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Context: Recently, all consumer goods distributors in Maharashtra were protesting against Colgate’s alleged unfair treatment of traditional distributors with respect to B2B technology companies such as JioMart, Udaan, and others.
How B2B companies were able to sell at lower prices?
Creative disruption: B2B companies have developed technologies to connect directly to the retail stores through mobile phone apps, bypassing the intermediaries. This results in cost reduction. Also, the common citizen benefits from these lower prices at their local store.
Predatory Pricing: These B2B companies are able to bear a 15%-20% loss on products they sell to the local stores. They deliberately offer their product at a price lower than what it costs them, to lure local stores away from the traditional distributors.
Key implications of this disruption
Is it a problem in India only?
While consumers may benefit from lower prices, the livelihoods of millions of distributors, traders and their families suffer.
Social media companies such as Facebook give away their products for free and e-commerce companies such as Amazon sell at lower prices, benefiting consumers enormously, but also causing immense social strife and disharmony.
By: Shubham Tiwari ProfileResourcesReport error
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