Conventional markets in India hit by e-commerce companies

E-commerce companies are buying and selling goods on the Internet and are expanding their footprints everyday. This has impacted the business of local markets in a big way. Even during the festival season, most of the local markets here continue to look deserted, said the traders association.

Business chambers and various market associations have been protesting against the expansion of online business platforms and e-commerce companies for several days, and have accused them of unfair practices.

Electronics and mobile dealers say they have been the worst affected. The business organisations have shot out memorandums and petitions to the Centre urging it to come to their rescue by restricting trade activities of e-commerce companies.

The construction workers, electricians and painters are without work. The interior decor shops have few customers, as a large number of real estate projects are in a limbo. The jewellery shops and automobiles dealers report a cold response from clients on the eve of festivals.

Every year from the first day of Navratri to the 14th of December, the first phase of the festive season, gives traders an opportunity to grab maximum sales. Thirty per cent of the total value of business in a year happens during this festive season but this year traders are desperate and disappointed with the sales. With barely one week left for Diwali, commercial markets are facing a demand slump. They have lost hopes of recovering from accumulated losses.

According to the Confederation of All India Traders (CAIT), the apex organisation of traders across the country, the main reason for such a dismal scenario is “due to highly surging sales in e-commerce market which is offering huge discounts on various products and even indulging in predatory pricing and adopting all kinds of unfair business practices which have greatly attracted customers to online markets.

Recently, in the festival sale put up by Amazon and Flipkart, both companies have sold goods worth around Rs19,000 crore in just four days, which makes it clear that a large part of the business of brick and mortar shops had already been shifted to the online portals.

CAIT National President BC Bhartia says that the retail trade in India generates an annual business of about Rs45 lakh crore out of which during festive season alone business of about Rs 6 lakh crore is conducted.

CAIT Secretary General Praveen Khandelwal said, “due to unscrupulous business practices of online companies, there is a decline of about 60 per cent in the business of mobile sector only, 35 per cent in FMCG and consumer durables, 35 per cent in electronics goods, 30 per cent in electrical appliances, 25 per cent in apparel, 20 per cent in footwear, 35 per cent in gift items, 25 per cent in decorative items, 15 per cent in building hardware, 30 per cent in kitchen equipment, 30 per cent in computer and computer goods, 35 per cent in grocery, 20 per cent in watches, 30 per cent in beauty and cosmetics, decline of 35 per cent in luggage, 30 per cent in fitness and sports goods, 40 per cent in fashion clothing and about 30 per cent in toys and if the market goes on like this for another week, then on this Diwali festival, only due to unethical business model of e-commerce companies, there will be a drop of about 50 to 60 per cent in the total business of traders, which is quite alarming.”

The CAIT office bearers said that due to the great slump in the markets and absence of festive spirit, the trade leaders across the country have decided not to decorate the markets on this Diwali as a mark of protest against e commerce companies who are bent upon controlling and monopolising the country’s vast retail trade by flouting FDI policy and adopting unfair business practices.

The Indian government is reportedly looking into heavy discounts offered by e-commerce platforms Amazon and Flipkart during their special festive sales. The authorities will investigate if the foreign-owned online marketplaces have violated foreign direct investment rules.

It does not come as a surprise. Last month, the Competition Commission of India reportedly said that the regulator will keep a close watch on these deep discounts following written complaints by the brick-and-mortar retailers lobby, the Confederation of All India Traders (CAIT), to commerce and industries minister Piyush Goyal. CAIT, in its letter on Sept.13, cited that discounts offered by e-commerce firms sometimes go up to 80 percent of the maximum retail price (MRP) of a product which the lobby group believes is a violation of the foreign direct investment regulations as such activities influence pricing.

Indo-Asian News Service