Festival season economy hit by slowdown; small traders, gig workers feel the brunt

E-commerce might be booming but business as a whole is dull this year. The slowdown in the economy has given a cold start to the festival season sales this year

Festival season economy hit by slowdown; small traders, gig workers feel the brunt
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B Sivaraman/IPA

Great Indian Festival…Big Billion Days…No, these don’t refer to Diwali and Dussehra or Eid and Christmas. They are the special festival season sales melas by e-commerce majors Amazon and Flipkart. As the names aptly capture, these sales festivals earn big billions for these mega corporates. Both festivals began with a bang on 29 September.

According to American market research and advisory firm Forrester Research Inc., these two online retail behemoths are expected to clock around $4.8 billion (Rs. 33,912 Crore) in sales through the festival season, lasting for six months from August to January.

As the festival season peaks in October-November, these sales melas stretching for around a week would account for 80% of their total festival season sales or about $3.82 billion (Rs. 26,988 crore).

E-commerce might be booming but business as a whole is dull this year. Firstly, the slowdown in the economy has given a cold start to the festival season sales this year, especially in a predominantly commercial town like Prayagraj (Allahabad).

“The business is dull!”—this has been the common refrain here among the business community in last the couple of months. Mr. Banwarilal Kushwaha, a Patanjali franchisee, who also owns a provision-cum-general stores in Teliarganj area of Allahabad, informs that his sales is down this year by 50% and he pins all his hopes on the festival season for revival.

Mr. Sadiq, a wholesaler in white goods in Kareli area of the town however is sceptical. “Eid as well as Janmashtami were not celebrated with the usual pomp this year”, he says and hopes that Dussehra and Diwali would give a boost to the business. Mr. Manoj Dubey, who runs a transport business, has a slightly different take.

According to him, acute crisis is that of shopkeepers only and not of business as a whole. He says online sales are booming and it has crippled many conventional shops. Apparel and garment sales are mainly online and their sales in shops are down by 70–80 per cent.

Mr. Vinay Kumar Tandon, President of the Allahabad-based Eastern Uttar Pradesh Chamber of Commerce, who also owns a food processing industry, concurs saying that having high-rent showrooms to sell apparels and even electronic items in the age of e-commerce is unviable. Enquiries among traders reveal that thousands of shops have closed down resulting in job losses to at least 25,000 to 30,000 shop assistants.

Until a decade back, monopolization was not significant in the retail trade sector. Now it is a changed scenario. The festival season revenue of just the two e-commerce giants, Amazon and Flipkart alone would be equivalent to the revenue of some 3.5 million small traders with a total festival season sale of Rs.10 lakh each on an average.

The other major impact on labour conditions is that e-commerce spawns a huge section of gig workers. Amazon, in a statement said it had created 90,000 seasonal employment opportunities for the festival season in its fulfilment centres, sortation centres, delivery stations, and customer service centres.

Likewise, Flipkart, which has now been taken over by the global organised retail giant Walmart, in a statement said that it had added over 50,000 direct jobs across its supply chain, logistics arm and customer support.

With this addition of these 1.4 lakh seasonal gig workers during this festival season, the total number of gig workers employed by these two e-commerce majors alone in India reaches 6.5 lakhs. These workers do not have the legal status of workers in these companies and are given a glorified tag as “delivery partners”.

One delivery worker complained that their commission per delivery is often reduced from Rs.50 to Rs.30 and they will have to struggle hard at great risk of overspeeding to make even 20 deliveries a day, but for that they would have to bring their own two-wheelers and even use their own petrol.

“All the deliveries are not evenly distributed through the day and they are mostly crowded in the hour before lunch and one hour before dinner. Rest of the time we are mostly idle”, said a Zomato worker. How many of these workers would go without work once the festival season comes to an end is not clear and this makes their job even more precarious.

What does ‘festival’ mean for them and their families? Not much, as unlike traditional industrial workers, they are not paid bonus or other statutory benefits as they are not accorded the status of workers at all.

Amazon proudly claims that it channelises products from 4 lakh suppliers and many of them are just home-based workers who supply to the contract agents, who in turn supply to Amazon. Amazon takes upto 20% of the sales value as commission for itself—just for accepting orders online, and packing the ordered items and delivering them using gig workers.

After adjusting with GST and other layers of middlemen, the primary producer hardly gets 50% of the market price as revenue. After adjusting against material and labour cost, he/she would be lucky if the profit margin is 10–15%.

The slowdown impact is visible among leather footwear workers of Kanpur. Usually, they work long hours during the festival season to meet the demand from other towns but this time traders who procure from them say that the orders are less in number. The story is the same with chicken workers of Lucknow or Benaras silk saree weavers.

Neither the e-commerce majors nor the banks advance any money for them and they are forced to turn to private moneylenders who charge Rs.100 interest per month for Rs.1000 borrowed.

Giving Rs.1.4 lakh crore tax concessions to big corporates may not boost sales. The real stimulus to the economy is the purchasing power of the people, and government should have reduced their GST tax burden and increased liquidity for them and the minimum wage for gig workers.

It is unfortunate that the government is unable to understand this simple thing. Mr. Tandon also wants the government to come up with a rescue package for sick industries and revive employment opportunities for the workers as the way out of the crisis.

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