[rovingeye]

I'm not understanding why the foreign players are being singled out under the garb of 'FDI rule violation". Someone mentioned Mota bhai earlier. Why is it OK if Mota bhai indulges in all sorts of anti competitive practices run by his son and daughter? Mota bhai already controls large parts of the internet, is now capturing TV (indirectly via the shambolic TRAI ruling) and will have a total monopoly by exploiting all advertising channels to lead the sheeple to his own online super mall.

Are we going to be ok with that?

Here's an interesting story about how Amazon and Flipkart were "violating" FDI regulations.

[pratyush6]

Originally Posted by Samurai

B
You are looking at this only from end consumer point of view. But that is a very short term thinking. When amazon/flipkart are killing all competition by under-cutting them on prices, you are thinking "Aha, good for the customer...".
.

I agree with most of the points that you make. However, the solution is not as straight forward as it seems. I agree that domestic manufacturers have to be propped up. But the Govt. only does lip-service to the SME and give breaks to the ultra big corporation (They also happen to be the biggest donors). Which isn't the way to go.
Replacing Walmart/Amazon with Reliance/Tata does nothing to at-least the SMEs, they will still source things from China; as far as the consumer goes, it will surely hurt, but that is still a point that can be taken care in the long run.

We are delving into Economics, which happens to be a great debating topic with no straight answers really.

[ksameer1234]

Originally Posted by rovingeye

I'm not understanding why the foreign players are being singled out under the garb of 'FDI rule violation".

Well, because FDI norms apply to foriegn investment? Foreign players are not being singled out, it is just that government wants to protect B2C retail and thus limits the foreign direct investment. Walmart has been operating for close to a decade now selling B2B. I thought governments which protect their citizen rather than selling them out to foreign biggies would be applauded, popular opinion doesn't indicate so.

Originally Posted by Hayek

That is certain to happen - because selling goods online is a fundamentally more efficient way of getting goods from suppliers to customers. That is true in countries like America with cheap real estate and costly labor - but even more true in India with insanely expensive real estate and cheap labor. The small shop keeper and the mall developer are both in business models that will inevitably go extinct.

I don't think the threat to malls is what we should be worried about. It is the small shopkeepers who will perish at the hands of organisations able to out-price them long enough to run them dry. As for efficiency, I get most of my regularly needed goods and groceries from local shops in less than 5 mins and items are significantly cheaper than something like Bigbasket.

Those in favour of FDI may like to visualise the scenario if agriculture is also open to FDI. It isn't farfetched considering how Amazon is integrating itself in value chain. Locals may not come out happy in that scenario.

[rovingeye]

Originally Posted by ksameer1234

Well, because FDI norms apply to foriegn investment? Foreign players are not being singled out, it is just that government wants to protect B2C retail and thus limits the foreign direct investment. Walmart has been operating for close to a decade now selling B2B. I thought governments which protect their citizen rather than selling them out to foreign biggies would be applauded, popular opinion doesn't indicate so.

I understand the meaning of FDI.

My point is, the government's rules and regulations seem to be surreptitiously being formulated to favor a single business house, namely Reliance. And the headlines (which is really window dressing) seem to be saying that small businesses are being protected - which is really not the case. When Reliance launches its version of Amazon/Flipkart, it will indulge in exactly the same practices that Amazon and Flipkart are being penalized for. Reliance will, through its ecommerce play use predatory pricing (just like it did with Jio) to get rid of the mom-and-pop kirana stores. And when it does, the government regulations will not apply to it because its an Indian company.

Its really not that hard to see how Reliance will have a huge undue advantage because it will (already does?) control various marketing channels - mobile phones, TV screens, cricket teams, movies etc. through which it will peddle its products.

I'm afraid to say, if there is one person gaining disproportionately from all these regressive and ill designed regulations, it is our very own motabhai.

[Sherlocked]

Cloudtail and Appario retail's products are back on Amazon now.
As per today's ET, Narayan Murthy' Catamaran Ventures has increased its stake in Cloudtail's parent company to 76 percent.

