Covid-19 & Retailing

What is the issue?

Since 24^th March 2020, online retailers had contended with poorly communicated policy decisions and a notification U-turn.
Renewed lobbying by physical retail associations had intensified the situation.

What are the recent problems faced by online retailers?

The problems began immediately after the announcement of national lockdown.
The initial orders of the Central government permitted the delivery of essential goods by e-commerce companies.
However, police across the states assaulted online delivery personnel.
Though state administrations clarified the policy, police intimidation in forms of arbitrary border-checks and interrogations continued.
This discouraged the delivery agents from showing up for work.

What is notification that created a problem?

The Prime Minister announced allowing certain economic activities in areas outside containment or sealed zones after April 20.
A Home Ministry notification permitted the delivery of essential and non-essential goods by e-retailers from April 20.
Later, the home ministry declared that e-commerce players wouldn’t be allowed to deliver non-essential goods.
It did not clarify when they would restart.
This caused a big inconvenience to online retailers, who had started hiring warehouse and delivery staff in readiness.

Why was this last-minute flip made?

It was the result of an urgent appeal made by two well-established small retailers’ lobbies to the Central Government.
Their argument was that physical retailers had already built up summer inventories in non-essentials.
They also said that allowing online retailers into this space would crowd them out.
This is not the first time e-commerce has been impeded in favour of their physical counterparts.
It has been subject to regular business rule changes.

What are the privileges for physical retailers?

Rules of 2019 - These rules debarred companies from selling products via firms in which they have an equity interest.
It also barred the companies from making deals with sellers to sell exclusively on their platforms.
These rules do not apply to physical retailers, for whom in-store brands can account for up to a quarter of revenues.
Investigation - The government also opened investigation into these platforms’ discount policies during festive season.
This privileging of one form of retailing over another is illogical and risky.
It is unlikely to be helpful for an economy that urgently needs to expand employment and strengthen national supply chains.

Source: Business Standard