Flipkart to tie up peers to form lobby group, fight offline onslaught

India’s e-commerce companies are engaged in a stiff battle to score over their rivals since the past year. However, the online players have realised offline players pose a much bigger challenge for them. To beat the online players in their game and also to safeguard their interests, the brick-and-mortar shops have been lobbying hard with the government for parity in FDI norms and also against inventory-based e-commerce which has been banned by the government. [caption id=“attachment_428913” align=“alignleft” width=“380”]  Flipkart CEO Sachin Bansal[/caption] Now, the online players have decided to take the offline players on their game by coming together to form a lobby group. The initiative was taken by Sachin Bansal, Chairman, Flipkart  to take on brick-and-mortar retailers like Aditya Birla Group and the Future Group. According to a report in Times of India, these offline players are seen to be influencing government policies through organizations like the Retailers Association of India (RAI). The report suggests that Bansal, along with the heads of several other e-commerce & internet-based companies, recently met Minister of State for Finance, Jayant Sinha to discuss their concerns about the online sector. “All key players are realizing the effect an association like RAI creates on the whole ecosystem. Most of us have our own different paths and strategies, but some issues are common to all and these could be addressed better as a group,” ToI quoted a senior executive who was present at the meeting. Many in their e-commerce space allege that offline players may have influenced the government’s move in March to ask foreign funded e-commerce players to operate only as a marketplace and also get the put a cap that one seller cannot exceed 25 percent of total sales. E-commerce companies are also opposing several state governments’ move to impose entry tax on goods purchased online, and allege that retail lobbies could be behind the move. “The decision to impose such a levy without any ostensible justification seems not to be driven by clean hands. The governments seem to be catering to various retail lobbies, which failed to stop e-commerce otherwise,” an ET report quoting an industrial official had said in March. Uttarakhand, Bihar and Assam have already imposed an entry tax while almost half-a-dozen other states, including Gujarat, Madhya Pradesh and Rajasthan, are considering a similar levy. Flipkart had sued Uttarakhand for its decision to impose a 10 percent entry tax on goods purchased through e-commerce. Besides fiercely lobbying with the government, these offline retailers have themselves taken the plunge in the online space to take competition head on. Retailers like Future Group, Godrej Group, Shoppers Stop and Reliance Fresh Direct are steadily investing into the online space. While Future Group has invested Rs 100 crore to spruce up its e-commerce strategy, Shoppers Stop, has spent Rs 20 crore to link its online (shoppersstop.com) and offline activities, Business Today report said. “Earlier, we were multichannel and our online store was not connected with the physical stores. Now we have realised that omni-channel would give us better economies of scale,” says Govind Shrikhande, Managing Director, Shoppers Stop, explaining the move. Further, to compete with Flipkart, Amazon and Jabong etc, offline players like Future Group and Hindustan Unilever too are upgrading and automating their warehouses, said a inancial Express report. Rakesh Biyani, director, Future Group said, “We have already automated our warehouses around 3 years back and we continue to adopt new technologies and plan to invest around Rs 60 to Rs 100 crore in 2016-17," the FE report said.