[civic-sense]

Originally Posted by ksameer1234

Except that there is a small problem here. Amazon and Flipkart have found loopholes in FDI norms by setting up Cloudtail and WS retail respectively thus selling goods at deep discounts. These deep discounts helped them divert sales away from brick and mortar stores. Now, due to deep pockets lined with foreign investment, Amazon and Flipkart were able to bleed offline stores and other online marketplaces to death.

In your example, while someone can start from scratch with disruptive prices, individual taxi drivers will be driven out of market because they need to earn on daily basis to be able to get to work next day.

I think what has happened now is that government has plugged the loopholes which Amazon and Flipkart made use of till now. I don't think government's stand of FDI was unclear at any time. FDI is good only so long as it does not create a massively skewed field just by the virtue of money-power.

Setting up WS Retail and Cloudtail were in response to stupid policies that the govt peddled under the guise called FDI norms. That something is law does not mean it is morally right.

Market will find a way to circumvent this problem too. I can already see that some of the products that were pulled out are already back. All they have to do is list them in batches to beat the 25% limit.

Originally Posted by Chetan_Rao

Cheapest isn't always the best or the most desirable in the longer run, and there's a reason why I still rely on good old Meru when I want to be absolutely sure I'll get a cab (airport drop, for example). Never been in trouble yet, and I've been a user since one needed to call for reservations, and through the times when Uber/Ola were doing flat-rate airport drops for ~50% of what the metered cabs were charging.

Let the customer decide what is best for him. Why should one babu get to decide what is best for me, just because he passed a PSC exam?

Monopolies start with incentives, but can't sustain on them alone. Once they enter consolidation phase, they'll implement all sorts of tricks (regulatory capture being one such) to ensure no Lala can start and operationalize a Fuber (as in your hypothetical example). It takes time to get there, but reversing the phenomenon is usually an uphill climb on a slippery slope.

Regulation IS the starting point of crony capitalism. So what you think will benefit the public will only lead to a few preferred industrialists controlling the industry. I've been careful not to take names, but you know what to fill with.

Not more or less, exactly the same. Plenty of auto-wallahs and individual cab drivers moved up to Uber/Ola using their loan schemes in hopes of making hay with the incentive programs, and plenty of youth that earlier moved to Bangalore to drive an auto/cab to make a living are now driving for Uber/Ola instead. All are slowly figuring out the tall 'earn X per month' claims are just hot air. Plenty have had their vehicles repossessed, some voluntarily because the cost-benefit equation no longer made sense.

No govt can substitute an individual's intelligence. If any customer thought that the ultra low prices would be forever, and if any driver thought that Uber would subsidize them forever, what is lacking was education, not regulation.

Originally Posted by Hayek

There are two parts to this issue. The first is whether online retail will destroy offline retail (or at least shrink it enormously). That is certain to happen - because selling goods online is a fundamentally more efficient way of getting goods from suppliers to customers. That is true in countries like America with cheap real estate and costly labor - but even more true in India with insanely expensive real estate and cheap labor. The small shop keeper and the mall developer are both in business models that will inevitably go extinct. Personally I am happy about that - there is nothing I hate more than having to visit a shopping mall.

I wouldn't lose my sleep even if the last offline store in this country closed down. IF it did, then that means that an archaic business model is dead. Why should any govt spend effort to keep an archaic business model alive? Businesses should reinvent and adapt to the new business model, not lobby the govt to curb newer business models.

Kodak died a natural death (almost) because they failed to foresee the digital revolution. Should governments force consumers to buy film and film cameras just to keep it alive?

[Chetan_Rao]

Originally Posted by civic-sense

...
Let the customer decide what is best for him. Why should one babu get to decide what is best for me, just because he passed a PSC exam?...

Nobody is arguing against customer choice, or for unfettered regulation. I'm pointing out that if we let current market practices to continue, there won't be many viable choices as a few players will monopolize the market via price wars and/or consolidation.

Regulation IS the starting point of crony capitalism. So what you think will benefit the public will only lead to a few preferred industrialists controlling the industry. I've been careful not to take names, but you know what to fill with

Ironically, what you say in the quoted bit is a perfect example of regulatory capture I alluded to earlier. Some business houses have cornered enough influence that they can and do meddle with regulatory mechanisms for personal benefit.

