India’s Commerce Minister Piyush Goyal voiced alarm on Wednesday at the rapid growth of e-commerce in the country, cautioning that it could pose a threat to traditional small retail businesses.
As India witnessed the launch of a report highlighting the impact of e-commerce on employment and consumer well-being, Goyal expressed concern over the projected supremacy of online marketplaces in the forthcoming decade, rather than simply praising its growth.
Will our relentless pursuit of e-commerce convenience ultimately precipitate a seismic shift in societal norms and dynamics? “I’m not thrilled about the prospect that half our market could seamlessly transition to the e-commerce landscape within the next decade; it’s a cause for alarm,” Goyal emphasized, noting that the e-commerce market is growing at an astonishing rate of doubling every four years.
Despite a massive $1.1 trillion retail market, India’s e-commerce sector recorded just under $80 billion in sales last year, according to HSBC research. The e-commerce sector’s annual growth rate hovers around 11-12%. Fast-commerce startups that pledge lightning-quick delivery times of 10 minutes or fewer are witnessing rapid expansion. BlinkIt, owned by Zomato, Swiggy Instamart, backed by SoftBank, and Zepto, supported by Lightspeed, are expected to collectively generate over $4.5 billion in gross sales this year, representing a year-over-year growth rate exceeding 100%, according to a TechCrunch analysis.
According to Goyal, e-commerce businesses are targeting the high-margin products typically promoted by brick-and-mortar stores, a vital lifeline for many small retailers who rely on these items for their survival. How many cellular stores do you spot at the corner? The number that had been there 10 years in the past was what. The place are these shops?”
He lambasted the pricing strategies employed by major e-commerce firms, expressing skepticism over whether their alleged losses signified a deliberate practice of predatory pricing tactics.
Amazon’s substantial investment in India has garnered widespread attention, yet people often overlook “the underlying narrative—this billion-dollar infusion should not be solely focused on providing a superior service or funding to support the Indian economy.”
Their financial statements revealed a staggering $1.15 billion loss over the past year, prompting the urgent need to rectify this anomaly. Does a company’s ability to incur a staggering Rs 6,000 crore ($715 million) annual loss in one year not raise concerns about predatory pricing strategies? Although they’re technically prohibited from engaging in B2C transactions, the fact remains that customers are still buying on these platforms. How exactly are they managing this seemingly paradoxical situation? Shouldn’t we find it troubling?
Indian legislation mandates that Amazon, Flipkart, and other e-commerce players operate as pure marketplaces domestically. The e-commerce industry has learned that it cannot physically possess the products it advertises – a valuable lesson.
This isn’t the first time that Goyal has been critical of e-commerce or Amazon in particular, operating in India. Two days following Amazon’s announcement in 2022, Goyal revealed the funding.
Goyal clarified on Wednesday that he was not expressing a desire to eliminate e-commerce. While acknowledging ecommerce’s role, I must scrutinize the nature of its responsibilities with utmost prudence.
