Bryant McGill, one of the best selling international authors of recent times once said that “the new slavery is consumerism”. He was not just overtly referring to unbridled urge of customers to consume more, but also tacitly criticising unethical & monopolistic methods adopted by e-commerce entities to thrive and flourish.
However, as there are always two sides to a coin, the pleasure and the pain, it is also important not to discredit the contribution of e-commerce, as far as the growth story of India is concerned. The case in point is the Flipkart’s Mega Sales worth $5.5 Billion in a short span of festive season.
Domestic Demand Is The Manifestation Of Consumerism
Basically any country can grow, in terms of GDP, in two ways. One is through domestic production of goods and services and the consumption of the same by its own residents. Another way to grow is through external demand, which essentially means thorough export of goods and services.
Despite the Global Economic Slowdown in recent times and the issue of Inflation in Developed World, the situation in India seems normal & it’s economy is expected to grow in double digits in coming fiscal quarters. The reason is simple, India is a predominantly “Self Sustaining Economy“. Much of its demand for goods and services comes in the form of domestic demand & we are less dependent on exports to grow.
The contribution of e-commerce, specially by players such as Amazon & Flipkart is significant when it comes to rekindling that urge to consume post pandemic and complete economic shutdown. In fact we were all surprised to see Nifty 50 hitting near All Time High just a few days ago, while indices in USA & other Developed Countries were in deep red, indicating impending Economic Recession.
Unleashing The Virtuous Cycle of Growth
As the demand for goods and services increases, the stagnant labor market begins to recover and the rate of unemployment should go down and the purchasing power of an average household increases because of wages, and this creates further demand, a virtuous cycle. The saviour RBI is always there to intervene when the prices start to increase and seem unsustainable.
On the contrary, it is also possible that issues associated with e-commerce firms, such as predatory pricing, monopoly, data protection and so on, can cripple Small and Medium Enterprises. The responsibility of ensuring a level playing field lies with the Government which is important given the fact that Micro Small and Medium Enterprises (MSME) contributea more than 90% of jobs in our economy.
E-commerce rules can be amended by the government in line with Digital Markets Act of European Union, which aims to solve some of the issues raised previously. Despite all favorable macro economic conditions, there is no denying the fact that the tech savvy and consumer oriented business strategy of Flipkart deserves its due credit.
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