To B or not to B? Clearly not to B, but to C, one would say to Kunal Bahl, co-founder of Snapdeal.com, even if he believes otherwise. Kunal Bahl has told The Economic Times that Snapdeal is not an e-tailer, but a software firm. He is welcome to have his version of what distinguishes an IT firm from an e-tailer, but must explain to us why his firm is doling out deep discounts to customers if it is a software provider. And trying to woo them for hours on television.
It is time e-tailers, whether they are using the marketplace route like Bahl’s firm does or any other model, stopped playing the innocent. They may want to believe they are merely ‘platforms’ that facilitate communication between suppliers and customers, but this is avoiding the issue. The fact is that by offering discounts on goods—even larger ones than the original manufacturer—a Snapdeal or a Flipkart is dealing directly with customers, in what is called a B2C business model. They may choose to camouflage their role in the business to take advantage of the FDI rules that allow foreign investments only in the B2B space, but that doesn’t change the facts.
FDI is their lifeline—without the billions of dollars that private equity (PE) players are putting into e-commerce ventures, the business wouldn’t survive. Which is why brick-and-mortar retailers are right in demanding a level playing field—they want 100% FDI in multi-brand retail. Indeed, it is high time the government came out with a clear and comprehensive policy on e-commerce and re-thought its views on FDI in multi-brand retail. Opening up the spaces will bring in large investments and create hundreds of jobs across the value-chain. That might not please Kunal Bahl, who has the gall to accuse e-tailers that have an inventory-based model, of being the ‘real threat’ to brick-and-mortar retailers, but it will be a win-win.
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