No. 65, January 2017

No. 65
(January 2017):

Behind the Hype of E-commerce

Behind the Hype of E-commerce1

-- Rahul Varman (rahulv[at]iitk.ac.in)

One is at a loss for words to describe the rise and rise of e-commerce in the eyes of the ruling and middle classes as well as the mainstream media. Not a day passes without the sector capturing the headlines and prominent space. Words like e-commerce, start-ups, and digital India, and brands like Flipkart, Amazon, Ola, and Uber have become household names in no time. Massive numbers in terms of investments, valuations, etc. in the sector are being presented.

This sector is talked of as the engine of economic growth and source of ‘good’ jobs that are equal to the aspirations of the young and educated. We are also told that start-ups and e-commerce are making the nation innovative and entrepreneurial, and that, for the first time in history, the young are becoming providers instead of seekers of jobs. After the announcement of ‘Start-up Action Plan’ by the Prime Minister Modi in January this year amidst much fanfare, the signature of the present regime, and in the presence of high profile galaxy of CEOs of a large number of big corporations that supposedly are ‘start-ups’ in the internet related areas, Forbes India gushed2 “Never before in India's economic history has 'entrepreneurship' been given such a centre stage by the Government and policy makers”. Apparently e-commerce has answers for every problem and all ills. The Government recently announced plans to create an ‘Amazon-like market for farmers’ by online linking of mandis, i.e., wholesale agricultural markets.3 In May, a Facebook-sponsored report4 by PricewaterhouseCoopers proclaimed that the Indian economy can add $1 trillion to its GDP (that means an almost 50 per cent addition to its present size) if only internet access could reach every single person, whatever that means! E-commerce has also become synonymous with hi-tech, and representative of the ‘new’ economy and modern society that apparently ¬†represent impulses like sharing beyond merely market based competition, what is called the ‘gig economy’. In this way, Ola/Oyo are presented as only a means to connect those who are looking for a certain service with those who wish to provide it.

In short, words like ‘start-ups’ and ‘e-commerce’ are, for the rulers, powerful new symbols of a rising India, and supposedly represent the hopes and aspirations of the new generation .

We attempt two things in the following: first, to bring the facts together and make overall sense of the developments in the e-commerce sector, and second, to then critically examine the hype and hope that are being invested in it. To narrow the scope of the piece, we will primarily be limiting the discussion to two basic domains of e-commerce that have attracted a lot of attention: e-retail, especially companies like Flipkart and Amazon, and taxi aggregators like Ola and Uber. In the next section we will provide an overview of the e-commerce sector, especially e-retail and taxi aggregators. In Part II we will discuss the regulatory issues around e-commerce, followed by a discussion of employee-related issues (Part III). In Part IV we will bring out how the whole thing is being driven by the motives of monopolisation and financialisation. In the final section (Part V) we make the following overall points:

1. The driving force for e-commerce is corporatisation-monopolisation of disaggregated services like retail and taxi through information technology.

2. Technology is being deployed to make the real relations of capital vis-a-vis employees, customer, and state, invisible.

3. The State exists primarily for disciplining labour and not disciplining capital.

4. The commanding heights of e-commerce for all practical purposes belong to finance capital.

5. In spite of such powerful forces promoting e-commerce, it is mired in the structural constraints of the larger Indian economy.

 

 


Notes:

1. Shikhar Baid and Vikrant Bishnoi worked with me for their special studies projects on ecommerce that helped me learn so much about it in the last one year. Also comments and suggestions of RUPE, Manali Chakrabarti, Shashi Shekhar, Arun Karthik and Manu Kanchan on an earlier draft are gratefully acknowledged. Pradeep helped in making the figures print friendly. (back)

2. Rupesh Mishra, “Everything you wanted to know about Start-up India”, Forbes India, 26/2/2016, http://forbesindia.com/article/startup-india-2016/everything-you-wanted-to-know-about-startup-india/42481/1, accessed on 01/06/2016 (back)

3. “Modi government is creating Amazon-like marketplace for farmers”, ET Bureau, Apr 14 2016, http://timesofindia.indiatimes.com/tech/tech-news/Modi-government-is-creating-Amazon-like-marketplace-for-farmers/articleshow/51823005.cms, accessed on 08/08/2016 (back)

4. Tanay Sukumar, “India’s GDP can rise by $1-tn if everyone gets internet access: Report”, HT, May 30 2016, http://www.hindustantimes.com/business/india-s-gdp-can-rise-by-1-tn-if-everyone-gets-internet-access-report/story-xgWF3dp7KcXjHtUONAhOwO.html, accessed on 01062016 (back)

 

NEXT: E-commerce: An Introduction

 

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