1. As buyers desert offline stores to buy from Flipkart, Amazon, Snapdeal, here’s why e-retail hypocrisy must be ended

As buyers desert offline stores to buy from Flipkart, Amazon, Snapdeal, here’s why e-retail hypocrisy must be ended

Considering the billions of dollars that are coming in as investments in the e-tail sector in the country every year, it is not surprising the government is reluctant to end the party. But, as a result of e-tailers being able to offer huge discounts, they are beginning to hurt not just big online retailers in the country but are also threatening to disrupt the models of white goods suppliers as buyers are starting to desert their offline stores in search of big online discounts.

By: | Updated: October 24, 2016 11:33 PM
 As the ongoing e-tail sales suggest, while the discounting is lower than in the past, it is still quite significant. As the ongoing e-tail sales suggest, while the discounting is lower than in the past, it is still quite significant.

Considering the billions of dollars that are coming in as investments in the e-tail sector in the country every year, it is not surprising the government is reluctant to end the party. But, as a result of e-tailers being able to offer huge discounts, they are beginning to hurt not just big online retailers in the country but are also threatening to disrupt the models of white goods suppliers as buyers are starting to desert their offline stores in search of big online discounts. As the ongoing e-tail sales suggest, while the discounting is lower than in the past, it is still quite significant. While the law now says that e-tailers can no longer fund discounts—this was done to prevent unfair competition since the offline players do not have access to free PE/VC funding—it is difficult to understand how the vendors selling on e-tail marketplaces are funding such huge discounts, nor is there any rational explanation for why they would even want to do so. In the event, while those who are complaining about high e-tail discounts are told these are no longer being funded by e-tail marketplaces, there is no way to actually know if this rule is being followed. Indeed, the department of industrial policy and promotion (DIPP) which is in charge of e-tail policy openly admits that monitoring the implementation of the policy is not its job, but that of RBI and the Enforcement Directorate (ED)—the two probably have more on their plate to worry about this.

Which is why, top retailers met finance minister Arun Jaitley last week, to ask for a level playing field for bricks-and-mortar players. There is, of course, little that the finance minister can do to ensure the e-tail policy is adhered to in both letter and spirit. What he can do, however, is to change the policy on multi-brand retail to allow 100% FDI—once that is done, there will be a genuine level playing field as big global retailers/PE funds can also provide cheap/free funds to their Indian units or joint ventures to be able to compete with e-tailers on a mixture of discounts and quality of merchandise/service. Given it was really the big retailers who were instrumental in blocking FDI in multi-brand retail, the government can easily open up the sector now. While the BJP has traditionally opposed FDI in multi-brand retail on grounds it will hit the business of kirana shops, few foreign retailers can buy land in neighbourhood markets to be able to threaten kiranas.

  1. P
    Prabhakar
    Oct 24, 2016 at 12:23 pm
    What is detailed in the article is the negative impact at one level. At the same time, if you look at the consumers' level, there are other issues too. It may appear as if the consumer is gung ho about the w matter of s, festivals, discounts, and what not. But the reality is different. The reality sinks in only after the delivery of the product. Very few people are really happy with the what they get from these e-tailers, overall. I myself as an example of someone hopes that things will be better this time and order once again from one of these sites only to be disappointed yet again. Take my latest experience. I ordered a product from Flipkart. It was delivered within the time frame promised (which again is a heavily stretched duration, so as to be seen as a prompt delivery!!). But the product came in shabby and tattered ng. It was not sealed well. The product did not not work. The worst part was that the package contained the invoice for the of the same item/unit to some other customer. And there were two dead batteries in the product, while the condition had specified "batteries not included". So it clearly means that a defective product that was returned by another customer was palmed off to me!! Well, this was just one of the bad experiences I had had with Flipkart and other etailers.
    Reply
    1. X
      xyz
      Oct 25, 2016 at 7:02 am
      The retailers deserve this. They voted for Modiji for aache din. Now Modiji does not meet anybody unless you are white skinned. And forget his cabinet colleagues. They can't even p i s s without his okay.
      Reply

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