI and cloud infrastructure, taking total committed investment to $48 billion between 2026 and 2030
Amazon’s quick-commerce ambition: To become the “largest delivery-in-minutes network” in India, with plans to expand to 300 cities
Flipkart Minutes network: 1,000 micro-fulfillment centers built in under two years; targeting 1,500 centers by end-2026
The escalation is playing out in real time through sale-season competition. Flipkart’s “Goat Sale” and Amazon’s own July sale event both launched on July 4, 2026, each offering 24 hours of early access to loyalty members (Flipkart Plus/Black) ahead of the general public — a direct contest for wallet share as quick-commerce blurs the line with traditional e-commerce shopping events.
• CNBC, “Amazon, Walmart-owned Flipkart get ready to shake up India’s delivery-in-minutes sector,” July 2, 2026
• Business Standard, “Amazon Now, Flipkart Minutes go full throttle in India’s qcom space,” July 2, 2026
• TechCrunch, “Walmart-backed Flipkart expands quick-commerce push as Amazon ramps up in India,” June 23, 2026
• The Tech Outlook / Desidime, Flipkart Goat Sale coverage, July 4, 2026
4. Regulators Turn Up the Heat on Dark-Store Food Safety
July brought the sharpest regulatory action yet on quick commerce’s dark-store model. On July 11, 2026, the Food Safety and Standards Authority of India (FSSAI) issued nine separate notices to Swiggy Instamart following consumer complaints of expired, spoiled and contaminated food being delivered through the platform. Days earlier, on July 4, 2026, FSSAI’s Northern Regional Office raided a food business operator in South-West Delhi, uncovering fraudulent re-labelling and unauthorized storage; more than 50,000 compromised food packs were seized and an FIR was registered.
FSSAI notices to Swiggy Instamart: 9 notices issued July 11, 2026, citing FSS Act, 2006 violations
Delhi enforcement raid: July 4, 2026 — over 50,000 food packs seized for fraudulent re-labelling and improper storage
Regulatory direction: Government signalling a move toward risk-based dark-store inspection, with facilities that have poor compliance histories to be inspected more frequently
Currently, dark stores are regulated under the same Food Safety and Standards (Licensing and Registration of Food Businesses) Regulations, 2011 that apply to conventional food businesses — there is no inspection checklist tailored to facilities processing thousands of rapid-fire orders daily. That gap is now central to the policy debate around India’s roughly 5,000-plus dark-store network.
• Barristery, “FSSAI Issues Nine Notices to Swiggy Instamart,” July 2026
• The News Mill / Lokmat Times, FSSAI Delhi raid coverage, July 4-5, 2026
• Business Standard, “Who inspects India’s dark stores as quick commerce expands rapidly?,” June 25, 2026
5. Retail Real Estate: Leasing Momentum Holds Through Q2
On the brick-and-mortar side, Cushman & Wakefield’s Q2 2026 India retail report (published July 2026) showed continued strength in mall and high-street leasing despite a thin supply pipeline.
Q2 2026 gross retail leasing (top 8 cities): 2.4 million sq ft — up 23.2% QoQ and 17.6% YoY
H1 2026 total leasing: 4.35 million sq ft, up 3.1% over H1 2025
Mall share of leasing: 51.3% (1.23 msf), up 33.4% QoQ and 21.9% YoY
New Grade-A mall supply: Nil for a second consecutive quarter
Supply pipeline (2026-2028): ~12.7 msf, of which ~1.6 msf due in H2 2026 (Delhi NCR to account for over half)
• Cushman & Wakefield, “India’s Retail Sector Growth in Q2 2026,” July 2026
• Business Standard, “India’s Q2 2026 retail leasing grows 17.6% YoY,” July 1, 2026
6. Walmart Fires the First Shot in a Summer Price War
In the US, Walmart and Sam’s Club announced on July 6, 2026 that they are cutting prices across thousands of products — groceries, household essentials, toys and clothing — in a move analysts read as the opening salvo of a broader grocery price war. A Walmart representative indicated the rollback would run roughly 90 days, and industry watchers expect Kroger, Albertsons, Costco and Dollar Tree to respond with their own price investments through the second half of 2026. The move also lands as both Walmart and Target operate under new chief executives this year — John Furner at Walmart and Michael Fiddelke at Target — as the two chains jockey for position against Amazon.
• TheStreet / MarketWatch, Walmart price rollback coverage, July 2026
• Review-Journal, “Walmart says it has cut prices on thousands of products,” July 2026
• WWD, “Walmart & Target Name New CEOs: Retail Giants’ 2026 Outlook”
7. EU Closes the Duty-Free Loophole on Shein, Temu and AliExpress
The single biggest global e-commerce policy shift of the month: a flat €3 customs duty took effect across the European Union on July 1, 2026, ending years of tax-free entry for low-value parcels. The EU scrapped its long-standing exemption for parcels under €150 and replaced it with the flat per-item duty — a direct hit to the ultra-low-cost, high-volume model that Shein, Temu and AliExpress depend on for the European market.
New duty: Flat €3 per parcel, effective July 1, 2026
Previous exemption removed: Duty-free treatment for parcels valued under €150
Early market impact: Temu’s ad visibility on Google Shopping has roughly halved; Shein is reported to be nearing a full exit from markets where border fees now apply
For Indian D2C and export-oriented sellers watching the ultra-low-cost Chinese platforms, this is a live case study in how fast a favorable cross-border tax regime can close — and a reminder that landed-cost economics, not just price, will increasingly decide category winners in Europe.
• Euronews, “EU slaps €3 duty fee on SHEIN, Temu and AliExpress imports,” July 1, 2026
• Smarter Ecommerce, “Europe’s New Tariffs on Temu & Shein: What Google Shopping Data Reveals,” July 2026
8. D2C Funding: Discipline Over Growth-at-All-Costs
Coverage through July 2026 confirms the D2C funding environment has continued its multi-year shift away from growth-at-any-cost. Investors are now underwriting to a 3:1 LTV:CAC ratio, 40%+ gross margins and demonstrated cohort retention before committing capital, with 6-12 months of repeat-purchase data increasingly treated as a baseline requirement rather than a nice-to-have. Large-ticket consolidation continues to be led by strategic acquirers rather than venture rounds, as established CPG groups look to acquire data-rich, already-profitable D2C brands rather than fund unproven ones.
Bottom Line for Retail, D2C and Quick-Commerce Operators
Three threads matter most heading into August 2026. First, the delivery-speed war has stopped being a quick-commerce-only fight — Amazon and Flipkart’s move into minutes-delivery will pressure Blinkit, Zepto and Instamart on cost per order well before Zepto’s IPO prices. Second, dark-store compliance is no longer a background risk; with FSSAI actively issuing notices and conducting raids in July, operators without audit-ready SOPs and traceability are exposed. Third, the EU’s parcel-duty change is a preview of how quickly a favorable trade regime can be unwound — a useful data point for any D2C brand building an export or cross-border strategy on thin-margin, high-volume assumptions.
— End of July 2026 update —
Gaurang Govind
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