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%.