Has e-commerce served us well, or has it been destructive to the economy? | Business Matters

Last week, Union Commerce Minister Piyush Goyal pointed to Amazon India’s losses and wondered if it weren’t indulging in predatory pricing. Predatory pricing could mean small vendors start falling by the wayside and a heavily funded giant could alone be left in the fray. Is that what is happening? Or has India benefited from e-commerce players?

The minister said that when large online retail companies announce big investments in the country, it is mostly to make up for large losses that they may have made.

Our group publication Businessline quotes the Minister as saying: “When Amazon says it’s going to invest a billion dollars in the country, we forget the underlying story that the billion dollars is not coming in for any great service or any great investment to support the Indian economy. They made a billion dollars loss in their balance-sheet and they have to fill in that loss.”

He also that half of India’s market could likely become part of the e-commerce network in the next decade, which was a “matter of concern.” On the implications of e-commerce, the Minister has proposed a “dispassionate and data-driven" analysis of its impact. He also pointed out the decline of traditional “mom and pop” stores in countries like the US and Europe due to the rise of e-commerce.

India is not the only country to look at behemoths with concern. In 2019, the US Dept of Justice DOJ said it was looking into how major online platforms have “achieved market power” and how their practices may have “reduced competition, stifled innovation, or otherwise harmed consumers.”

In fact, earlier that very year, Amazon boss Jeff Bezos told shareholders that “large entities deserve to be inspected and scrutinized,” according to a CNBC report.

In an article in businessline, my colleague Aarati Krishan emphatically argues that with all its problems, "e-commerce has done more for ease of living in India than policymakers through their regulatory interventions.”

Has e-commerce been good or bad for the economy?

Presentation: K. Bharat Kumar
Video: Johan Sathyadas
Production: Shibu Narayan

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