In a recent development, Indian Commerce Minister Piyush Goyal has expressed concerns over the rapid growth of e-commerce in the country, accusing major players like Amazon of engaging in predatory pricing practices. The minister’s comments come at a time when the e-commerce sector is experiencing unprecedented growth, with many small retailers struggling to compete.
Predatory Pricing and Market Disruption
Goyal questioned the legality and ethical implications of e-commerce platforms engaging in direct-to-consumer sales, which he suggested may be happening despite regulatory restrictions. “They are, after all, an e-commerce platform, and they are not legally allowed to do B2C. However, the reality is all of you buy on these platforms. How are they doing it? Should it not be a matter of concern for us?” he asked, urging a closer examination of these practices.
The minister also voiced concerns about the impact of e-commerce on local services, using the example of pharmacies. He reminisced about how local pharmacists used to personally oversee medication needs, like monitoring the use of Benadryl to ensure safe consumption. “I remember when I was a child, my local pharmacist would keep a watch if I bought too much Benadryl,” Goyal said. He questioned how such personal care and oversight could be replicated in the e-commerce environment, where online purchases lack the same level of personalized attention and community trust.
Impact on Small Retailers and Employment
Goyal warned that the growth of e-commerce could lead to “huge social disruption” to retailers and shopowners of the country. He cited a report that showed the growth of e-commerce at 27% annually, saying “We look at it as a source of pride. Lots of youngsters, including my children, order online. But we must remember that what we’re doing today is going to determine the future of India 10 years down the line.”
The minister emphasized that e-commerce doesn’t attack every part of the retail store. Every store has only 5-10% items that make a good profit for the storeowner, and e-commerce is edging and wedging into high-margin products, imagining what happens to the over 10 million retail stores in our cities.
Impact on Small Retailers:
- E-commerce firms are edging and wedging into high-margin products, which are the only items that make a good profit for small retailers.
- The growth of e-commerce at 27% annually could lead to the closure of over 10 million retail stores in Indian cities.
- Small retailers are struggling to compete with e-commerce firms, which are selling products at a loss to gain market dominance.
Impact on Employment:
- The growth of e-commerce could lead to job losses in the retail sector, as small retailers are forced to close down due to competition from e-commerce firms.
- The minister expressed concern about the impact of e-commerce on employment, stating that “we do not land up causing huge disruption for the 100 million small retailers across the country”.
- The loss of jobs in the retail sector could have a ripple effect on the broader economy, leading to social and economic instability.
Concerns Over Unregulated Growth
Goyal urged the audience to consider the impact of these practices on small retailers and consumers across the country. He pointed to examples from developed nations, such as Switzerland, to underscore the potential risks of unregulated e-commerce growth. “Why did Switzerland not allow e-commerce to come in until very recently?” Goyal asked, highlighting the need for India to carefully consider the impact on its own small retailers and the broader economy before fully embracing the e-commerce boom.
The minister called for a more organized and citizen-centric approach to the growth of e-commerce in India, emphasizing the need for this growth to be inclusive and beneficial to all sections of society. “We’ll have to see that this grows in an orderly fashion,” Goyal asserted, urging stakeholders to consider the implications of e-commerce on small retailers and to ensure that the benefits of technological advancements are democratized across the country.
Conclusion
In conclusion, the Indian Commerce Minister’s comments highlight the need for a balanced approach to the growth of e-commerce in India. While technology has the potential to drive efficiency and innovation, it is essential to ensure that this growth is inclusive and beneficial to all sections of society. The minister’s concerns over predatory pricing and market disruption serve as a reminder of the need for careful consideration and regulation of the e-commerce sector to prevent harm to small retailers and the broader economy.
FAQ’s
- Q: Who accused Amazon and e-commerce firms of predatory pricing? A: Indian Commerce Minister Piyush Goyal accused Amazon and e-commerce firms of predatory pricing.
- Q: What is predatory pricing? A: Predatory pricing refers to the practice of selling products at a loss to eliminate competition and gain market dominance.
- Q: What are the concerns of the Indian Commerce Minister? A: The minister is concerned about the impact of e-commerce on small retailers, employment, and the broader economy.
- Q: What is the growth rate of e-commerce in India? A: The e-commerce sector is growing at a rate of 11-12% annually.
- Q: What is the projected sales of quick commerce startups in India? A: Quick commerce startups are projected to achieve over $4.5 billion in sales this year, with a year-on-year growth rate exceeding 100%.
