E-tail: Look at consumer- and employee-interest
The government must also intervene if firms are exploiting vulnerable workersUpdated: Jan 20, 2020 20:13 IST
When Jeff Bezos, the founder of global e-commerce giant, Amazon, visited India last week, he promised to bring in a billion dollars in investment and generate millions of jobs. But his visit has also intensified a debate on the pros and cons of the growing e-commerce sector in India. Both Amazon and Flipkart are being investigated by the Competition Commission of India (CCI) for violating competition laws. Commerce minister Piyush Goyal went so far as to suggest that Amazon’s investments were mostly to fund losses arising from predatory pricing.
E-commerce companies have become an integral part of the retail economy. Hundreds of thousands of people are employed in them and millions benefit from the convenience of shopping and discounts they offer. To be sure, e-commerce is still a small fraction of India’s retail economy. According to a research note by CARE Ratings, e-tail accounted for $24 billion, just 3% of the total retail market in 2018, with the latter being dominated by mom-and-pop stores. These numbers underline the importance of proceeding with caution. Any large scale disruption to unorganised retail will hurt the livelihoods of millions of people. But few countries would be comfortable applying competition law to companies accounting for 3% of an entire sector.
Importantly, preserving the livelihoods of people in retail sector needs more than just remaining vigilant to issues of predatory pricing. E-commerce giants have taken a leaf out the approach of erstwhile manufacturing sweatshops to the services sector. Last-mile service providers are overworked, sometimes poorly paid, and without any safety provisions at the workplace. The government should crack the whip if existing mom-and-pop stores are being replaced by large companies — foreign or domestic — who are taking advantage of loopholes in the law. It should do so if consumers are getting a raw deal. And it should definitely intervene if these firms are exploiting vulnerable workers or despoiling the environment.