In the latest installment of Intaxicating, the discussion seems to suggest that e-commerce will open up the market for small and medium industries. This may not be wholly correct for two reasons. One, vast majority of SSIs act as ancilliaries for bigger industries. Few if any, have their own products. Even then, they would be industrial products. There are few if any, amongst SSIs, who manufacture consumer goods. Thus, access to retail market through e-commerce platforms is illusory. Secondly, even if the SSIs which manufacture consumer goods seek to market their products through e-commerce platform, the would be forced to work on low profit margins, as the e-commerce giants would mercilessly beat down their prices. This is a major allegation against retail giants like Walmart. Their suppliers live under their thumbs. For instance, a shirt sold to the retail buyer at Rs.2200, is bought by the retailer for Rs.800 plus. Since SSIs and MSEs cannot produce in huge volumes, working on thin profit margin would not be sustainable even on the short run.

Gururaj B N 28/07/2015