Why monopoly in e-retail is bad? – UPSC GS3

Utility: Direct question can be asked on the topic.
  • Indian retail market would value at $2 trillion dollar by 2030 .
How would big e-retailers dominate the market?
  • Bulk buyers: Big e-retail companies will buy in bulk. They will dictate price and stifling terms to manufacturers.
  • Technological advantage: Along with investment in Artificial Intelligence and process systems, their delivery prices to consumers will eventually be less than the procurement price of kirana stores.
  • Supplier to small stores: E-retail companies would become super distributors to kirana stores and will use them as pick-up points for ordered merchandise. Simultaneously, kirana stores will be nudged and compelled to increase the minimum order size, driving up inventory costs and losses for such stores. This would be a temporary arrangement and over the next 10-20 years, a majority of kirana stores will close.
Problems associated with monopolistic e-retailers:
  • Loss of employment: Many among the 20 million small establishments (the kirana stores) would be closed. Further, the 40 million families dependent on the informal and formal retail chain would also lose their jobs.
  • Stifle entrepreneurship: It would deplete the independent entrepreneurial streak that is essential for a nation’s progress.
  • Impact banks: It would impact public sector banks and make them lose the lucrative retail segment. This would happen as E-retail firms have the ability to source and provide cheaper credit to consumers.
  • Impact on Media: It would reduce the independence of media outlets by taking a larger share of advertising revenue. Due to their huge presence, brands will be obliged to spend heavily on advertisements to gain visibility for their products.
  • Control over data: The massive control over data would enable them to become arbitrators of opinion and decide the fate of elections. This would undermine free and fair elections in our democracy
Way Ahead:
  • Europe is considering legislation to address the monopolistic behaviour of big tech companies and to make data anonymous. India can learn from this for improving regulation, enforcement and anti-trust legislation in the country.