Are We Responsible For Killing Small Business?

Posted by Kotiyal Gaurav
February 4, 2017

Self-Published

Nowadays we all feel proud when we say we have got X product from an online store in Y amount  (discounted)  and all that. Do you think you are really cutting down some small business with this practice and then it becomes a habit to unknowingly becoming a part of their (online aggregator/store) marketing game.
Big business is also incredibly important in the economic food chain however the small business plays a most important metric to watch for rebuilding the middle class and is a source of new energy for jobs. GDP is the sum of all sales and production of everything we buy, sell and make.

Lets Say –You Have a normal market scenario. Lets assume, You used to purchase a X product at INR 150 from a local store near you. Suddenly a new online market player comes into the picture <With all their marketing stuffs and said to be an improved version>. However they are not the actual producer of that product so it means they would need a supply chain for that.

Now (Initially) they started their advertise for the same X product at INR 120.
So Now we all (Customers) are happy and we say with proud we are getting the same X product at INR 120 and unknowingly we becomes one of the executer for their marketing plan.
Now the game begins: As they are not the producer so they will buy from local vendors at INR 160 however online store will be seeling the product at INR 120.  (Initially a loss of INR 40/Sale). Vendors are also happy to see that now the are getting INR 160 for the same product which they used to sell for INR 150 so they will divert their supply to this online vendor at INR 160. And as the customer are getting the product at INR 120, the customer also divert his demands towards this online aggregator.

Then after some months of happiness for both local vendor and customers (which investors and those entrepreneus says breakthrough)
The model changes.. Now online aggregator starts selling the product at INR 130 and starts getting the product at INR 150 from the local vendor. And then after some months the same product would cost Customer @ INR 150 and they buy @ INR 140 from the local vendors.

By this time online aggregators are the market leader for all demands and supply.

And on a fine day, everything changes Now the company sells the product at INR 160 and get it from the local vendors at INR 130 and makes the profit with the volume bulk sells.

This is how they pay back to their investors (a huge money pumped from the investors at the early stage i.e happiness time.. )

So its not wrong if I say “we are only responsible for this”.

However Govt should also keep an eye on these models. They should come under Govt regulation. The minimum cap for a product should be defined from the regulatory so that the market is transparent and there are no false and fake rates.
Lets have an example …Some months ago In Bangalore, We used to get cabs (sedan/All ACs) at RS 550 to/from airport and that time diesel cost was 64-65 RS/liter. Now diesel costs approx 45-46 however the fares are approx INR 1050 for Hatchbacks Non AC vehicles.

Mostly same model applies for all online aggregator.

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