Much of India's economy is based on 'buying and selling'. The game is simple: buy low, sell high. And high can be as high as you want. Even though merchants add very little value, with bartered prices they can make an enormous margin on goods sold to unwary customers. The manufacturers don't want this slice of the pie taken from them, and so most packaged foods and many goods come with a Maximum Retail Price (MRP) printed on the item. (Akin to RRP in the UK).
For a while this worked, but unfortunately in this game the merchants work against the customer. Why should they stock their store with an item where the margin was very small. Instead the temptation is to stock brands with the lowest purchase price but the highest MRP. In theory a savvy user should be able to shop around and find a better deal, but in practise the small shops in India will all be stocked with the same brands. Even if the price is the same, quality is driven down.
The result is two fold, firstly many packaged goods cost more in India than in European countries, and secondly that you can no longer trust the MRP on some items, as it is grossly inflated. You pay Rs350 for olive oil with a printed MRP of Rs650. You pay Rs40 for toilet paper with a printed MRP of Rs80. You pay half the labeled MRP on imported China made shoes (you can guarantee the price on the customs slip is 10% of the MRP). For other items the price is revealed when an honest merchant sells below MRP.
With bottled water the game is subtly different. Bottled water is typically Rs20/litre, which is actually quite a high price. It's comparable to Greece, and more expensive than in Nepal (which imports it's oil and has even worse infrastructure). It's possible to market the same product with a retail price of Rs15 (Rail neer, common at railway stations). In fact, it's very popular and profitable for the state owned IRCTC. But why would you stock a product with the lower sale price, there isn't any incentive!
For a while this worked, but unfortunately in this game the merchants work against the customer. Why should they stock their store with an item where the margin was very small. Instead the temptation is to stock brands with the lowest purchase price but the highest MRP. In theory a savvy user should be able to shop around and find a better deal, but in practise the small shops in India will all be stocked with the same brands. Even if the price is the same, quality is driven down.
The result is two fold, firstly many packaged goods cost more in India than in European countries, and secondly that you can no longer trust the MRP on some items, as it is grossly inflated. You pay Rs350 for olive oil with a printed MRP of Rs650. You pay Rs40 for toilet paper with a printed MRP of Rs80. You pay half the labeled MRP on imported China made shoes (you can guarantee the price on the customs slip is 10% of the MRP). For other items the price is revealed when an honest merchant sells below MRP.
With bottled water the game is subtly different. Bottled water is typically Rs20/litre, which is actually quite a high price. It's comparable to Greece, and more expensive than in Nepal (which imports it's oil and has even worse infrastructure). It's possible to market the same product with a retail price of Rs15 (Rail neer, common at railway stations). In fact, it's very popular and profitable for the state owned IRCTC. But why would you stock a product with the lower sale price, there isn't any incentive!
No comments:
Post a Comment