Govt need not intervene in e-trade

The big splash and hooplah of Flipkart’s recent Big Billion Day were proof of the fact that e-commerce has arrived in a big way in India. The e-commerce company organised it with fanfare to show that it was poised to lead this new business. It had raised considerable amounts of funds recently. That showed that investors had confidence in the business. In spite of the snags and glitches that marked its initiative on the day, a high and unprecedented volume of business was transacted. Sales of Rs 600 crore in 10 hours were beyond expectations. The inconvenience caused to many customers and intending buyers was not the important highlight of the day. It is true that the company was not prepared for it and should take the blame for it. A large number of customers went over to its rivals when it was found that it failed to honour its promises. All e-commerce companies will now be better prepared to face customer demands in terms of technical ability, stock availability, promises on prices and discounts and other aspects of business. 

While it is for them to take care of their reputation through  fair and efficient business practices, the complaints about the tools and methods of the business and the demand to regulate the business are questionable. The brick and mortar retail business, which sees the rise of e-commerce as a threat, has accused companies in the new sector of predatory pricing and offering of steep and unviable discounts. But there is nothing legally wrong when a retailer offers to sell a part of his stock on a discount. If the discount is beyond its capacity and it cannot sustain it, the company will go down. That is the rule in a free market of fair competition.  If there are unfair practices being resorted to by e-commerce companies in the matter of prices there is already a mechanism in the country in the form of the competition commission to take care of complaints in this respect. Instead, the demand is for the government to step in and regulate e-business.

Commerce minister Nirmala Sitharaman’s statement that the government will look into the complaints and demands of the brick and mortar companies is unwise. It is not an area for the government to intervene as there is no obvious violation of any existing laws. It cannot ban or put a limit on discounts.  However, if consumers are taken for a ride or cheated by new online methods of business, there may be a case for plugging loopholes in consumer protections laws. But, on balance, consumers seem to be benefiting from the new business. The government in any case has no reason to protect one business against the other.