The demand of the traders’ association, the Confederation of All India Traders (CAIT), that the government should intervene and place curbs on discount sales run by India’s largest retail e-commerce platforms and stop them from taking cash-on-delivery orders while making digital payments mandatory, is not just protectionist but also infringes on the rights of consumers. The Union government must reject outright such demands and advise the traders’ body to approach the Competition Commission of India with grievances if there are distortions to fair play in the market. It should at best play the role of a mediator, getting the e-commerce players and traders’ lobby to sit across the table to resolve difference and apprehensions amicably, as it attempted to do on Friday. CAIT is unhappy with the outcome of that meeting, as none of its demands have been acceded to and the senior executives of Amazon and Walmart-controlled Flipkart claimed the discounts are offered by the brands and not the platforms.
CAIT’s lobbying the Union government against only Amazon and Flipkart is duplicitous. Like Amazon and Flipkart, all major e-commerce platforms including TataCliq, Snapdeal, fashion-wear retailers Reliance Retail's Ajio and AV Birla group's Pantaloon as well as online groceries platforms such as Big Basket and Grofers offer similar discounts, but the traders’ body does not find that objectionable. CAIT’s apprehensions about the big e-commerce players are also a bit misplaced – sales through all e-commerce platforms are just about 3-5% of the total retail sales in the country. It is also very unfortunate that CAIT is attempting to ascribe ulterior motives to the discounting practices on Amazon and Flipkart when it is common across all platforms that follow the marketplace model. CAIT would very well know that the discount sales on e-commerce platforms hold benefits for both sellers and buyers. It helps sellers liquidate stocks faster, particularly in a slow market, and attract buyers from smaller towns where brands do not have a presence through physical stores and the spending capacity of the consumers is smaller. Consumers also benefit from lower prices. CAIT’s threat to boycott brands that are selling products at big discounts on the two e-commerce platforms also goes against the spirit of a free market, and will only serve to hurt its own members, some of whom might be participating in the marketplaces of the e-commerce platforms.
CAIT claims several mobile phone stores were forced to shut down as vendors were selling the devices at a discount on the e-commerce website. CAIT would do well to recognise that retailing formats will continuously evolve and that some shops will go out of business as a result, even as new players enter the fray. Rather than resist changes in the economy and retail trade, the confederation would do well to pick up signals of change early and help its members to adapt. It would also benefit its members to enter into partnerships with e-commerce platforms, as stockists and vendors.
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Published on October 12, 2019