Probably, you might have seen couple of headlines in the yesterdays and todays newspapers on the conflict between the views of traditional retail companies and that of online retail companies.
Traditional retail companies’ claim:
The ‘predatory pricing’ followed by e-retailers like Flipkart, Amazon, Snapdeal hurts the traditional brick and mortar retailers. The discounts provided by them are far below the landing price (the minimum price that is offered in retail shops). This has impacted 25-30% of the businesses of traditional retailers and have lost it to e-retailers in last 6 months. This may impact lakhs of jobs in the traditional retail industry.
Traditional retailers are also concerned if the owners of online retailers have funded the sellers to boost the sales. Boosting the traffic on these websites provide e-retailers higher valuation, hence more investments and improving their business.
E-retailer companies’ claim:
E-retailers provide only a ‘marketplace’ where sellers and consumers meet. They provide a website , a portal where the consumers can view the products from sellers and the respective prices from sellers. They do not own inventory or decide the prices for the products.
Point of view from traditional retailers
E-retailers sell brands indirectly. Once has to be cautious about it. Assume premium products getting sold for low prices in a consistent way, that will impact the brand value.
As per the basic concept of marketing, any business selling at below cost like that of predatory pricing following by e-retailers now is unsustainable. They have to be cautious that such business model will fall down eventually.
Only way traditional retailers can sustain the competition from e-retailers – move to omni-channel capabilities. These days all retailers also have an online portal available. We have also seen signs of some small kirana stores now offering online ordering and delivering facilities.
Point of view from e-retailers:
At the same time, online markets have enabled small sellers, retailers take their products to customers. People living in small towns have access now to the same selection of products as that in metros. E-retailers can reach to larger customer base using a fraction of the capital they would require for traditional retail store. Adding with the low cost of sales and distribution compared to traditional retailers has contributed to higher profits.
E-commerce is not only a meeting place for consumers and sellers. It is also improving the logistic and courier companies, which employ lacks of people.
As per stats, Indian retail market will gear up from current $650 million to $1 trillion by 2020 and there are a lot of opportunities for both offline and online retailing.
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