Indian retailers are up in arms against the online onslaught

Policy flip-flops may have forced the Big Retail to stop midway in their passage to India, but Indian retailers are fighting a different animal altogether - the e-retail.

With online shopping gaining currency among the middle class, the threat of physical stores getting cannibalised is clear and present.

Internet has transformed the retail experience for consumersby activating their emotions and sparking the desire to buy through imagery, videos, virtual try-ons, real-time feedback, free home delivery etc. But while online shopping has been a boon for customers, it’s proving to be a death knell for thebrick-and-mortar retail businesses.

This is because the web is literally crawling with multi choices all brought to to your desktop with just one click.

The digital age has brought with it virtual stores, which is slowly but surely killing the need to visit physical stores.

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Customers find virtually anything they need online at ridiculously discounted prices and have them delivered for free. They save money, fuel, time, get more done in same time frame. Can a physical store really compete with that?

Little wonder thatseveral small brick-and-mortar retailers have come together and sought protection from e-commerce companies, which they say are undercutting them with predatory pricing.

According to a report in The Economic Times, “The retailers, mostly from Bangalore - home base for Flipkart, India’s largest e-tailer - have written to the Competition Commission of India, complaining that their online counterparts are selling goods below cost and skirting Indian laws on foreign direct investment in retail.”

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Aprotest movement has begun with the setting up of a website called “wewillact.com”, whichdetails more than a score retailers in Bangalore, and claims support of “1 ,000+" retailers who are seeking to protect their “right to survive and grow”.

Their main grievance against online retail is that millions of physical retailers suffer and close their store because they can’t afford to operate on a loss making business model like most online retailers who get massive VC funding.

[caption id=“attachment_798289” align=“alignleft” width=“380”]  The digital age has brought with it virtual stores, which is slowly but surely killing the need to visit physical stores.
Reuters[/caption]

The Indian government is considering a move to allow FDI in online retail. At present, the government permits 51 percent FDI only in multi-brand retail and not in e-commerce. The size of India’s e-commerce market is estimated to be Rs 50,000 crore and companies such as Flipkart follow a dual-company route to work around the restrictions.

“We have a simple mission: to protect the “RIGHT TO SURVIVE AND GROW” for all level and section of people. We do not oppose the online retail format or any legal business format but we strongly oppose the unethical business practices of 2-3 big online retailers who are selling in losses to capture the market. For these big online retailers and their investors, it is just GAMBLING but for millions of poor retailers it’s a matter of their BREAD AND BUTTER,” saysHari Rastogi, a Bangalore-based seller of electronic goods and the founder ofwewillact.com.

Rastogi is a distributor for Dell and Samsung laptops in Karnataka and also runs a website called www.Laptopwale.com, which is unable to face stiff competition from online retail stores due to ‘predatory pricing.’

“The customer today checks the price in online retail store (XKart, Ydeal..) and then comes to a physical retail store to negotiate for same price by which the physical retail margin shrinks and most of them are losing their interest in the business,” Rastogi alleges.

The retailers have appealed to the government to take action against ‘unethical online retailers who are using their money power to sell products at below cost price to lure users and killing the whole market using Foreign VC money.’

The retailers have also alleged that even though VC funding is not allowed in e-commerce, some online retailers are floating parent companies in Singapore and routing the money to India.

For instance, Flipkart has incorporated a new parent company in Singapore which owns the back-end and wholesale B2B operations while it has sold its front-end WS Retail to a group of investors led by former OnMobile Chief Operating Officer Rajiv Kuchhal, says in a NextBigWhat report.

Flipkart recently raised around $150 million, taking its war chest to $550 million to extend its lead to a level that makes it more challenging for Amazon and others to catch up.

These Bangalore-based retailers have appealed all offline retailers to boycott purchase and supply of goods to ‘unethical online retailers.”

A 10-year old computer distributor in Bangalore laments on the site that “The XKart guys purchased the hard disk from me at R 5,200 and they were selling in their website for Rs 4400.00. This kind of unethical business practices are spoiling our market. I am not supplying to any online retailers any more but they have money and buying from any distributors across India or importing directly. If they will continue this kind of loss making business practices I have no option but to close my distribution business.”

In September, camera-maker Nikon warned its customers that e-commerce players Flipkart and Snapdeal are not the company’s authorised dealers in India, a move prompted by several physical electronic product retailers protesting against the undercutting of prices that e-tailers are often accused of doing, reported the Hindu.