Offline Retailers go crying to the Government as Online Retailers grow exponentially

Indian retailers are getting desperate with each passing day as online retailers take away their sales (and profits), with the convenience of shopping at home and that too at cheaper prices. Online retailers in India have seen their revenues grow exponentially. Even the smaller ones such as shopclues.com have seen their top line grow by 700%. With the initial fears of personal security in buying online dissipating with passing time, online retail has become the choice for an increasing number of consumers. Not only is there more choice, but the prices are much lower. Also online retailers are most trustworthy, as sites such as amazon.in have good buyer purchase protection programs and also allow only genuine sellers on their marketplace.

In India, you easily get duped by offline retailers as there is little by the way of contract law in India. Going to the policy makers and courts is mostly a futile and time consuming exercise, so for small ticket items the brick and mortar retailers can cheat you with impunity, secured with the knowledge that the consumers will not create a ruckus. Even in the online world this cheating is possible, but it is less given the constant online review mechanism.

Online retailers are killing the offline ones due to the following advantages:

1)     Much lower costs given that they have almost negligible rental and staff costs

2)     Bigger scale compared to the mom and pop guys who allow them greater bargaining power in relation to suppliers

3)     Deeper pockets as most such as Snapdeal and Flipkart have got massive cash infusions from PE players

4)     Convenience as driving and parking on India roads is a major hassle.

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The biggest problem for the offline retailers is that they can’t compete on costs. These days many consumers go to normal stores to browse goods which then they end up buying online as it is much cheaper. Mobile phones are being mostly sold now through the online channel in urban areas as the price differential is quite large. Offline retail cannot match the prices because of their large overhead costs.

Complaining to the minister will not help as this is an inexorable trend and most of the smart brick and mortar guys can see the writing on the wall. Biyani is already tying up with Amazon and Chroma too is looking to sell products through tie-ups with the big buys such as Flipkart.

Hindu

In a letter to the Commerce Minister Nirmala Sitharaman, Confederation of All India Traders have raised concerns about “predatory pricing” strategies by e-commerce players that is causing losses to brick and mortar stores and has said that this is against the principle of fair market and fair competition.This comes in the wake of the big sales being announced by e-commerce players.

The trade body said, “It is astonishing that same brands of large number of products are being sold at a much cheaper rate by these companies in comparison to offline market. Such tendency is causing much business loss to brick and mortar shops particularly in segments of Cosmetics, daily use items, footwear, apparels, watches, gift articles, electronics, computer hardware and software, Mobiles and its accessories, Toys, Home Furnishings, Kitchen Appliances, Sports goods, Travel Luggage and Accessories, books and many other. Jewellery is yet another segment which is also being hit due to online market.”