Editorial. E-commerce bogey, again – The Hindu BusinessLine

Commerce and Industries Minister Piyush Goyal has revived an old debate on the impact of e-commerce by alleging “predatory pricing” practices by online retail giant, Amazon. The Minister later clarified that the government was not opposed to online retail as such but only concerned about preserving “fair play” for Indian businesses and consumers. While there is no disputing this view, it merely echoes fears voiced about 15 years ago — when the consequences of opening up foreign direct investment to retail were fiercely debated.

Since then, the retail scene has changed dramatically with the growth of not just ‘organised retail’ (MNCs and Indian owned) but much more so, online retail or e-commerce. Online shopping has exploded with the expansion of internet use, smartphones and digital payments, more so during the Covid period. Even in the absence of a large dataset, it can be said that this change has not driven ‘mom and pop stores’ out of existence, as was feared. The retail space today caters to diverse consumer preferences.

E-commerce’s attractiveness lies in its customer convenience, aggregation efficiencies, generous discounts and market access to vendors. The issue here is to assess the gains and losses objectively. It cannot, for example, be readily said whether the jobs lost in offline retail are compensated by e-commerce, or whether the latter is a bigger job creator. The eighth Economic Census, expected to be launched next year, should include the online space. A separate study can be considered. A Pahle India Foundation study observes that e-commerce accounts for 7-8 per cent of the retail pie, with a market of over $70 billion. The online seller base is probably in the region of 1.5 million (1.3 million in 2020), while the shopper base is well over 300 million. By 2025, retail employment is expected to rise to 45.5 million, with e-commerce jobs at 3.4 million. The report makes the point that jobs generated in e-commerce (in logistics, warehousing and technology) are not at the expense of offline jobs. Its negative impact on offline retail is concentrated in electronics (particularly smartphones), fashion, shoes, books and games, but less so in food, household products, jewellery and beauty products.

But the biggest issue here is the absence of a regulatory and institutional set-up to oversee a large market. For instance, it is hard to move on predatory pricing, if the competition regulator fails to act in this regard. Anti-competitive actions, such as e-commerce sites pushing their own products instead of sticking to their role as platforms, need to be investigated. Data protection needs to be resolved with the early implementation of data protection laws. The draft policy on e-commerce, prepared about four years ago, seems to have been left forgotten. It may be a better idea to dust it out, discuss and frame a coherent policy than to put out statements that unsettle the stakeholders.