E-commerce poses a significant challenge for jobs. At a time when India is confronting an employment crisis, being clear eyed about how unfolding trends like e-commerce are affecting the quantity and quality of jobs is critical to managing its disruptive effects.

Recently, Commerce Minister Piyush Goyal expressed concern over the growth of e-commerce and its employment impact. The minister highlighted the possibility that half of India’s market could become part of the e-commerce network in the next decade, a development he described as “a matter of concern”.

Forecasts (by agencies such as BCG) suggest that India’s e-commerce market will grow at a compound annual growth rate (CAGR) of 11.79 per cent between 2024 to 2028. This is almost at par with the US’ 11.82 per cent, but it outpaces projected global e-commerce growth of 9 per cent. Online retail in India accounts for approximately a quarter (Invest India estimates) of total organised retail.

As e-commerce grows, a key concern is how it will impact India’s micro, small and medium enterprises (MSMEs) — an important source of employment engaging approximately 111 million workers.

Among the touted benefits of e-commerce are its potential to provide businesses market access that extends beyond their physical location to a wider geographical radius, and the prospect of boosting exports.

While these may be true for some businesses, they don’t apply to the majority. Given that most of India’s businesses are unregistered micro enterprises, they confront several obstacles while engaging in e-commerce.

Rapid adoption of online payment systems and UPI among small businesses is often cited as evidence of the propensity of businesses to take on e-commerce. But meaningfully engaging in e-commerce goes beyond that.

A lot of paperwork

The registration of businesses onto platforms requires a lot of paperwork. There are laborious on-boarding processes and platform fees. How do you make sure your shop/product is competitive and stands out among others? These challenges, and additional barriers like access to finance and procurement, are more pronounced for women who engage in e-commerce as artisans or small-scale producers.

Some evidence suggests that businesses that are online are more productive, but that’s because to get online and benefit from it, the business must be a ‘better’ business to begin with. For many such small businesses, e-commerce starts and ends with adding some app-based delivery personnel and having a UPI payment system. A consolidation of businesses is inevitable when only the fittest survive. This will squeeze out MSMEs.

Beyond the impact of e-commerce on MSMEs, there are questions around whether e-commerce is generating new jobs? E-commerce will create some new positions within firms, for example, in digital marketing and management. What distinguishes e-commerce from traditional, offline supply chains is the use of technology, data, and information to power decisions and connect stakeholders.

But such job roles call for a higher level of education and skill. For those that acquire relevant education and skills, e-commerce offers some opportunities, but these jobs are inaccessible to most. Efficiency also means fewer positions.

A large share of the e-commerce supply chain relies on platform workers. Estimates trying to quantify e-commerce jobs count this form of task-based work as jobs; they are not. The expansion of e-commerce is creating more opportunities for income generation by breaking traditional jobs into task-based gigs. This kind of ‘gigification’ means that a growing contingent of workers are self-employed with service contracts that don’t provide for labour protections and entitlements.

Women’s employment across the e-commerce supply chain, like in traditional supply chains, is gendered. They are more likely to be found in packaging and warehousing than in delivery or high-skilled positions.

E-commerce is on the rise. The genie cannot be stuffed back into the bottle. But it is disingenuous to deny the disruptive effects of this phenomenon on the quantity and quality of jobs in India. Managing the impact is not a matter of more or less regulation, but appropriate and effective regulation to enable businesses and workers to adapt to the pace and scale of disruptions.

The writer is President and Executive Director of the JustJobs Network

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