More laws for e-tailers, but you can’t stop them
E-commerce players like Amazon and Flipkart are under increasing pressure to adhere to competition laws so that they don’t leverage their giant size and that there is a level playing field with smaller brick-and-mortar traders. First, the Karnataka High Court, by rejecting their appeal, has given a green signal to the Competition Commission (CCI) to begin an inquiry against the big online traders. Second, the Union government is planning to tighten the Consumer Protection (e-commerce) Rules, 2020, to prevent flash, discounted sales and to ensure preference to locally produced goods. Online sellers will also be banned from misusing consumer information for jacking up sales.
The Confederation of All-India Traders (CAIT), which represents thousands of small and medium-sized sellers, point out that big online sellers—who have been now joined by Reliance’s JioMart and Tata Digital—are supposed to be virtual marketplaces, and stay neutral with respect to sellers and products. However, by using loopholes in the law, these operators become proxy sellers. Again, by manipulating algorithms, the digital marketplaces cut out some sellers and give preference to their own logistics companies. Many of these grouses are not new; and, significantly, the e-commerce players have managed to change tactics and be one step ahead of the law.
While government efforts to stop the e-commerce operators from muscling out the small sellers must be supported, we must also realise that it is difficult to swim against the consumer tide. Over the last decade, large sections have consciously shifted to e-tailers. The variety and choice available from the comfort of their homes and the competitive prices offered have made online marketplaces a big hit. The pandemic, which made physical shopping difficult, has only reinforced these trends. E-shopping is a habit that is only going to grow. The market size of the online retail industry in India is estimated at $60 billion in 2020, and may touch $75 billion by 2022. To put it in perspective, this is still less than 10% of the country’s total retail market, and mom-and-pop stores and neighbourhood shops, if they are innovative enough, will have a clientele for a long time to come.