A survey of 1,500 small traders across six mega metros and 500 manufacturing MSMEs across eight product categories has found almost zero impact of growth of ecommerce in India. In fact it says that online retailing has led to an increase in footfalls, while reducing traders’ costs of procurement, leading to an increase in profit.
The survey found that the perception of negative impact of ecommerce on mom and pop stores is greater than any actual negative impact. India does not allow foreign direct investment (FDI) in any business-to-consumer, or B2C, ecommerce companies, so home-grown firms like Flipkart, Snapdeal operate as marketplaces providing a platform for vendors to sell goods.
Over the past few years, association of physical retailers has been asking for a level-playing field with ecommerce rivals. In May, Retailers Association of India (RAI), which has players like Future Group, Shoppers Stop and Reliance Retail as its members, filed a case against the central government in the Delhi High Court, accusing ecommerce companies of "circumventing" FDI laws by calling themselves marketplaces. Since there has been no favourable response from the government on the matter, the association plans to once again approach the court.