Geetanjali Krishna: Online prices, offline woes

The other day, I was passing the time of the day with the old fruit seller who cycles through my neighbourhood every day. Did he know, I asked, that one could order Alphonso mangoes online? He nodded gloomily and said, "I'm an old man, unfamiliar with technology. I fail to understand how something like fruit, which people like to touch and feel before they buy, can be sold online! But if this is happening, I see bad times ahead..."

It got me thinking. To most of us, being able to buy monthly groceries, mobile phones, books and electronics online is cheaper and more convenient. At a time when online retail is hitting all-time highs, maybe we should spare a thought for smaller brick-and-mortar retailers who're being eased out in the process.

I spoke to the Bangalore-based computer retailer Hari Rastogi, who's formed a group, We Will Act, to protest against, what he says are predatory pricing strategies of large online platforms. "Most of the large e-retailers like Flipkart have received huge funds from foreign venture capitalists. To drive their online sales and grab a larger market share, they're selling products at loss-making prices," he told me. The capital invested in them allows them to bear the losses on sales, but smaller retailers have no such backup. According to his website, over a thousand retailers have signed up to protest against the unethical pricing strategies of online players. "But call any computer retailer from the Yellow Pages and ask about the competition he's facing from online platforms. No one can compete with someone who doesn't want to make a profit at all!"

On their Facebook page, I read the story of Raju, who owns a shop called Laptop Bazaar in Bangalore. "In the last one year, I have hardly sold any laptops," he said on the phone. "Customers now keep track of online prices and ask me to match them," he said. However, prices of the same laptops on Flipkart and other online vendors are even below his distribution price. "I've asked the sales managers and distributors of computer companies how their products are selling at such low prices online. They say that they can't do anything if an online vendor wants to sell at a loss," he said. "As a result, I am losing my customers as well as their trust, as they go away feeling that I'm overcharging them," said Raju. Consequently, he is focusing on growing the computer maintenance aspect of his business, and has virtually stopped selling computers. "I sell two, maybe three, laptops in a month. But how can that justify the Rs 15,000 I pay as rent, and Rs 10,000 I pay to the salesman I employ? So even though I've done electronics engineering, I am now making ends meet as a repairman," he said.

The retailers' pressure group has complained to the Competition Commission of India that online platforms are selling goods below cost and skirting Indian laws on foreign direct investment (FDI) in retail. "We have also filed an RTI application seeking the Enforcement Directorate's report on Flipkart's violations of FDI regulations, but somehow, the government is not interested in our plight," said Rastogi. Meanwhile, Lenovo India recently joined manufacturers such as Toshiba and Nikon by issuing an advisory to its buyers against doing business with e-retailers.

"We don't have any problem with online retail. But the government and the Competition Commission should ensure that all retailers, online or offline, sell at MRP, not lower. This will give us a level playing field," said Raju. Ill-equipped to play the game of Last Man Standing, time is already running out for small retailers. As Rastogi says, "online retailers are fighting for bigger market shares right now. But people like us are fighting for survival..."