E-commerce | Representative image (PC-Shutterstock)
Even as e-commerce firms grapple with a ban on the delivery of non-essential items, the Centre will not intervene, for now, leaving it to the judgment of the states, which are at various stages in their battle against the second wave of coronavirus.
Earlier this week, Karnataka, which so far allowed all e-commerce deliveries, has now asked e-tailers to restrict their delivery to only essential goods.
Even as various states prescribe varying guidelines, e-commerce companies such as Amazon and Flipkart are in a spot given that there is no central list for what's essential and what's not.
"There is no national guideline around this. Tamil Nadu has said nothing except for food and provisions will be allowed, many other states have said grocery and 'other' essential products will be allowed. Now there's no written definition on what's essential and what's not," said a senior executive of a marketplace requesting anonymity.
Besides Karnataka, states like Delhi, Maharashtra, Rajasthan, and Tamil Nadu have also banned e-commerce firms from delivering non-essential items to consumers.
Bihar is one of the few states that is allowing the sale of all the goods through e-commerce platforms despite having a lockdown.
However even as states go on restricting the deliveries of non-essential items, on the ground, the customer needs are different. According to the executive quoted above, while a refrigerator may not be an essential item according to the government, it may be a highly essential product for an elderly couple staying alone this summer whose old refrigerator has broken down.
"It is very hard to pinpoint what is essential and what is not," he added.
Even as the government is taking a tough stance, it is under tremendous pressure from industry bodies and e-commerce companies who are demanding a clarification on how to define what’s essential and what’s not.
The government however has no immediate plans to come up with a list clarifying the issues. A government official told Moneycontrol requesting anonymity that the central government will not intervene for the time being. Instead, it will let the states define what's essential and what's not adding that right now the Centre's priority is to reduce the rising COVID cases. "The Centre may intervene in the near future if needed," he said.
According to industry experts, grocery currently accounts for around 9-10 percent of the overall sales done by the e-commerce sector. The rest 90 percent comes from non-essentials with a huge chunk contributed by mobile phones.
This move is therefore expected to cause a deep dent on the sale of online commerce firms such as Amazon and Flipkart.
"What has started to happen is that unlike vertical players like BigBasket and Grofers marketplaces like Amazon and Flipkart are facing issues with groceries especially fresh produce. A lot of the time items are found out of stock on their platforms because of supply and demand crunch. It’s happening with vertical players as well but to a lesser extent. It is more of a watershed moment for retail in general," said Sanjeev Kumar, an analyst with US-based research firm, Forrester.
According to the research firm even as the marketplaces are expected to ramp up the delivery, the e-commerce sector is unlikely to witness any growth this year.
"The growth in the e-commerce sector was expected to be 21 percent in 2021 from $35 billion in 2020. Forrester expects that this will be difficult to attain If things remain this way. The market is likely to be severely affected till June at least," said Kumar.
According to him, this time the impact is more because now the spending power of the consumers have been badly hit. Almost every household is impacted by Covid. There's tremendous pressure and job losses are now visible. People are not making discretionary purchases and the government's decision to curb delivery of non-essential items adds to it.
Flipkart did not respond to Moneycontrol's query.
"Currently, we are following revised state guidelines and enabling deliveries of essential products in Karnataka. However, we have learnt from customers that urgent needs vary across individuals and households and it is challenging to define a static essentials list especially during a pandemic induced lockdown," said an Amazon India spokesperson.
Advocating that home delivery of all products was the best way to maintain social distancing norms Amazon has requested the government to allow delivery of all products.
Confederation of All India Traders (CAIT) has been aggressively lobbying with the government to ensure that e-commerce companies only deliver essential items and not non-essentials. Last month the association also sought action against Amazon and Flipkart for allegedly supplying non-essential items amidst restrictions.
According to CAIT, there should be a level playing field between the online and offline traders. "If they (etailers) can deliver non-essentials then offline traders should also be allowed to open stores," said Praveen Khandelwal, general secretary, CAIT.
CAIT also demanded a list of items from the government defining what's essential and what's not.
According to Khandelwal, the rough translation of essential items is anything required by a person during a day, whether it is grocery, medicine or kitchen items. However in the current scheme of things a smartphone is equally important in a person's life. What would he do if his device broke at a time when the country is dealing with a second and deadlier wave of the pandemic.
"Mobile and repairing of mobile phones should also be considered essential in my opinion," said Khandelwal.
Acknowledging the work e-commerce companies are doing during the pandemic, he said, " Nobody can deny that e-commerce is playing a very important role. Fully admit that it is a future mode of commerce. However, the government should now draw a policy which encourages traders to opt for e-commerce business as well. Government should promote digital empowerment and acceptance and adoption of digital payments."
A list of essential items
There is no clear list of items that can distinguish between essential and non-essential items. However, here's a list of some of the products which can be easily categorised under essentials going by the notifications of the state governments.
-- Baby products
Here's a list of items e-commerce companies think should be considered as essentials besides the ones stated above.
-- Kitchen equipment
-- WFH furniture
-- Mobile phone chargers