Sukumar Sah
THE debate over the impact of online business (e-commerce) on traditional retail (kirana, or mom-and-pop stores, as they are called) has cropped up once again with Commerce and Industry Minister Piyush Goyal’s remarks, which, however, were rectified soon thereafter.
Speaking at the launch of a report in New Delhi on August 21, Goyal called out e-commerce players such as Amazon for alleged predatory pricing and social disruption engendered by the potential loss of employment in small retail outlets.
E-commerce sector’s rapid growth is more of a matter of concern, rather than pride, as it can lead to employment loss in traditional retail businesses since it is eating into the market share of small retailers by offering high-margin products at discounted rates, the minister is reported to have said.
What made Goyal make those remarks is unclear, but he soon amended his stance stating the Government was not against e-commerce and only wants fair competition between online and offline businesses.
“We are very clear that we want to invite FDI (foreign direct investment), we want to invite technology, we want to have the best of the world, and we are not against online at all,” he said atw an industry event in Mumbai, a day later. “Online e-commerce has tremendous benefits. It has the benefit of convenience, speed, it gives you comfort in your homes, many benefits,” the minister stressed.
Retail is evolving
The fact is that while e-commerce provides consumers with a wide range of products and helps sellers by expanding their market reach, those against online businesses have repeatedly raised worries about job losses, market monopolies, and the fairness of online pricing and product quality.
But the retail sector is constantly evolving. Today, there are many small stores which offer better discounts than e-commerce platforms, even though online prices can seem lower due to inflated original prices and subsequent discounts.
The concerns regarding lack of competition in e-commerce are also being addressed by the market. The apparent duopoly of Flipkart and Amazon now faces competition from two Indian quick-commerce companies – Blinkit and Zepto – which are swiftly expanding their catalogue.
A welcome fallout of this debate is on the horizon. A draft e-commerce policy has been in the public domain for quite some time now. It has been revised several times over the years, and there are indications that following Goyal’s statement, it might see the light of day soon.
Any e-commerce policy should be for the benefit of consumers, and not for creating a regressive environment. E-commerce has driven the growth of direct-to-consumer brands, generating jobs and supporting infra. However, issues like predatory pricing, counterfeit products, and a lack of transparency must be addressed.
What is required is a balance between consumer and business interests, without a backward approach that could deter investment and harm economic growth.
