Online Shopping and its Side Effects

online shopping

The trend of Online Shopping is increasing incessantly. Very recently, the sale of two very big names in ecommerce websites has caused immense anxiety to the traditional retailers. Truly speaking, the trend of online shopping is beneficial for the customers, and simultaneously, the traditional market has its negative effects.

The increasing trend of online shopping has created great troubles amidst the traditional retailers in the country. On one side, the E-commerce companies such as Flipkart, Snapdeal, and Amazon etc are providing heavy discounts and greater ranges, and on the other side, the traditional vendors are voicing that it is an unfair competition. This has not spared even the biggest listed retailer – Future Group. Kishore Biyani, the founder of the Future Group has raised the question about how these online companies can sell the goods even below the manufacturing price. He said that it is a strategy to eliminate the competition. To a great extent, it appears to be true as more than 4000 mega stores in 2011 had been shut down due to this trend of online shopping.

In the year 2013, the retail market amounted to $ 421 billion and the share of online shopping was very limited in it; however, the rapid escalation of online trend has now doubled the worries of the traditional retailers.

Increase up to 350 %

As per the fresh report of ASSOCHAM India; the online shopping has reached up to Rs. 10 thousand crores in this festive season with an increase of 350%, whereas the growth rate was only 200% last year. Despite slow economic progress and price rise in 2013, the growth rate of online shopping was 88%. In 2009, the E-commerce market amounted to $ 2.5 billion, whereas it reached up to $ 8.5 billion in the year 2012. Again, in 2013, the online shopping market increased up to $ 16 billion, and this year, it appears to be growing more and faster than ever before.

The report released by CRISIL shows that the online retailing industry will have the market of Rs. 50 thousand crores by 2016. The report also says that this is one of the rapidly growing industries in recent years.

How such a heavy discount is made possible?

In one of the Flipkart sales, there was a heavy discount of about 80%, and this aroused a great curiosity amidst the people. As per a media report, Flipkart had offered heavy discounts on several products which outgrew even the discount offered by the manufacture company itself. The paper-closet brand had given about 50% discounts during its sales; however, in kitchen and other utility items, Flipkart had given the discounts from its own side. As per an anonymous seller, Flipkart had listed the prices as per the market rate; however, it sold the items at higher discounts to attract the greater number of customers and compensated the loss from its own pocket.

Three most highly affected sections:

Apparently, online shopping may appear to be a highly profitable deal for many, but it is not free from the side effects. It is also a reality that this trend of online shopping is negatively affecting the government as well as the common population. Let’s know here how the three main sections are being compelled to suffer:

State Governments

Due to the online shopping, the state governments are losing a great share of revenue. The online selling companies establish the warehouses in the low VAT states; however, the sale of items is not confined to the customers of that particular state. The customers from any states can make online purchases irrespective of where the warehouse is. Obviously, the people are receiving the products through online shopping, but the government is not getting the due revenue.

Small and big traders

As per the report, Flipkart had recorded the sale of Rs. 600 crores in just 10 hours. The small and big traders are thus being destined to heavy losses. It is affecting the traditional market in a negative manner. In fact, these online sellers sell the items at heavy discount which is not possible in the traditional market.

The customer

The customers are not very well familiar with the various aspects of online shopping. They fail to know about how the products are being sold at such cheap prices. Very often, the service centers refuse to provide the warranty on the equipments and gadgets purchased online. This problem is very much apparent in mobile phones and such other electronic items.

Why is the trend of online shopping increasing continuously?

The greatest benefit of online shopping is that you can purchase the products or items at your home comfort. At the time of rising petrol prices and the heavier traffic, the attraction towards online shopping is escalating more in the festive seasons.

The use of the internet is on the rise all over the country. Also, the products are available in installments. Moreover, the cash on delivery and debit card payment facilities are quite convenient for the customers, and all these factors play a vital role in enhancing the popularity of online shopping.

Higher discounts are available on online shopping portals, and during the festive seasons, the discounts go much higher. Compared to the traditional retailers, the online websites provide higher discounts.

The benefit of online shopping is that you can have multiple choices in various items. Scrolling through the websites is easier and more comfortable than moving around in the brick and mortar shopping malls or shops.
In this modern lifestyle, and especially among the urban population, there is a shortage of time. Ordering the products through the computer or smartphones is quite convenient and time -saving.

Expert Comment

The expert and the specialist of economic matters, Mr. Jagannathan comes up with two significant points here:

Opportunity with risk

Online shopping is both an opportunity and a risk. For the customers, it is no less than a bonanza. The customers enjoy fascinating offers and varying choices, but for the traditional retailers, it is a great problem. There appears a phenomenal decrease in the number of their customers. In such moments, it is a serious challenge for the traditional retailers to adapt to the mutating circumstances. It is essential for the traditional retailers to connect themselves with the internet. They also need to strengthen the delivery system following the footprints of online shopping.

Necessity of a legal structure

After witnessing the heavy online discount offers recently, many of the companies said that it wasn’t possible even for them to sell their own products as cheap as the online portals could sell. It is also assumed that many of the online retailers import the products from the countries like China and sell them at cheap prices. It is, therefore, necessary that the government forms a legal structure concerning online shopping. It is required to observe from where the online companies purchase the products. It needs to be ensured that such companies pay due taxes. Also, it should be observed to what extent such online companies are responsible towards the consumers.

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