Not a la carte
16 Oct 2014 10:43 PM GMT
There is no news in the fact that the e-commerce market in India is growing at an estimated compound annual growth rate of 40-45 per cent in the wake of the lucrative deals tha are being offered by e-commerce retailers like Flipkart, Snapdeal and Amazon among others. The market share of such companies has exponentially increased and now the situation is such that charges of unethical business practices have been levelled against Flipkart if not all of them together.
The recent ‘Big Billion Day’ sale which was held by Flipkart on 6 October is case in point. Even if we forget that Flipkart servers crashed because of the huge traffic of shoppers who accessed the website of the e-tailer, how are we to forget that there is no presence of any e-commerce policy in the country which can stop online retailers from organising such sales in the future? It is clear that most of these online shops buy a lot of their stock in bulk and when such sales are organised prices are slashed to the extent that the products are most of the times sold even below the cost price.
Thus, if the regular markets are reporting drop of sales by a margin of 50-60 per cent and are protesting and lodging complaints against e-shops we should not be surprised. However, if tomorrow other retailers start indulging in the same practice, how would the government respond? But the apparent lack of resolve displayed by the Enforcement Directorate in investigating these complaints is something which needs to be debate. How exactly is commerce minister Nirmala Sitharaman going to investigate these genuine grievances especially after ED has decided not to go ahead with investigations, will be interesting to see.
However, ED has said that it will continue to look into the FDI norm violations that e-retailers committed in the past. This move is significant as the current FDI policy does not allow foreign investment in domestic e-commerce companies conducting B2C (business-to-consumer) transactions while 100 per cent foreign investment is permitted in B2B (business-to-business) transactions. Flipkart, for example, has regularly raised capital from international investors and has failed to comply with the basic premise of the policy. With the level of competition growing by the day and predatory price wars ruling most of the e-market, the Indian government should take a stand before it’s too late.
The recent ‘Big Billion Day’ sale which was held by Flipkart on 6 October is case in point. Even if we forget that Flipkart servers crashed because of the huge traffic of shoppers who accessed the website of the e-tailer, how are we to forget that there is no presence of any e-commerce policy in the country which can stop online retailers from organising such sales in the future? It is clear that most of these online shops buy a lot of their stock in bulk and when such sales are organised prices are slashed to the extent that the products are most of the times sold even below the cost price.
Thus, if the regular markets are reporting drop of sales by a margin of 50-60 per cent and are protesting and lodging complaints against e-shops we should not be surprised. However, if tomorrow other retailers start indulging in the same practice, how would the government respond? But the apparent lack of resolve displayed by the Enforcement Directorate in investigating these complaints is something which needs to be debate. How exactly is commerce minister Nirmala Sitharaman going to investigate these genuine grievances especially after ED has decided not to go ahead with investigations, will be interesting to see.
However, ED has said that it will continue to look into the FDI norm violations that e-retailers committed in the past. This move is significant as the current FDI policy does not allow foreign investment in domestic e-commerce companies conducting B2C (business-to-consumer) transactions while 100 per cent foreign investment is permitted in B2B (business-to-business) transactions. Flipkart, for example, has regularly raised capital from international investors and has failed to comply with the basic premise of the policy. With the level of competition growing by the day and predatory price wars ruling most of the e-market, the Indian government should take a stand before it’s too late.
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