Flipkart incident not be used as ammunition for over-regulation: ASSOCHAM

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The Flipkart incident resulting in inconvenience to enthusiastic customers on the Diwali offer should be taken at the most as one-off case and let it not be used as a ploy or an ammunition to subject the fledgling and a hugely promising e-commerce space to regulation over and above the rules of the game which are applicable to normal business, the ASSOCHAM said.

"After the promoters of the company have expressed regrets and have assured customers to address the technical issues that may not have been expected to crop up, the matter should rest here. To suspect a mala fide on the part of Flipkart or to paint the entire e-commerce business with a brush of doubts will be wrong. If at all any regulatory issue is involved, let it be dealt within the existing laws concerning interests of the consumers," ASSOCHAM Secretary General Mr D S Rawat said in a statement.

He said subjecting this sector which holds big promise in terms of creating new market among the aspirational middle class consumers will "kill the business in its infancy, denting the entrepreneurial spirit of the promoters, most of whom are young and people willing to try out new ideas".

Flipkart incident not be used as ammunition for over-regulation: ASSOCHAM
While the unorganised retail has been estimated at about USD 550-600 billion, the organised retailers have been able to corner a market of about something like USD 25-30 billion while the e-commerce is just about USD three-four billion. "But given the kind of enthusiasm both on the part of the e-commerce players and the consumers, the sector holds a great promise of USD 15-18 billion in the next three years. What is noteworthy about the e-commerce phenomenon is that it is attracting a lot of first generation young entrepreneurs besides the global players like Amazon and e-Bay showing great interest," the ASSOCHAM Secretary General said.

While it is true that part of the existing market dominated by the brick and mortar retail format will shift to e-commerce, the internet based delivery platform has also been creating additional demand in several areas like books, music, premium goods like sun glasses, branded spectacles, .

"The demand for books, especially the non-educational, in the brick and mortar era , for instance, was also a function of the time availability of going to book stores.....But with online shopping, the demand in this segment has seen a sharp increase Thus, the e-commerce has only created an additional market for the books,".

Mr Rawat said in as far as the policy issues are concerned, there is a need for clarity in the area of foreign direct investment. The FDI in e-commerce can be allowed as the neighbourhood kirana stores are not really going to be affected by the kind of technology driven delivery platforms and the supply chain linked to e-tailing.

"In an era of technology, e-tailing is something which we cannot afford to miss or stop. Besides creating a new types of demand among the middle class people, the e-commerce will have a sobering impact on the excessive cost of commercial real estates. To assume that e-tailing will spell doom for the organised retailing in the malls and traditional markets will be an incorrect assessment".

Read more about: flipkart
Story first published: Monday, October 13, 2014, 9:10 [IST]
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