Traders vs e-commerce

The new economy has been disrupting India in the last decade, creating a boom in various sectors. But with the proliferation of e-commerce platforms, business generation for local vendors and massive valuation for startups, the online marketplace has waded into a multitude of controversies. Everything new is not always everything good; the battle playing out between traders and e-commerce companies in India shows just that.

On the face of it, traders led by the Confederation of All India Traders (CAIT), have been up in arms against e-commerce giants such as Amazon and Walmart-owned Flipkart. Their charges against the e-commerce companies range from unethical practices to price and algorithm manipulation, among others. The traders' concerns are not ill-founded. At a time, when the Indian economy has screeched to a halt, even the festive season did not revive consumer sentiments. Online platforms, however, performed far better since consumers with smaller-than-usual festive budgets spent their meagre monies availing deep discounts. The neighbourhood shop was left high and dry.

So why should the e-commerce player worry about the kirana store or 'mom and pop' stores? A developed economy would and should allow both the online and offline to co-exist. Brick and mortar businesses must be benefitted by the virtual space (as it used to happen when it just started) and not annihilate it. The online space has been a boon to thousands of small sellers until it started dipping into that same pool to propel its own in-house brands. So, while the big e-commerce players are promoting their own brands with their algorithm showing them first on search, the other sellers suffer.

Deep discounting has already obliterated the online food space with restaurants facing huge losses, which the online aggregator is able to soak up thanks to huge funding that allows them to bleed. Then came the online aggregator's own kitchens which makes the restaurants irrelevant as the aggregator pushes its own kitchens. Same with the cab aggregators where the scene has totally overhauled. Cab aggregators are helping finance vehicles for drivers. A good move but along with this, there are also allegations of them throwing more rides to their financed drivers than the ones who already own their vehicles.

So, what is the way forward? The pressure on the government to intervene is growing with every passing day of this battle between the old and new. 70 million traders across 700 Indian cities have upped the ante against e-commerce players. The traders have made the clarion call and are demanding price parity along with minimum operating price between the offline and online space. The traders are asking for a uniform policy of discounting by brands and cashback on credit cards to be extended to the offline space. And, if the e-commerce companies push best business practices rather than predatory ones, the resolution may be acceptable to all stakeholders.

Globally too, tech firms are facing a backlash. Personally, I'm not a big believer of government intervention and imposition of regulations. But the solution, in this case, can perhaps come only from the government with the view to protecting interests of traders while at the same time ensuring that too much protectionism does not brand India as a closed, restrictive economy. This balance between the old and new economy is essential and urgently needed for India to transition into a mature economy.

Shutapa Paul is an author and media entrepreneur. Views expressed are strictly personal