In times of digitalisation, when expediency has reached a stage where everything is accessible at fingertips, what does the future hold for online market?
As per IBEF, the Indian e-commerce market is expected to grow to US $200 billion by 2026 from US $38.5 billion as of 2017, thereby indicating a substantial shift towards online market. Having said this and the recent Walmart vs Amazon spate to buy majority stake in Flipkart, there is one aspect that goes unanswered. Flipkart, being one of the biggest online e- commerce giant, already holds online majors Myntra, Jabong, Ebay(Indian wing) amongst others, will now sell majority of its stake to either of the above mentioned (Walmart or Amazon). The question here stands, would this lead to consolidation of online platforms in the sense that, all platforms would now be controlled by a single entity, which will be able to dictate the terms of market. If yes, would this further lead to a situation of possible monopoly considering the giant, Flipkart already boasts having 100 million user base in India. At stake is a growing online sales market as more of India’s 1.4 billion population comes online for the first time.
In order to increase the participation of foreign players in the e-commerce field, the Indian Government hiked the limit of foreign direct investment in India in the e-commerce marketplace model for up to 100 percent (b2b models). The Retailers Association of India, recently wrote to Commerce and Industry Minister Suresh Prabhu, raising concerns over the discounting model of e-commerce firms, “The FDI policy forbids marketplaces from participating in pricing directly or indirectly, but these companies are not only influencing selling price but also selling own brands/private labels through website”. The letter further said, “This ultimately results in multi-fold increase in valuation of such companies, despite them making losses. The aim of accepting of FDI is not to avert losses, but to increase valuation so that a few shareholders are able to achieve the maximum benefit”.
On one hand, the short term impression in form of reduction in data prices and the launch of affordable 4G devices will further boost the expansion of the buyer base for online retail markets in India. Alternatively, the long term impact in form of shrinking of the online market through acquisitions will leave Indian economy with few major investors including Amazon, Softbank, Alibaba, thereby influencing the decisions of the entire retail market.