Because in India there is a tug-of-war between the government and e-commerce platforms

Because in India there is a tug-of-war between the government and e-commerce platforms

Online purchases and investments by large companies for digital sales are growing in the country, while Narendra Modi's government launches new rules to brand big techs

In the largest department store in Amazon in India (Getty: Dhiraj Singh / Bloomberg) Digital revolutions, battles between giants and excellent landings: the battle for ecommerce in India has continued, for the past three years, to reserve continuous twists. The last is the work of the same government, led by Prime Minister Narendra Modi: the proposal of a series of amendments to the consumer protection rules, dating back to 2020, which directly affect the world of ecommerce.

New rules

Among the changes proposed by the government is the request to clearly identify the origin of the products and to appoint a complaints manager (as recently requested also from the world of media and social media), but even the ban on "flash" sales (Black Friday, goodbye), and on selling own-brand products: India does not allow ecommerce companies to hold stocks or sell items directly to consumers, and to get around the problem, until to date, companies operated through a maze of joint ventures, with local companies acting as inventory.

The main platforms (in particular Amazon and Flipkart, owned by Walmart) have turned up their noses, but Claudio Maffioletti, general secretary of the Italian Chamber of Commerce in India, recalls that the Indian ecommerce market continues to gorge. The figures speak of a turnover of 80 billion dollars for this year, while the forecasts forecast a value of 200 billion by 2027. "The reasons for the interest are simple. The so-called "retail brick and mortar", linked to physical stores, requires significant investments to meet Indian demand, primarily in terms of real estate costs, both in large cities and in smaller cities (so-called Tier II and Tier III) are very high. So transferring everything to a digital platform allows a company to cut costs ", he explains.

Local and digital purchase

There is also a concomitant reason for the recent success of ecommerce, as well as the race of the big global players to take part. "The second factor is the extension, the penetration of the wifi network in India, which is particularly extensive, which makes it possible to reach a very large market with lower investments, also in terms of inventory and storage," he explains. Then, remembers Maffioletti, there is a propensity and a habit of using digital that is now important. The pandemic, according to the data, has further increased a trend already underway.

Thanks to the advent of operators such as Jio, a handful of years ago, and the settling of e-wallets, now also purchases newspapers take place via smartphone. "Even before the pandemic, like everyone else, I was ordering via WhatsApp also at the kirana near the house, the classic neighborhood shop that has a bit of everything," says the secretary. The pre-pandemic country numbered over 12 million kirana, and first of all, Reliance Industries and Amazon understood their potential as they sought to exploit the ecosystem to grow their food business.

But it is in the past year that over a million owners of kirana, often family-owned, have decided to embrace local apps and platforms that have enabled them to facilitate payments, deliveries or inventory management. “The kirana represent the great complexity of the Indian market, but above all its granularity. They have the great merit of serving widespread reference areas, and for this reason the difficulty for them was the management of logistics, which remains very complex "Maffioletti specifies.

Made in Italy

For with regard to Italy, explains Maffioletti, there is a sore point and concerns the rules already mentioned: "Due to the way it is structured, the system requires that an Italian company present on a marketplace platform cannot sell directly in India, to this is essential to have an importer or a distributor who is a point of reference ". The announcement of a new crackdown on ecommerce regulations in India, he specifies, responds to specific needs: "We are talking about a sector that, unlike traditional retail, is substantially unregulated and the attempt by the authorities is to protect local retail. I don't think so much the small kirana, as the Indian SMEs and the local production: it would seem that one of the points under discussion is precisely the fact that for every imported product, presented on an ecommerce platform, one must correspond to one made in India. It will certainly not be easy ".

On the other hand, according to the expert, an advantage for Italian producers could undoubtedly be represented by the obligation of certification, which could highlight Made in Italy, but it is equally true that, as far as our country is concerned, the numbers are backward and the volumes low. "At this stage it is more important than the institutions to push for greater awareness of the quality of Made in Italy production through the various e-commerce channels, for example in the agri-food, furniture, or fashion", he says.

In this sense, the Foreign Trade Agency (Ice) and the Ministry of Foreign Affairs have launched the initiative The Italian Mall - made in Italy, a showcase through which Italian products have landed for the first time on the big Indian ecommerce platform, Flipkart. In the meantime, the Chamber of Commerce is working to promote the agri-food sector, in particular, with agreements and important initiatives with large operators such as Big Basket, which however will be strictly hybrid, therefore partly online and partly linked to physical stores: "From a side you will no longer be able to do without online, it will be increasingly important to work on the shopping experience. In India, I believe, as regards ecommerce, we will see an acceleration of an experiential purchasing method. And those who work in the sector already know this ”.

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