#SwatantraOpinion

Leveraging E-Commerce To Revive Economy

Introduction

The governmental ban on the delivery of ‘non-essential’ goods by e-commerce websites demonstrates that the promise of ensuring a “level-playing field” stands defeated, and has, in fact, made way for lobbying by vested interests. Restarting electronic commerce is not only the safest strategy to resolve supply chain management issues, and create some jobs —but will also help in the critical goal of revitalising MSMEs, and reviving the economy, in an era of social distancing. At a time when brick-and-mortar stores are being allowed to operate in various parts of the country, the denial of market access to e-commerce is devoid of any moral, or economic justification.

The problem with the governmental determination of the essentiality of a product, or service.

As the world adapts to the ‘new normal’, amidst the growing belief that lockdowns are here to stay—the question of determining the essentiality of a product, or service, assumes importance. In a scenario where lockdowns are increasingly becoming a regular feature of city life, the question of what is essential should be best left to the judgment of consumers. One can argue, for instance, that electronic goods, including mobile phones, can be as essential to sustenance—as say, wellness products. That the government has permitted the delivery of latter, but banned the former, is devoid of logic. Going by the present definition of essentiality, around 93 per cent of e-commerce sale in India is said to be ‘non-essential’. Estimates suggest that electronics is the biggest online retail sales category with a share of 48 per cent, followed closely by apparel at 29 per cent. Such goods can be perishable, or irreparable, and therefore—it is wrong for the State to assume that they are non-essential, and hence non-worthy of being sold.

Dealing with the jobs argument

At the heart of the moral argument against kick-starting online retail, lies the misconceived belief that reinvigorating electronic commerce will lead to a loss of jobs, in the COVID-19-hit economy. Nothing can be farther from truth; for experience suggests otherwise. Fuelled by the lockdown-induced demand, Amazon has hired 1,75,000 workers in the Untied States. A resumption of e-commerce activity in India could similarly result in employment opportunities for thousands of out-of-work employees, from shuttered factories, restaurants, and retail stores.

It is important to look at online retail as an extension of regular commerce. Despite high levels of growth, numbers suggest that e-commerce accounts for just 3% of total retail sales. Moreover, most websites follow a marketplace model, where many small, micro, and medium sized businesses host products. It is further important to note that the concerns of the trading community, relating to pricing, and market dominance on such platforms have largely been addressed, and continue to be reviewed, from time to time. It accordingly follows that many brick-and-mortar stores are indeed better placed to resume economic activity by utilising the supply chains of e-commerce retailers. The argument that doing so will result in unemployment, does not hold ground.

The market potential for online retail is now too big to be ignored.

With over 450 million smartphone users, and the expected increase in number of mobile internet users to 850 million by 2022, the Indian appetite for online retail is growing faster than ever before. To some extent, e-commerce in India has out-grown the first wave of its consumers in metro cities, and is now adding consumers from Tier-II, and Tier-III cities. The suspicion around e-retail, has to, therefore, end—and efforts have to be made to use it as a medium to reinvent, rediscover, and re-orient the dynamics of market economics.

Integrating small businesses with e-commerce.

According to the National Report on E-Commerce Development in India, released by the United Nations Industrial Development Organisation in 2017, 85 percent of the SMEs which adopted E-commerce believe that it is a cost effective medium to grow sales, having witnessed 51 per cent higher revenues, and 49 per cent more profit, on an average. The Report further highlights that E-commerce enabled SMEs reported 60 percent to 80 per cent reduction in distribution, marketing, and sales spends to get incremental business. Evidence, therefore, suggests that e-commerce can be a win-win situation for retailers, and consumers alike. Governmental interventions, accordingly need to be directed toward incentivising the adoption of e-commerce models by brick-and-mortar stores.

The importance of e-commerce in fixing the pandemic-hit supply chain.

The COVID-19 pandemic has brought social, and economic life to a standstill. E-commerce has the potential to emerge as a key pillar in our fight against this virus. Online shopping, and telemedicine, can go a long way in avoiding in-person contact, thereby reducing the risk of new infections. Online entertainment can make lockdown measures more successful, by making them more bearable. Children who may be cut off from their dependent parents can use e-commerce to meet their needs, and by linking the local kirana store to the e-commerce platforms, delivers can become faster. By utilising the rail, and air cargo network, e-commerce can be the excuse we need to resume limited activity by incurring minimal health risk, at the end of private enterprise. In China, for instance, e-commerce played a key role in maintaining retail operations in Wuhan during its two-month long lockdown. Alibaba in China led the market response by using automation, driverless smart vehicles, smart machines, and delivery boxes in gated communities to keep the last-mile delivery of goods, contact-less. E-commerce is here to stay, and so is the pandemic. It is about time that we recognise that, and leverage the potential of online retail, to protect our supply lines from such shocks.

Conclusion

The step-motherly treatment of the e-commerce industry comes at a time when Facebook has invested $5.7 billion in Reliance Jio, for a seat at the table. Reports suggest that Jio is already testing an ordering system on WhatsApp which will enable users to order items from millions of kirana stores. A day after this announcement, Amazon launched its initiative ‘Local Shops on Amazon’ to connect India’s neighbourhood stores with its platform. As the market seeks to transform and digitise retail in India, government cannot be held to ransom by lobbyists. It must rise to the occasion, and give the market a chance—and some much-needed freedom.

Gaurav Sansanwal
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