The Business Standard editorial [26 August 2024] emphatically stated that ‘E-Commerce policy should aim to enhance competition’. As I got speaking with experts with deep experience in the E-Com domain, I realized that there is no one definition of what is broadly called E-Com. And taming the E-Com dragon is well out of question.
At one end of E-Com is the sale of services that are done totally through the electronic mode, by a few clicks of your mobile phones. You can buy an insurance policy, pay for it all using your smartphone. Same can be said of the airline ticket, movie ticket or hotel room.
Then there is E-Com that is used by brands that sell you products. Ola E-Bikes are sold entirely online. You place the order and the bike gets delivered to your home [Ola is also setting up its own consumer contact points now].
Then there are products that are sold online [and offline] and here again there are many shades. There are brands like Nike who sell shoes from their own stores as well as from their website and other E-Com platforms. Consumers can be Webroomers [search online buy offline] or Showroomers [search offline but buy online]. My column in this paper [9 March 2023] explored these two animals and other species.
While Nike is a global player, there are small brands that are able to sell across the country through the E-Com medium. They don’t have the brand pull of a Nike and not too many people will stumble across their offering but for the help of the E-Com platforms. These platforms are providing small manufacturers of products a window to the world. A few of them I am familiar with are categorical in saying that E-Com platforms are a great blessing. Even when I probed them about the loss of customer data [the platforms own the data you see], they feel the upside is substantial. Someone even said ‘Customer data is overhyped’. Big brands don’t share this view; Nike is hoping to sell more and more from their own website and from their own stores in order to own the entire customer journey. But a small manufacturer of kurtis or agarbattis is not worried about loss of customer data.
Then comes the kirana merchant who is facing multiple threats. Two decades ago it was the modern trade outlets. As I had argued in an article I had written in the Hindustan Times [28 January 2024], the Indian kirana is a master of survival. They have managed to adopt digital technologies, UPI payment interfaces, quick delivery and more. But is there a new threat looming ahead?
As an expert told me, the local kirana managed to face off the formidable modern trade through their locational advantage. It was simple to walk across to the kirana and buy what you wanted. The tortuous drive to the supermarket was not adequately compensated by the discounts you got [unlike US shoppers who buy their discounted groceries every month from Costco / Walmart and stores them in their huge house / garage, urban Indian homes are small].
Kirana survived the modern trade. Then around ten years ago came the E-com platforms and market places. They offered great discounts but had some limitations. You had to be sure about when you can take delivery. And if you were in the next building chatting with your friend, as most Indians are wont doing, you miss the bus. This last mile or last minute problem has been solved by the Q-Com, or quick commerce merchants. They offer a limited range of products, but a good enough variety. They offer some discounts, not in the Costco league. But they promise to deliver in 10 or 15 minutes. This is a sure win proposition for densely populated big cities. While all the Q-Com merchants are still losing money, they seem to be making an impact. Question remains if they can get a big enough segment of Indian consumers to make the switch. And how will the kirana change.
As an expert in this domain said, inherently the kirana merchant is inefficient. They are surviving simply because they often own the real estate [or pay old rent], they are run by the family that owns the shop, so no salary or very little salary cost. So they can run on low margins with a fair amount of inefficieny built in. Try buying a large pack of a liquid detergent from your neighbourhood kirana, you may get excuses like ‘Company ka aadmi aya nahin’ ‘Last pack got sold yesterday’ etc. That said I think the humble Indian kirana will not give up without a fight. They are trying to get the government to support their cause; and I wish them all the best. More savvy kiranas are already changing. Some are becoming specialist gourmet shops. Some are becoming mini-supermarkets. Some are setting up their own super efficient delivery system. Some are expanding on their ‘khata’ system.
Indian kiranas are agile enough to face the Q-Com challenge. But it is going to be a tough fight.
Appeared originally in Business Standard Sept 2024