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.