In a situation when several online commerce companies have gone bonkers with deep discounts, cash-back plans, freebies and a variety of inducements to get customers across the country enrolled, e-tailers will have to behave and self-regulate or come under the government prescribed regulatory regime.
Deep discounts and predatory pricing tactics by e-tailers have enraged small offline mom & pop stores, which don’t have big budgets or deep pockets to counter them and run their fragile outlets. Thus, small traders, kirana stores and offline retail outlets have approached finance minister Arun Jaitley and commerce minister Suresh Prabhu seeking policy intervention to effectively deal with e-commerce firms and their ‘market-distorting’ tactics. According to them, companies like Amazon, Flipkart or online Future, Big Bazar stores have resorted to unfair and unsustainable pricing regimes that may virtually wipe out the small players. Organised online retail firms, in particular, have reportedly provided discounts up to 50-60 per cent, apart from absorbing the tax liability.
The westernised model being followed by e-commerce companies with huge funding support from international financing companies may have begun to muddy the domestic retail space. Apart from heavy discounts, most online companies seem to be operating in tandem in terms of pricing, products and services in different markets. Cartels operating in the retail space seem to have disrupted the entire market that hitherto operated on mutual trust, goodwill and thin margins.
Also, flooding the Indian markets with Chinese goods – brought in as gifts – appears to be the new game being played by even branded online stores. Cheap and unregulated Chinese products have started flooding the Indian market through this route. While India-based e-commerce companies are procuring Chinese products, some consumers seen to have received deliveries at their doorstep directly.
If the Swadeshi Jagaran Manch analysis is anything to go by, Chinese companies were busy peddling products online as gifts to evade import duties and taxes. According to existing provisions, each individual is entitled to four gifts a year without attracting duties. Interestingly, these sales are reportedly happening via platforms like Amazon to keep the tax sleuths at bay.
Further, e-commerce companies – both Indian and Chinese – in the consumer products segment have earned notoriety for delivering sub-standard products against orders placed and payments made online by unsuspecting consumers, especially in the sub-urban and rural markets.
As per reports, companies like Shien, Club Factory and Ali Express have shipped huge amount of cheap Chinese products into India. In several cases, fakes, cheap copies or unreliable items from Chinese firms have reached consumers directly. Of the 70 million users globally, Club Factory recently boasted of 40 million Indian users in September alone. Similarly, Shien’s mobile app-based deliveries in India have crossed 10,000 a day.
There’s no reason why the e-commerce platforms should be allowed to play dirty. It’s not only about keeping the market space clean and hygienic, but also protecting the thousands of retail outlets in physical format that serve their limited clientele and provide employment to millions but lack the wherewithal to withstand under-pricing or below-the-cost sale of products and services.
It’s true that the central government will have to take the vast network of retail traders on board before finalising a broad-based e-commerce policy. A secretaries panel, set up by commerce minister Prabhu to finalise the e-commerce policy, will have to come out with steps to protect interests of consumers and domestic unorganised small offline retailers.
Violation of domestic laws by e-commerce companies may have to be dealt with swiftly and conclusively. Consumers have a right that cannot be compromised at any cost.