In e-commerce world, let the consumer be king

Instead of punishing e-tailers like Flipkart, the government should find ways to treat the consumer right rather than the traders and middlemen

Just when shopping was getting interesting, the government is getting ready to play spoilsport. A day after Flipkart experienced outrage over failed transactions on its Big Billion Day sale, reports said that the poster boy of Indian e-commerce is likely to face government scrutiny on complaints of predatory pricing.

 

Retail traders are known to be a vote bank for the present government; it is only likely that th
e government will listen to their complaints. "We have received many inputs. Lot of concerns have been expressed. We will look into it," Commerce and Industry Minister Nirmala Sitharaman has been reported as saying. “Whether there is a need for a separate policy or some kind of clarification is needed, we will make it clear soon.” 

 

 

But it is not traders alone who are complaining, especially after the ‘Big Billion Day’ sale. For a start it was more of a fiasco than a sale. Complaining customers, crashing sites, vanishing carts, poaching competitors, you name it, it was all there. But the underlying fact is that Flipkart still managed to sell $100 million of goods in 10 hours. And this is just Flipkart alone. Snapdeal and Amazon also had record sales on the same day, capitalising on Flipkart’s misery by announcing matching or better deals.

 

As Victor Hugo said all the forces in the world are not as powerful as an idea whose time has come. Big Billion Day has announced the presence of e-commerce with a bang. It has rocked the boat of established players who now feel threatened and have run to the government complaining of fair play.

 

Some of the complaints do seem genuine. Take the case of consumer goods suppliers. Times of India has quoted LG Electronics India officials as saying that the company has decided not to deal with e-retailers at all. The report also quotes other company officials as saying that they will not offer service support for such sales as the deal with e-retailers was through unauthorised channel partners. Sony India officials are also quoted complaining about the huge discounts offered on website prices against those in stores. 

 

As for the traders and large brick-and-mortar retailers, they have very little grounds for complain. E-retailers are doing to these organised retailers what they did to the small kirana shopowners. Retailers are complaining of predatory pricing by Flipkart and accusing it of selling below cost. But the definition of cost is different for a trader as compared to that of a manufacturer.

 

But the reason their accusation might fall flat is because Flipkart is only providing a platform for sale. Pricing are decided either by the manufacturer or the agency that decides to sell on Flipkart. Business Standard has reported a Flipkart spokesperson as saying that “We are an e-marketplace, where sellers decide the price, and only they can change the prices in the system. They sell directly to buyers without stepping out of their workplace." There is precedence in a similar case of predatory pricing against Snapdeal where the government could not prove no wrongdoing as the e-retail company was only providing a platform.

 

In his pre-election speech Prime Minister Narendra Modi, addressing small traders had told them that they would have to accept presence of large retail chains and e-commerce companies. He had said that small traders must learn to build brands and go online, creating virtual malls to take on large and multinational retailers. But that was before Big Billion Day happened. Now even the big retailers are complaining.

 

If customer is really the king, then he should be served at the best pricing possible. It is the duty of the government to ensure that the customer is treated as a king rather than bat for middlemen and intermediaries in their name.