Piyush Goyal backtracks, says e-commerce firms bring ‘tremendous benefits’

Bengaluru: A day after attacking e-commerce companies in India on issues like legality and predatory pricing, Commerce Minister Piyush Goyal softened his stance and stated that the sector has brought tremendous benefits to the economy.

However, analysts and e-commerce company representatives who spoke to DH dismissed his earlier concerns.

“It is practically not possible to indulge in predatory pricing because sellers decide the price point - this is not how this sector works,” said a company representative of one of the e-commerce giants that Goyal had targeted. The person spoke to DH on condition of anonymity.

Goyal said on Thursday that the government wants a fair playing field which provides an opportunity to local players as well as large e-commerce firms. “We want to ensure that our people also have a fair chance to compete against such online businesses,” he said.

In an event on Wednesday, he called out e-commerce firms for unlawful activities like predatory pricing and operating in business to consumer space (B2C) when they are only allowed to be business to business (B2B).

Independent analysts concurred with Goyal’s claim of predatory pricing, asserting that there is a need for regulation which prohibits e-commerce companies from any unlawful activity.

“Claims of pricing make sense, there have to be certain norms in place where brands do not see a steep discount beyond a point. There has to be a cap in place because it hampers the growth of offline peers,” said Karan Taurani, Senior Vice President, Elara Securities.

“While not all e-commerce players are doing predatory pricing, big players often have the advantage of economies of scale and can offer deep discounts, which smaller e-retailers struggle to match. In such a case, there is a dire need for a regulatory body,” said Sachin Verma, e-commerce expert and founder of FEDUS, a direct-to-consumer (D2C) brand.

On the other hand, experts and lawyers denied any illegality on the B2C aspect highlighted by Goyal, stating that these are the fundamentals of an e-commerce platform.

“E-commerce is essentially a B2C play in India and Amazon offers its set of items to the remotest area. Therefore, I do not understand the key issue made out currently,” said Harish Bijoor, business and brand-strategy expert.

“I wouldn’t say it is illegal, that is an overstatement. I am unsure if he should have commented about it because these are on-going investigations by the Competition Committee of India (CCI),” said Prashanth Shivadass, Partner, Shivadass & Shivadass Law Chambers.

Experts also dismissed the commerce minister’s claim on Amazon’s loss of Rs 6,000 crore pertaining to predatory pricing. “Losses within an organisation happen due to a variety of reasons. If you look at the current degree of loss, in the larger play, it is a small number,” said Bijoor.