One of the most important features of tech policy is 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. Over the past few weeks, we have seen lockdowns happen in Jharkhand and West Bengal. As you hear how and where lockdowns are being imposed try to keep in mind the role e-commerce plays in making sure such measures are effective.
It has also been fascinating to witness how the government’s thinking has evolved in this regard. There has been renewed importance placed on the sector. And that’s not just because of reports of a new draft e-commerce policy, but because 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 how the world works. On a macro level, kirana stores may be essential but if the trucking industry is not, kirana stores do not have a lot of supply. On a micro level, the charger to my laptop is an essential commodity for me to sustain my livelihood, but in the eyes of the government, it is not.
And that is fundamentally key to managing the lockdown. Citizens need supplies to survive, and if they can’t get them online, they are going to venture out. Hence, e-commerce needs to adapt and fast. The government seems to realise this. Since the classification mentioned above, the government has learned and moved on to appreciate the role of e-commerce in keeping citizens safe. According to a report by Economic Times, the government has been keen on enabling partnerships between e-commerce companies and kirana stores to ensure 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 only have the supply chains not completely collapsed, but companies such as Zomato and Amazon have enabled contactless deliveries to minimise putting the citizen at risk.
Sellers and buyers have also responded accordingly. According to Business Insider, both Amazon and Flipkart saw a 9X increase in the number 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 more time at home—for example, dishwashers, vacuum cleaners, and innerwear.
None of this would have been possible had the market not been encouraged to operate in a usual manner. And while 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 in their geographical vicinity before the crisis. Now, even that section is afraid to venture out. With virtually non-existent sales, margins diminish, and it is hard to pay staff a living wage.
The only option here is to move online. Doing so provides reach to a broader segment of the population and enables access to a distribution network that covers the length and breadth of the country. But moving online has its own challenges. As I mentioned in an earlier column, the current structure has put in place monetary and compliance hurdles for offline sellers to move online. Having obstacles may have made sense in a world without the pandemic, it certainly does not now.
Earlier this week, I was having a conversation that revolved around whether it would make sense to have a framework that would enable the government and the industry to work well together. My initial response to that was to question the role the government could play in enabling the e-commerce sector. To have a framework that identifies spaces where the government could make life easier for e-commerce companies, the first step is to look at how and if the government is acting as a hurdle.
To that end, there are only two things the Union and State governments need to do. Firstly, ease barriers to entry into the online space for offline retailers. Failure to do that can have lasting impacts on the offline retail space, without giving it a chance to survive. Secondly, work in collaboration with e-commerce companies while imposing lockdowns because lockdowns in one area can impact supplies to others.
At this point in time, nationwide e-commerce supply chains are an asset that needs to be strengthened. Failure to carry this out successfully can make lockdowns ineffective. Citizens going out to buy goods during a lockdown is an unintended, anticipated consequence and hence, should be mitigated.