Offline Retailers Want “Entry Tax” Levied For Online Goods Purchases!
The protests are getting stronger from Offline retailers – It goes without saying that growth of ecommerce in India has severely affected the businesses of small retailers, especially in hardware and electronic devices category.
On one hand, Indian Ecommerce companies, with their fierce growth are looking at billion dollar valuations and on the other hand offline retailers are going out of business. It’s not only smaller shops, but even larger offline stores are seeing their businesses suffer.
In a press meet organized by Confederation of I.T. Association, over 1500 vendors came together and protested against the “unethical pricing” offers by online retailers. They have threatened the manufacturers of boycotting their products, if some action is not taken against these online shops.
The association has also appealed to Commissioner of Commercial Taxes to introduce an “entry tax” for goods sold online, to ensure a level playing field for them.
Like we have mentioned earlier, these small offline product retailers generally double up as product service centers as well. If these businesses boycott manufacturers, they will not have any service centers left.
The biggest issue is that consumers buy products online at extremely good rates and for warranty and other services they approach offline retailers, on which they do not make any money.
Over past 12 months or so, the protests from offline retailers have been growing stronger and stronger. Last year many physical store owners came together to form “We Will Act” initiative, which appealed to consumers that they should not buy products from unethical online retailers.
Many product manufacturers like Lenovo, Toshiba, Netgear, Nikon and others have even announced that products bought online will not get any warranties as these ecommerce stores are not their authorized agents.
While I completely sympathize with the plight of offline retailers, they need to accept the new world order. How much ever they protest, these ecommerce shops are here to stay.
Infact, most of large online retailers are actually marketplaces where these physical stores can create their storefront and sell the products. Rather than protesting and boycotting, they should look at these online marketplaces as a new channel for business which exposes them to millions of new customers. Some of them who have adopted this online model have seen their business grow multifold.
While I do agree that online retailers do undercut the prices to get new customers, and VCs are pouring inordinate amounts of money in them, they are here to stay. Offline retailers need to accept that and move forward.
Would love to hear your comments on this!