The government recently released the draft e-commerce policy, intended to promote ‘Make in India’ and create a level playing field for homegrown companies. Once adopted, it could lead to the end of ‘deep discounting’ era and two of the largest online marketplaces, Walmart-owned Flipkart and Amazon, will be hit the most. Experts say the intent of e-commerce is not to create a bipolar world and the Walmart-Flipkart deal this year has led to stakes becoming higher in the Indian e-commerce market.
With their global sourcing strategies, scale, deep pockets and big data on consumer insights, Amazon and Walmart have the power to dominate both mind and wallet shares with the help of what may seem predatory pricing and bargain offers. Neighbourhood shops or even malls can’t match either the range of inventory available online or deep discounts to easy returns, home deliveries that ecommerce shoppers can get.
Amazon and Walmart (Flipkart) account for nearly three-fourths of the $20-billion ecommerce business in India and their dominance is growing. Ecommerce accounts for less than 4 per cent of the $500 billion India retail market but is growing about 4x every year compared to brick-and-mortar selling. Amarjeet Singh, Partner, KPMG, feels pressure is being built by brick-and-mortar players. With large foreign investors putting in money in many local champions such as Snapdeal, Paytm, Ola and MakeMyTrip, their ‘Indianness’ is intriguing.
The industry has given mixed reactions to the draft policy. Suchi Mukherjee, Chief Executive, Limeroad, feels in the long run, it helps the country and Make in India. Rajaraman Sundaresan, CEO, Aahaa Stores believes millions of micro, medium and small enterprises (MSMEs) have a better chance to go online. Pricing will no longer be controlled by a group companies. This is an important step towards creating forward looking, enabling regulation which will catalyse robust and orderly growth of the ecommerce sector in India. Kishore Biyani, Chief Executive, Future Group points out the draft policy will be good to promote Indian entrepreneurship and is, in the right direction. But there needs to be a constant check as to how the space is evolving—it’s not digital or physical retail alone but phygital (physical plus digital) retail. There needs to be a policy for that.
There are many issues and ambiguity within the policy including the definition of e-commerce. There is no clarity on who is an e-commerce player now, felt Kumar Rajagopalan, Chief Executive, Retailers Association of India. Almost every retailer uses technology and supports online buying and delivery. Can everyone be called ecommerce then? The new draft suggestion seems to be dividing retail by channels, which is creating confusion even from an FDI angle.
Anand Khurana, Co-founder & Partner, Hypersonic Advisory points out currently it’s almost like reservation based rules benefitting a few players. But the government has to look after interest of all players. The draft policy is in the right direction and gives industry some time to plan and respond. It will also help large companies build a viable business rather than just depend on discounts. Vinamra Pandiya, CEO, Qtrove also agrees at $20 billion, e-commerce is a sizeable business for rules to be laid out and policy interventions. Industry will be relieved with the draft proposals. Mukherjee says, there is a lot of Chinese dumping (via online & offline stores) in India both in electronics and fashion besides price gaps in online and offline stores and needs to be addressed. This scenario needs regulations.