SNAP­SHOT

E-Commerce

Consumer Voice - - Contents - By Ashim Sanyal

Where con­sumer is king

Over the last couple of years, e-commerce has changed the con­sumer ex­pe­ri­ence al­most ir­re­triev­ably. e-Commerce com­pa­nies are re­defin­ing how cus­tomers buy and man­u­fac­tur­ers sell; to­day, even a house­wife run­ning a small es­tab­lish­ment from home can ap­proach a global au­di­ence of buy­ers. e-Commerce com­pa­nies com­pete with con­ven­tional con­sumer goods com­pa­nies in at­tract­ing cus­tomers to their sites.

With time, and with the grow­ing suc­cess of the model, the reser­va­tions about e-commerce have faded. Con­sumers have seen the power of com­pet­i­tive pric­ing, the con­ve­nience of buy­ing at the click of a but­ton, and the ease with which goods can be re­turned or ex­changed. It is th­ese as­pects of e-commerce that have made it the next best thing to hap­pen to the con­sumer re­tail in­dus­try, af­ter the open­ing up of for­eign direct in­vest­ment (FDI).

Gold­man Sachs’ re­cent re­port on the huge growth and po­ten­tial of In­dia’s e-commerce in­dus­try ($300 bil­lion by 2030) is pri­mar­ily boosted by the coun­try’s at­trac­tive de­mog­ra­phy un­der­lined by a largely young pop­u­la­tion. The coun­try will have over 300 mil­lion new on­line shop­pers in the next 15 years, making on­line re­tail­ing the largest on­line seg­ment.

Re-Fo­cus­ing the De­bate

Where is the con­sumer’s vote in all of this? It is to be noted that the cur­rent de­bate on e-commerce is mainly fo­cused on the im­pact it may have on tra­di­tional re­tail­ers, small en­ter­prises (SMEs) and other such busi­nesses. The ben­e­fits it brings to con­sumers, who are the ma­jor­ity and should be the first pri­or­ity of the gov­ern­ment, are not even be­ing men­tioned in the on­go­ing de­bate.

In In­dia, the B2B e-commerce sec­tor has seen sub­stan­tial growth in the last couple of years. This growth, how­ever, can­not sus­tain un­less there is an en­vi­ron­ment that helps the play­ers — sup­pli­ers, sell­ers and on­line plat­forms — gain eco­nom­i­cally and op­er­ate with­out reg­u­la­tory ob­sta­cles. As of now, there is con­fu­sion around the op­er­a­tional struc­ture of e-commerce com­pa­nies and this has cre­ated a sit­u­a­tion where most of th­ese com­pa­nies are forced to op­er­ate like tech­nol­ogy plat­forms.

Many full-fledged e-commerce op­er­a­tors act as ser­vice op­er­a­tors; they only al­low re­tail­ers to dis­play and sell their prod­ucts and add value by pro­vid­ing sev­eral back-end ser­vices like home de­liv­ery. Th­ese com­pa­nies can­not yet source di­rectly from man­u­fac­tur­ers and sell to con­sumers – if this is al­lowed, it could be a game-changer for the price­sen­si­tive In­dian mar­ket and con­sumers would be the win­ners.

Con­sumer Is King

It is crit­i­cal that the reg­u­la­tory frame­work in the coun­try be con­cep­tu­alised keep­ing in mind the larger in­ter­ests of con­sumers in the coun­try. If tech­nol­ogy is avail­able to cut in­ter­me­di­ary costs on con­sumer prod­ucts, it must be al­lowed to be used to its full po­ten­tial as it will bring down the re­tail price of many con­sum­ables and ben­e­fit the mid­dle class, which is im­pacted most by price rises.

In the long run it will also ben­e­fit the econ­omy – the con­tri­bu­tion of the e-commerce in­dus­try to the GDP will go up 15 times in the next 15 years. No other in­dus­try is promis­ing such growth amidst an on­go­ing global slow­down. To al­lay fears of con­sumers be­ing ex­ploited, the min­istry of con­sumer af­fairs, un­der the lead­er­ship of Ram Vi­las Paswan, has been at the fore­front of tack­ling con­sumer-griev­ance is­sues and has formulated reg­u­la­tions to en­sure proper re­dres­sal. That be­ing ac­counted for, the In­dian cus­tomer to­day wants ac­cess to do­mes­tic and global prod­ucts at the click of a but­ton, and at com­pet­i­tive prices.

This also ex­tends to the ru­ral con­sumers who now want par­ity in ful­fill­ing consumption as­pi­ra­tions, as their eco­nomic sta­tus is im­prov­ing and they have bet­ter ac­cess to the In­ter­net. In this sense, e-commerce is play­ing the role of a lev­eller and is bridg­ing the ru­ral–ur­ban di­vide. Any reg­u­la­tion that re­stricts the open growth of this bridg­ing medium will not only drive con­sumers away but will also have an ad­verse im­pact on busi­ness, econ­omy and en­trepreneur­ship, not to speak of small-scale man­u­fac­tur­ing.

The Global Per­spec­tive

The world­wide lead­ers in B2C e-commerce ex­ports are the United States, the United King­dom, Ger­many, the Nordic na­tions, the Nether­lands, and France. To­gether, their on­line re­tail cross-border ex­ports are fore­casted to top € 100 bil­lion by 2020. Cross-border B2C e-commerce thrives in Europe, sup­ported by ini­tia­tives of the law­mak­ers in cre­at­ing a sin­gle on­line re­tail in­fra­struc­ture and reg­u­la­tion. More than a quar­ter of on­line shop­pers in the Euro­pean Union (EU) have made pur­chases from other EU coun­tries, with this share be­ing higher in the euro area.

In­ter­est­ingly, none of the above-men­tioned coun­tries im­poses strin­gent re­stric­tions on e-commerce com­pa­nies, and finds them no threat what­so­ever to brick-and-mor­tar re­tail­ers or even tra­di­tional re­tail­ers and SMEs. e-Commerce com­pa­nies in most coun­tries are treated just like any other pro­fes­sional busi­ness en­tity and are not re­stricted to act like tech­nol­ogy plat­forms. Many such com­pa­nies across the globe are col­lab­o­rat­ing with small re­tail­ers as well as SMEs not only to broaden their own prod­uct port­fo­lio but also to al­low such re­tail­ers to in­crease their reach as well as sales by us­ing their medium.

In sim­ple terms, it is more a per­cep­tion of threat than any ac­tual threat that is urg­ing a par­tic­u­lar sec­tion of re­tail­ers and SMEs to protest at the growth of the sec­tor and al­low­ing of FDI. Soon they too will re­alise, as some have be­gun to do, that the cus­tomer is king and if you can of­fer them a bet­ter prod­uct, cheaper, more con­ve­niently, and with sat­is­fac­tion guar­an­teed, you can only gain.

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