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Online not in line with brick and mortar businesses...

There is the expected protest from brick and mortar companies over the blitzkrieg of promotions unleashed by e-commerce companies. The latest to join are the retailers of drugs and pharma products.

These arise over a couple of concerns: the first is the additions to cost made at different points of the distributor chain in conventional marketing; these also involve hefty costs of real estate: setting up retail stores at vantage points in cities and towns does involve huge costs on rental space. This is especially high for metros and large cities. There are the additional hassles of transportation, parking, transfer of goods from the shop to home, etc.

There are also tax issues. Luckily, with a certain uniformity in state sales tax rates brought about by the Vajpayee government, this issue has softened to a considerable extent. States are bound to raise concern over loss of revenue through e-commerce across the nation from warehouses kept at areas of low cost.

The other issue relates to regulation and quality. Pharma dealers point to e-commerce companies dealing with prescription drugs. They question how a drug prescribed by a doctor could be sold through such companies. But the drug trade at retail level is marked by several unsavoury practices and huge mark up  in prices.

I witnessed a curious instance of extending such protest to ludicrous levels. I was looking at the pricing of hearing aids. The ENT specialist suggested a well-known dealer in this line. When I enquired, the local dealer indicated the cost for the instrument at around Rs  62,000 for each ear. My children working in the US,  checked with Amazon and found a piece of same specification to cost around Rs 19,000! When the issue was taken to the managing director of the sole distributor in India, he tried to explain it away by saying that instruments may not carry warranty and none of the dealers would provide servicing to the instruments purchased online.

Hearing aid tuning can be done by an audiologist. But the manufacturers working as a cartel, refuse to extend warranty on products sold online! At such high prices, relief is not available to the average citizen.


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