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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..."
n the past three months ending May 31, beating its BRIC peers. Brazil’s Bovespa index gained 8.8% while Russia’s Micex Index and China’s Shanghai composite Index stayed flat in the same period.ETFs tracking the MSCI India Index have received fund flows worth $401 million in the past three months, and have surpassed regional peers during the same period, according to a report in today’s Economic Times. FTSE China 25 ETF has seen outflows of $928 million, Hang Seng ETF has seen withdrawal of $267 million by investors, MSCI BRIC ETF witnessed outflows of $47 million, while the iShares MSCI Emerging Markets (EEM) ETF has seen marginal outflow of $4 million during the same period.In an interview with the ET, State Bank of India chairman Arundhati Bhattacharya, said that while everyone likes to compare India to China, the country needs bigger banks if it wants to grow like their northern neighbors.“Among the top 10 banks in the world, three of them are Chinese. Why did that happen? Because the Chinese economy grew and, therefore, the banks had to grow in order to provide credit,” she said. “Things will happen in India if the Indian economy grows. India will need bigger banks. To build bigger banks organically is difficult. So, to do it in an inorganic way by clubbing some of the banks will be the best route,” she told the ET.Investors are hoping that the new Modi government will work to greenlight much needed infrastructure projects in India.