.png)
Increasingly, people are shopping online instead of going to the store. What effect does this have on the economy? A new issue of "Economics by Ear" with the Rector of the Russian School of Economics by Ruben Enikolopov and managing director of the online hypermarket "Vprok.ru Crossroads" by Leonid Dovladbegyan. They tell us how e-commerce is changing our consumption, how it affects inflation, whether an oligopoly is waiting for us in online trading. We publish the main theses of the issue, and the issue itself is available in the Podcasts section.
Leonid: The pandemic and lockdown triggered the development of online commerce, but it was growing before that, cannibalizing offline commerce. And it continues to grow, albeit not as fast as in 2020.
Online is a more convenient format of consumption than offline. It has been appreciated in China for a long time. If for residents of many Western countries and Russia online shopping was a kind of forced step in finding low prices, then the Chinese enjoyed shopping online - cool, fashionable, interesting. Now residents of other countries have also tried out this format, felt a taste for shopping on the Internet.
Gradually, e-commerce – largely under the influence of the pandemic and lockdowns - is changing consumption itself. We began to cook more at home, watch movies in online cinemas more often, we spend more time with our family, spend less time shopping. The consumer culture of the 2000s with trips to hypermarkets, clogging the trunk with food is leaving. People clearly know what to buy and spend less time on it. The culture of consumption is becoming more reasonable.
Online is a different mindset. It is connected with the purchasing mission. If this is express delivery and the task is to eat now, and not to buy something for the future, then this is a low check and a 15-minute delivery service. And these checks are lower than in an offline supermarket. And in an online hypermarket, receipts will be higher than in an offline supermarket.
If we talk about global trends in general, then, of course, this is the environmental friendliness of consumption, this is a reduction in the receipt, because household expenses are not growing, this is the desire to buy cheap, but rather high-quality goods.
Ruben: There is a tendency towards oligopoly in the field of marketplaces. The competition is still quite tough, but among a smaller group of players.
The consumer is not too concerned about this, he is much more concerned about the choice of goods. And the fierce competition of even two players is enough to ensure that these players do not have monopoly power. Sellers of goods on marketplaces can even win – their access to markets is expanding. These are interesting trends: the number of competing players in the retail market is falling, and competition is increasing in the sellers' market.
Leonid: The venture approach to investing gives many marketplaces the opportunity to invest in the manufacturer, giving him access to the shelf. The strategy of many online players is to work not for profit, but for the value of the company. Of course, in this race, many players strive to become market leaders. And such a leader will definitely appear.
But there will be niche players and offline players. So in America, the most expensive retailer is Amazon, but Walmart has more sales volumes in the USA.
Ruben: E-commerce slows down price growth - simply because it reduces costs. But this is a temporary effect, which will be as long as online trading is gaining a niche. Over time, this effect will weaken.
Ruben: An interesting question: where is it easier to make unnecessary purchases - online or offline? Clicking is much easier than going to the store. But in the store there are more ways to push a person to buy something – you can pick up a product, inspect it, the product on the counter acts emotionally stronger than on the site. These two effects balance each other. But as online services develop and it becomes easier to return purchases, spontaneous purchases will be made more actively.
Leonid: I am absolutely sure that there are no more spontaneous purchases online than offline. Just the trouble with online - less share of emotional purchases for pleasure.
Online purchases are quite boring, which satisfy everyday demand. This is reasonable shopping, generated demand, as the online infrastructure helps to search for specific products.
Leonid: We live in a consumer society, this is especially noticeable in societies that are changing socio-cultural models. We are moving on, as the sociologist [Pitirim] wrote Sorokin, from a society centered on ideas to a society of sensual pleasures, and this is consumption. This is the way our country has gone: from the idea of building a society of universal happiness to a society in which getting pleasure here and now comes first. But for someone, the pleasure is to read a book, for someone - to own a new phone or jacket, for someone - to eat delicious food. Of course, probably the simplest kind of pleasure is to get something that you can feel with your hands. Moreover, for a long time we lived in an era of scarcity in the Soviet Union. And of course, in the 2000s, this factor worked in full force. Now, probably, society is growing up and understands that pleasure is not only shopping, but it's time with family, it's theater, it's cinema, it's books, it's an online cinema. And online forms a more convenient environment for this.
Ruben: People are trying to have fun, but what exactly gives them pleasure. In the USA, a study was conducted that showed that the most expensive thing you can buy is your own time. People were given money and told: you can spend this money only on goods. And then they could spend them only for someone else to do some unpleasant thing for them. And it turned out that the second option gave them much more pleasure.
That is why digital services, social networks that seem to be free, actually cost us a lot. They eat up the most expensive resource – time. Shopaholism is replaced by addictive behavior, dependence on social networks, smartphones. This is a big problem from the point of view of welfare.
Ruben: Attempts to regulate prices due to rising inflation are very harmful to the economy. Price growth is a general global trend. And the problem is not that prices are high, but that wages are low, that products that take up a large share in the basket of poor people are becoming more expensive.
Such government intervention in the market does not help, but only leads to market distortion. If you are forced to sell goods at a low price, then either there is a shortage of these goods, or their quality decreases, or prices for other goods rise. Ultimately, this undermines the investment of manufacturers. Again, with such restrictions, it is not retailers and manufacturers who subsidize the population, but some consumers who subsidize others.
Leonid: Retail is doing more than it can to keep prices low. But prices are formed by macroeconomic factors: there is a lot of money in the economy – more than what can be bought with it.
Market mechanisms work well in Russia. There is a good retail in Russia, it does not lag far behind Western countries. Restaurants are no worse in Russia, and banks' apps are very convenient in Russia. Where Russian private business operated in fairly free conditions, where market mechanisms worked, good products were created there. I will not comment on state regulation.
