Tech This Week | Amazon and Flipkart make lockdowns effective
One of the main features of tech policy may be the sheer number of disciplines it intersects with. With the pandemic getting worse, in India, we have gone back and forth on locking down areas to stop the spread of the virus. In the last few weeks, we've seen lockdowns happen in Jharkhand and West Bengal. As you hear how and where lockdowns are being imposed try to take into account the role e-commerce plays to make sure such measures work.
It has additionally been fascinating to witness the way the government’s thinking has evolved in this regard. There's been renewed importance put on the sector. And that’s not merely due to reports of a fresh draft e-commerce policy, but as a result of how e-commerce has been seen as a mitigating instrument to manage lockdowns.
During the earlier days, goods and services were classified into essential and non-essential. That classification is not reflective of the way the world works. On a macro level, kirana stores could be essential but if the trucking industry isn't, kirana stores don't have a lot of supply. On a micro level, the charger to my notebook can be an essential commodity for me personally to sustain my livelihood, however in the eyes of the government, it is not.
And that's fundamentally key to managing the lockdown. Citizens need supplies to survive, and if indeed they can’t have them online, they will venture out. Hence, e-commerce needs to adapt and fast. The government seems to realise this. Because the classification mentioned above, the federal government has learned and shifted to understand the role of e-commerce in keeping citizens safe. According to a written report by Economic Times, the federal government has been thinking about enabling partnerships between e-commerce companies and kirana stores to make sure better last mile delivery of goods.
Given this, and the urge to be competitive in a cut throat environment, e-commerce companies have kept pace. Not merely have the supply chains not completely collapsed, but companies such as for example Zomato and Amazon have enabled contactless deliveries to minimise putting the citizen at risk.
Sellers and buyers also have responded accordingly. According to Business Insider, both Amazon and Flipkart saw a 9X upsurge in the quantity of sellers coming back to the platforms for business. On the consumer front, demand also doubled for ‘non-essential’ goods that would enable people to spend additional time at home-for example, dishwashers, floor cleaners, and innerwear.
None of this could have been possible had the market not been encouraged to use in a usual manner. Even though that is half the battle, there is also a need to promote more offline sellers to get online. Small and medium offline sellers are going to be severely hit by the pandemic. Their demand base has taken a hit. They could only reach a section of the people within their geographical vicinity before the crisis. Now, even that section is afraid to go out. With almost non-existent sales, margins diminish, and it is hard to pay staff a living wage.
The only option here's to move online. Doing this provides reach to a broader segment of the populace and enables usage of a distribution network that covers the distance and breadth of the united states. But moving online has its challenges. As I mentioned within an earlier column, the existing structure has set up monetary and compliance hurdles for offline sellers to move online. Having obstacles may have made sense in a global without the pandemic, it really does not now.
Earlier this week, I was having a conversation that revolved around whether it could make sense to have a framework that could enable the federal government and the industry to work effectively together. My initial response compared to that was to question the role the federal government could play in enabling the e-commerce sector. To get a framework that identifies spaces where the government could make life easier for e-commerce companies, the initial step is to look at how and if the federal government is acting as a hurdle.
Compared to that end, there are only a couple of things the Union and State governments should do. Firstly, ease barriers to entry in to the online space for offline retailers. Failure to achieve that can have lasting impacts on the offline retail space, without giving it an opportunity to survive. Secondly, work in collaboration with e-commerce companies while imposing lockdowns because lockdowns in a single area can impact supplies to others.
At this point in time, nationwide e-commerce supply chains are a secured asset that should be strengthened. Failure to carry this out successfully can make lockdowns ineffective. Citizens venturing out to buy goods throughout a lockdown can be an unintended, anticipated consequence and hence, should be mitigated.
