Private labels have penetrated high-margin categories across quick commerce platforms, though the track record has not been as successful in other product segments.
Staples, packaged foods, and home cleaning products, for instance, are seeing greater traction, according to Rishav Jain, managing director and Lead – retail practice at Alvarez & Marsal, who says they contribute anywhere between 8% and 40% to category sales.
While channel margins on grocery and FMCG stand at 14-15%, it is nearly twice that for fresh categories. “High purchase frequency and margins of 25-30% make fresh produce an attractive category,” Satish Meena, advisor at Datum Intelligence, told FE. Fruits and vegetables, accounting for 8-10% of quick commerce sales, present a particularly bright opportunity. But players are finding it harder to scale up in categories like eggs and poultry, showing that the success has been category-specific. Private labels’ contribution has hit 6-8% of q-commerce sales—up from 1-2% two years ago— but the distribution remains highly uneven across product segments.
BigBasket has set the pace. Its private labels—BB Royal, BB Popular, BB Home, and Fresho—account for 35% of total revenue. Zepto is also scaling its private-label portfolio in staples. Last year, it launched Daily Good, offering, oils, dals, millets and dried fruits.
Jain believes the commoditised nature of these products and the significantly lower supply chain complexities compared to perishables, makes them ideal candidates for white-labeling. “These products deliver 7-10% higher margins than branded alternatives and boost gross margin per order and profitability,” he told FE. Platforms are focusing on categories where supply chain barriers are lowest. For instance, Swiggy Instamart has ramped up its Supreme Harvest label, which spans pulses, oils, spices, flour, and dry fruits, achieving 18% penetration, as per data sourced from e-commerce and quick-commerce analytics platform 1digitalstack.ai. Supreme Harvest accounted for 20% of tur dal, 17.9% of moong dal, 15.1% of urad dal, 26.6% of raisins, and 18.1% of almonds sold on the platform by the end of March, reflecting strong consumer uptake in high-frequency, as well as premium-perishable categories.
Notably, Blinkit appears to have stepped back from private labels in its current avatar, despite Grofers previously having a substantial private label presence.
But BigBasket’s Fresho offers fresh fruits, vegetables, milk products and extends to meat, poultry and seafood. Zepto’s Relish brand, launched for meats and eggs in October 2023, generates Rs 40 crore in monthly sales and the company expects annual revenues could hit Rs 1,000 crore by March 2026.
Some categories are, however, hard to crack given the shorter shelf lives, complex logistics, and a zero margin for error. This has prompted peers in the past to either avoid or shutter private-label plays in categories like meat —Dunzo (through its butcher-to-doorstep approach) or Instamart (through its B2B tie-up with meat suppliers). To date, none of the players has successfully implemented a fully upstream farm-to-fork model in these categories. Instead, they source through intermediaries—processors or traders—rather than directly from farms.
However, Deepak Gupta, General Partner at WEH Partners, suggests the base-level cold chain investments required for a sourcing-based owned brand could unlock private labels in under-explored categories like beverages, — aerated drinks, mocktails, or mixers, — which pose fewer supply chain complexities than meat, or fresh produce.
Despite the higher margin potential, quick-commerce platforms are expected to take a measured approach in balancing in-house brands with established names to sustain growth, with user behaviour on these platforms still largely being led by intent-based searches, Gupta said. He believes it will be hard for platforms to push their private label play beyond a certain point.
Platforms also sacrifice ad revenue and the flexibility to penalise slow-moving branded third-party SKUs, which could result in more moderate penetration goals, Jain noted.