What’s right and wrong with online commerce?
It is the digital age no doubt, and we are constantly attempting to digitise our lives. At the same time, a certain school of thought is convinced that nothing compares to the good old shopping in your local markets, with friends and family in tow.
A lot has been written about the online shopping experience – either way. I would like to take a step back and share my perspective on the pros and cons -
- The convenience it brings to the consumer. Sitting from your living room/office, you can order the stuff that you want. Get reviews and plenty of other information etc.
- Biggest product catalogs at your finger trips. You don’t have to spend time in searching from shop-to-shop for what you need. Saves time and all the inconvenience caused by traffic and parking.
- Competitive pricing. Thanks to the VC money, online commerce today is fairly price competitive vis-a-vis physical stores.
- Making products available to a wider section of population, specially in smaller cities and towns, where product availability from physical stores could be a challenge.
- In the marketplace model, there are no fundamental cost savings; as in the end, some local retailer from your vicinity could be selling to you via the Amazon’s of the world. Once VC money starts thinning out, it is not clear who pays for logistics, COD, return and multi-crore marketing budgets. The business model itself is more suitable for charging a premium to the consumer for all the reasons mentioned earlier. However, the gross reality is that e-commerce portals are subsidizing sale prices by putting money from their own pockets.
- Customer service is becoming questionable day by day. The internet and social media are full of stories wherein people have received stones/soap bars instead of the latest mobile phone they ordered. Duplicate accessories, used products, empty boxes, problems with refund - the list is never ending and increasing with every passing day. This is leading to an erosion of consumer trust. This is also inevitable in a market where price becomes the only point of differentiation.
- Retailers are disappointed, as they see online commerce not helping in the long run. If every shopper, distant as well as nearby, is going to shop online, why does the retailer have a retail presence? Why does he need to set up a shop at a prime location with a good ambience and trained staff. Mom & pop stores are waking up to this long term damage and have started to shy away from selling goods online. This does not help online commerce.
- The whole online commerce wave is riding on legal loopholes wherein an Amazon and Flipkart are not even considered as a retail entity, and a Big Bazaar is.
My take - Online commerce has an unfair advantage as they can raise billions of $s in FDI (and that’s how they have been surviving), while brick and mortar retail can’t raise these humungous funds. Thanks to the vagaries of our law-making institutions and lawmakers, a whole sector, which has been established for centuries and provides for millions of jobs, is suffering due to a non level playing field and loop holes!
Is this sustainable situation?