Trader body faults India's e-commerce business practices

Raising concerns on how the e-commerce companies can offer more discounts to customers than the brick and mortar shops, the Confederation of All India Traders (CAIT), an apex body of the traders in India has written to Commerce Minister Nirmala Sitharaman demanding a probe into their business module.

“We invoke your kind and immediate attention to business module of e-commerce companies in India conducting online selling activities. A few companies have given big advertisements in media for ‘big Sale’ or ‘Diwali Sale’ on their online portals.

 Since such companies are providing merely technology platform for the sellers who are registered with them and since the ownership of the inventory is not with them, a pertinent question arises as to how can they offer ‘Sale’ on portals. We apprehend some kind of hidden agenda behind the scene which needs to be unearthed,” CAIT said in the letter to the minister.

The traders’ body said that such business practice was causing losses in the business of brick and mortar shops particularly in segments of cosmetics, daily use items, footwear, apparels, watches, gift articles, electronics, computer hardware and software.

Other consumer goods items such as mobiles and its accessories, toys, home furnishings, kitchen appliances, sports goods and books businesses and their off-line sale were also being hit, CAIT said.

“It is surprising that even after paying commission and shipping charges to the e-commerce companies, the online shopping is cheaper than offline markets. It is understood that commission of such companies ranges from 5 per cent to 20 per cent of the cost of the product which is generally not the profit margin of offline market,” CAIT’s Secretary General Praveen Khandelwal said in the letter.

CAIT also said that the e-commerce companies were causing loss of tax revenue to consuming states. The traders’ body said that it was also contemplating lodging a complaint with the Competition Commission of India about the unfair competition practices by the e-commerce companies.