Challenge of the Goliath

Context: India must be wary of monopolistic e-retailers.

Challenges of monopolistic e-retailers:

• Cornering a larger pie of marketplace: Jio Mart, Amazon, Walmart or the Tata Group cornering a larger pie of the Indian retail marketplace estimated to be $2 trillion by 2030.
• Chinese expansion: Chinese companies like Alibaba and Tencent wanting a piece of the untapped market but retreated due to Indo-Chinese disagreements.
• Hurting small value chains: 20 million small establishments (the Kirana stores) and the 40 million families spread across every street of the country dependent on the informal and formal retail chain.
  • Big e-retail companies, by being procurers of goods in large volumes, dictate the bottom of the pit prices.
  • Along with investment in Artificial Intelligence and process systems, their delivery prices to consumers will eventually be less than the procurement price of Kirana stores.
• Crony capitalism: Markets that used to be served by independent entrepreneurs are now increasingly being served by the expansion of existing businesses.
  • Over time, it depletes the independent, entrepreneurial streak that is essential for a nation’s progress.
  • Crony capitalism generates monopolies that reduce competition, strangle innovation and disincentivise smaller businesses that actually create jobs and economic dynamism.
• Huge social costs:
  • Jobs in the unorganised sector are not registered, and when millions are lost, they will not get documented.
  • With the addition of services, e-retailers will also dictate the terms to credit card companies and e-payment platforms to retain part of the fees collected when customers make purchases.
• Manipulation of consumer behaviour: Data enables corporates to target and influence consumer behaviour, while aggregated data allows for large-scale manipulation of markets.
• Media independence: A free and independent media is one of the pillars of democracy. It survives on advertisements and is already beginning to collapse.
  • When Google was founded in 1998, print media collected over 50% of the advertisement revenue. Today, it’s down to about 10%.