I just don't agree the opposite of bad regulation is NO regulation. It's true that regulations need to be arrived at and implemented better, but that would be achieved by getting more qualified people into decision-making positions, not eliminating the process altogether.

What system would you prefer? No regulations and a free-for-all where the players make up the rules as they go? How does one operate in a market with no rules, and why would you trust a for-profit corporation any more than a for-profit bureaucrat pandering to the same corporations at your expense?

No govt can substitute an individual's intelligence. If any customer thought that the ultra low prices would be forever, and if any driver thought that Uber would subsidize them forever, what is lacking was education, not regulation.

Reminds me of a George Carlin quote: “Think of how stupid the average person is, and realize half of them are stupider than that.”

That isn't meant to denigrate the average person's intelligence, but to demonstrate that people of average or below-average intelligence do make decisions that can impact the overall market. The smartest person's rupee is the same value as the dimmest one.

I'll bounce your earlier question back to you: If it's unacceptable to rely on an unqualified bureaucrat to make policy decisions, why is it any more or less acceptable for an entire market to bear the consequences of the decision-making of a small segment of uninformed/under-informed consumers who can't or won't see the larger picture and only care for short-term gain?

I wouldn't lose my sleep even if the last offline store in this country closed down. IF it did, then that means that an archaic business model is dead.

Neither would I, to be honest, because I can survive perfectly well without B&M stores. Most urban/semi-urban areas could with a few adjustments. You need to account for the non-urban populace though, which would be impacted.

Why should any govt spend effort to keep an archaic business model alive?

Because archaic for you and me is still relevant to a huge chunk of the population. When archaic becomes irrelevant enough to not matter and refuses to evolve, the model will die on its own across the board, as you say.

Plenty of people still sent (and relied on) telegrams and postcards when phones were already mainstream, plenty used 'archaic' forms of transport long after modern modes became mainstream. Plenty still trust and function in community-based banking systems when state-of-the-art modern banks are mainstream. Obsolescence takes time.

Archaic, like most things we can debate about, means nothing without context.

[civic-sense]

Originally Posted by Chetan_Rao

Nobody is arguing against customer choice, or for unfettered regulation. I'm pointing out that if we let current market practices to continue, there won't be many viable choices as a few players will monopolize the market via price wars and/or consolidation.

That is just speculation. Amazon is not the only company out there with money. If a billionaire builds a monopoly and turn rogue, a half billionaire can disrupt it. If Amazon.in starts hiking prices, you won't shop at amazon, you would move to Snapdeal. If there is no Snapdeal around some Lala will see an opportunity and create a Laladeal.

This talk of some rich corporation taking over everything in the future is just scaremongering peddled by Marxists to attract gullible folks to get behind them.

Ironically, what you say in the quoted bit is a perfect example of regulatory capture I alluded to earlier. Some business houses have cornered enough influence that they can and do meddle with regulatory mechanisms for personal benefit.

Regulation puts power in the hands of a few politicians and bureaucrats to decide policy. So rogue corporations rather would like to pay these powerful politicians and bureaucrats than play fair in the free market. Getting rid of regulations will end crony capitalism.

I just don't agree the opposite of bad regulation is NO regulation. It's true that regulations need to be arrived at and implemented better, but that would be achieved by getting more qualified people into decision-making positions, not eliminating the process altogether.

Who decides who is qualified and who is not? When you give the power to somebody to pick that qualified guy, he would pick someone beneficial to him or his party donors. In a free market, every buyer and seller is a policy maker.

What system would you prefer? No regulations and a free-for-all where the players make up the rules as they go? How does one operate in a market with no rules, and why would you trust a for-profit corporation any more than a for-profit bureaucrat pandering to the same corporations at your expense?

One rule - The buyer and seller determines the terms of the trade.

Reminds me of a George Carlin quote: “Think of how stupid the average person is, and realize half of them are stupider than that.”

That isn't meant to denigrate the average person's intelligence, but to demonstrate that people of average or below-average intelligence do make decisions that can impact the overall market.

Well, I am okay to perish because of my lack of intelligence than live on somebody else's intelligence. And even if living on somebody's intelligence is good for me, I should at least have the liberty to choose whether I want such a life. Not some government telling me - "we know you don't understand what color of car is good for you, so we made that choice for you".

