This is a Guest Post by ANITA GURUMURTHY and NANDINI CHAMY
In 2007, in her book, ‘Shock Doctrine’, Naomi Klein argued that history is a chronicle of “shocks” – the shocks of wars, natural disasters, and economic crises, but more importantly, of their aftermath characterised by disaster capitalism, calculated, free-market “solutions” to crises that exploit and exacerbate existing inequalities. This is why Big-Tech-to-the-rescue in times of the virus does not strike the right chord. It started with the lockdown order issued by the central government on March 24 with the exemption for essential services and supplies getting extended to delivery of foods, pharma products and medical equipment through e-commerce channels. The upper classes had to be assured that their means of shopping would not be affected. Notably, the order issued no such explicit exemption on the movement of foodgrains through Food Corporation of India channels, integral to the Public Distribution System. The lockdown order was a candid admission that e-commerce companies have now become infrastructural utilities indispensable to India’s aspirational middle class.
Dominant e-commerce platforms have seized this moment to position themselves as interlocutors of public interest. In the US, Amazon has stepped up to the health care challenge with CEO, Jeff Bezos, holding parleys with the Director General of the WHO to “flatten the curve” and make sure Amazon can “protect people around the world”. China’s Jack Ma, co-founder of Alibaba, sent out shipments of a million masks and 500,000 coronavirus test kits to “friends in America”. Pledging his solidarity to the global community, Ma wrote, “It would be irresponsible of us to sit on the fence, panic, ignore facts or fail to act.” The new global digital czars holding sway over the market it would seem are the charmed circle, displacing aggressive diplomacy and nationalistic propaganda.
On March 27, after the lock-down announcement and ensuing shutdown of delivery and logistics operations on the ground, Indian e-commerce companies met the Minister of Commerce and Industry seeking an expedited channel for trucks, also submitting that differentiation of essential versus non-essential items by the government may ignore what consumers ‘wanted’. Even prior to the lockdown, Flipkart had extended a hand to the government, offering to partner in any programme for the delivery of essential commodities.
This zeal that e-commerce platforms have displayed is disaster capitalism’s COVID-19 moment. The pot at the end of the rainbow must be claimed now, and the traditional retail sector – grocers, pushcart vendors, neighborhood traders who paradoxically have been catering to the public in these strange and trying times – rendered irrelevant. The aftermath in a post-COVID world could easily present e-commerce a phenomenal opportunity. Zomato, the food delivery platform, is making forays into grocery and is about to launch Zomato Market. With its food delivery fleet grounded, the company is in talks with Grofers and Big Basket facing a spike in grocery orders, to optimise labour supply. Big ecommerce platforms have already coopted local stores into their logistics and supply chain. In fact, the offline is the crucial battleground for the big players in online retail – Amazon, Flipkart and JioMart – as each of them woos local kirana stores to scale up last mile reach.
The long game
What is presented as a win-win for both big e-tail and small stores is in fact a skewed equation. Today, kirana stores already subsidise e-commerce big business in delivery of goods, stocking and inventory management. The end game for JioMart, Amazon and Flipkart is to eventually push their grocery and private label business through these local stores. Flipkart and Amazon are also trying aggressively to push their payment wallets PhonePe and AmazonPay, while Reliance Retail has already launched the Jio point of sale (PoS) machine for kirana store vendors so that it can gain a firm hold over its distribution segment. The last mile player will still be around, only to be reduced to a replaceable cog in the corporate wheel.
Social distancing measures and fears of the contagion have led to consumers rapidly switching to e-commerce from brick-and-mortal retail. Surveys of the Indian market indicate that hyperlocal e-tailing businesses (such as grocery) registered a 45-50% growth in overall gross merchandise volume in the first two weeks of March, when compared to the same period in February. At the height of the COVID-19 crisis, Alibaba-backed online grocery start-up BigBasket acquired the milk delivery start-up DailyNinja, gaining control over the latter’s network of 1,10,000 consumers and 2000 milkman partners across the country. A time when most public transport networks and warehousing and logistics infrastructure have come to a grinding halt and open retail markets are shut down happens to be BigBasket’s moment to consolidate its hold over microlocal retail networks.
The future is evidently online in more ways than one. When the crisis passes, it can never be a return to business-as-usual. On March 20, the Retailers Association of India petitioned the government seeking urgent economic stimulus for traditional retail on grounds of decreasing footfalls and loss of revenues, highlighting that COVID-19 has exacerbated the financial stresses on the sector. The lockdown is only going to worsen the cash flow crunch and big and small retailers alike may end up simply shutting shop. And those who remain will find themselves in a radically altered market scenario – a ‘new retail’ sector where online and offline retail channels are seamlessly integrated and controlled by e-commerce companies. Wholesalers, distributors and kirana stores may have no option but to integrate into some part of the warehousing, supply and microretail logistics network of one of the big e-commerce platform companies. Morgan Stanley has predicted that even with the recession, e-commerce is expected to bounce back. Gaining resilience post-COVID will call for greater coordination and predictability in supply chains in a highly resource-constrained economy. The prowess to achieve economies of scale in this context – in terms of sophisticated AI, robotics, IoT – is the exclusive monopoly only of the e-commerce giants. Retail is poised to see a second digital disruption, a new normal with significantly higher concentration of market power.
The longer-term prognosis of this is worrisome. E-commerce platforms dream big. Their cash burn models are built to embrace cross-sectoral ventures. In 2018, Amazon acquired online pharmacy PillPack and established its ambitions in health care. This partly explains Bezos’ public-spirited motivation during this crisis. Governments fighting jobless growth and recession may simply have to give in to these corporatised, new age public utilities, allowing them to lead the way. For India, this poses several critical policy concerns. What will be the fate of the draft e-commerce policy? How are ‘FDI in e-commerce’ norms likely to change? Will they be re-clarified to allow e-commerce platforms to invest in or even acquire a majority stake in traditional retail?
How governments can regulate platform companies, prevent market consolidation by the digital behemoths and enable alternative platform models will be critical policy imperatives for the coming years. The dominant e-commerce narrative encapsulates a creeping dissipation of free and fair economies. A cross-movement mobilisation of workers, small traders and social justice activists is necessary to recover the idea of digital infrastructures for those at the margins and to ensure that policy can avert the disastrous consequences of a post-covid disaster capitalism.
[The authors are with IT for Change, Bangalore]