Trader Amar Parwani, head of the Chhattisgarh chapter of Confederation of All India Traders (CAIT), is concerned about the growing popularity of e-commerce platforms such as Amazon and Flipkart as they have regular deep discounting sales. He alleged that the e-commerce portals are trying to capture the markets by becoming popular among consumers by offering them deep discounts.
“Whatever category you can think of, from furniture to mobile phones, from washing machines to automobiles, these e-commerce platforms have entered. They have ruined our businesses. In order to have higher valuation, they offer deep discounts and do not mind selling things to consumers even at a loss. If they procure an item say at Rs 100, they may sell it at Rs 40 or 50 to the end consumer. We cannot do this as we need to maintain a margin. In a way, these online players are destroying our livelihood,” Parwani told THE WEEK.
He said the deep discounts being offered by the e-commerce players are also spoiling their goodwill among customers. “Since we are unable to offer such kind of discounts, customers have started feeling that we are cheating them and thus we are losing the goodwill of the consumers. In tier II and III cities, some people feel a sense of pride in having bought items from these online portals. It has become a prestige issue for some people in smaller towns to buy things online. We know that many of these e-commerce portals are running at a loss, but still offer deep discounts. This is dangerous for the entire trader community as there are scores of people who are employed by them. These employees are also on the verge of losing their jobs as the traders have started laying off people as they are unable to sustain their salaries due to poor business,” added Parwani.
The CAIT has alleged that e-commerce marketplaces such as Flipkart and Amazon have been continuously violating FDI norms applicable to e-commerce platforms by indulging in below-cost, predatory pricing while operating on loss. “The Competition Commission of India (CCI) had also noted the fact that e-commerce marketplaces do influence prices. Online portals such as Flipkart are openly offering major discounts of upto 70 or 80 per cent which is indicative of the fact that it is using its deep pockets to provide certain preferred sellers with the means to offer such predatory discounted prices on its platform,” said Praveen Khandelwal, national secretary general of CAIT.
He further remarked that if the practice of offering deep discounts are allowed to continue, traders will suffer immensely. “It will lead to both an anti-competitive effect on the market as well as severe damage to the traders and MSMEs of the country who cannot afford to operate below cost,” added Khandelwal. In fact, CAIT has also written to Union minister Piyush Goel, requesting them to to look at the issue.
Traders such as R.C. Lahoti of the Federation of Karnataka Chambers of Commerce and Industry (FKCCI) felt that if the trend of deep discounting by e-ommerce platforms goes on, it will wipe out the existing retail stockists. Lahoti, who has been into food wholesale business, pointed out that many of these e-commerce players have started procuring directly from the mills. There are many days in a month when they are giving promotional offers such as Rs 1 per kg of sugar or toor daal etc. “The government should look at our concerns on a priority basis. It is just not the automotive sector or the manufacturing sector which is facing a slowdown. The traders community is also staring at a bleak future due to the predatory pricing of these e-commerce portals. In case India wants to become a 5 trillion dollar economy, the trading community will need to be uplifteded,” Lahoti told THE WEEK.