I'll bounce your earlier question back to you: If it's unacceptable to rely on an unqualified bureaucrat to make policy decisions, why is it any more or less acceptable for an entire market to bear the consequences of the decision-making of a small segment of consumers who can't or won't see the larger picture?

Because for each x number of small segment of consumers making "bad" decisions there would be y number of large segment consumers making "good" decisions. The outcome will depend on the sum total of decisions made and not based on a bad judgement of one bureaucrat.

Neither would I, to be honest, because I can survive perfectly well without B&M stores. Most urban/semi-urban areas could with a few adjustments. You need to account for the non-urban populace though, which would be impacted.

Nobody is going to die overnight. These impacts are felt on a long term. People will move to newer businesses.

Because archaic for you and me is still relevant to a huge chunk of the population. When archaic becomes irrelevant enough to not matter and refuses to evolve, the model will die on its own across the board, as you say.

If there is no consumer for an archaic model or product there is no point trying to keep it alive. The earlier you get out of that model, the better.

[Chetan_Rao]

Originally Posted by civic-sense

....

One rule - The buyer and seller determines the terms of the trade....

There's plenty I disagree with in your post (let's agree to disagree), but this one bit piqued my curiosity.

What happens when either or both parties in that trade decide to renege on agreed terms, especially after capital has changed hands and walking away isn't an option?

[rdst_1]

Originally Posted by civic-sense

I wouldn't lose my sleep even if the last offline store in this country closed down. IF it did, then that means that an archaic business model is dead.

I used to live in Chandigarh till 2014. Now, I reside in a small town in Himachal. While, I still use Amazon for deals and other stuff, and their service is also pretty good, I couldn't even think about surviving without the local shops because delivery charges and lead times on most daily use stuff is outrageous. There are a lot of towns like mine in India, which still need the good old B&M shops.
Also, you might have said this in the spur of the moment, but have you ever thought about the importance of 24hr medicine stores and the like.
There are still a lot of goods, which need the prevalent distribution system until technology becomes so advance so as to provide a proper replacement.
Till that time, both will have to co-exist and both parties will try to fight for their spot whichever way they can.

[Leoshashi]

I am still seeing Cloudtail on some products:

[KK_HakunaMatata]

Originally Posted by Leoshashi

I am still seeing Cloudtail on some products:

Attachment 1845947

Yes, there has been a re-jig at the share holding pattern, and now Amazon holds only 24% shares of cloudtail, which doesn't make it a related company. So cloudtail back in business from yesterday.

[dailydriver]

Originally Posted by KK_HakunaMatata

So cloudtail back in business from yesterday.

Weren't our forefathers right when they said:

If you go under the mat, I will crawl under the rangoli.

Sounds better in Kannada:

ನೀನು ಚಾಪೆ ಕೆಳಗೆ ನುಸುಳಿದರೆ ನಾನು ರಂಗೋಲಿ ಕೆಳಗೆ ನುಸುಳುತ್ತೇನೆ.

[aadya]

Originally Posted by civic-sense

That is just speculation. Amazon is not the only company out there with money. If a billionaire builds a monopoly and turn rogue, a half billionaire can disrupt it. If Amazon.in starts hiking prices, you won't shop at amazon, you would move to Snapdeal. If there is no Snapdeal around some Lala will see an opportunity and create a Laladeal.

Its the responsibility of the intelligent and more fortunate to at-least consider what is good for the least fortunate. This is called Society. If the other way around happens its a jungle, and those live such a life are animals or barbarians.
Why somebody would want a receipt when the seller and buyer are in agreement? That receipt or invoice is to show some regulatory authority that one of the party has not kept the promise when the deal goes sour. \
Its easy for somebody lazy enough to walk to a neighbourhood store to buy what we eat and use, but to run on treadmills to gain health. If there is no regulatory bodies there is no competition. If a half billionaire cannot challenge a billionaire that is called monopoly.
I pray that our internet shuts down for few days for the benefit of everybody and the armchair capitalist wake up to the neighbourhood human beings.

[AMG Power]

Originally Posted by KK_HakunaMatata

So cloudtail back in business from yesterday.

That's a $177 billon company showing a $60 billion one how to play the game.