Why restrict e-commerce players like Flipkart and Amazon when offline retailers follow the same practices, ask industry experts

Why restrict e-commerce players like Flipkart and Amazon when offline retailers follow the same practices, ask industry experts
Business Insider
  • The government rolled out the Consumer Protection (E-Commerce) Rules of 2020, two weeks ago.
  • IAS Aruna Sharma highlighted that the e-commerce platforms should not be treated so differently, as retailers follow similar practices too.
  • While the retailers are celebrating the regulation at the moment, this may be going to do more harm to them as e-commerce liberalised trade.

The government of India updated its draft e-commerce policy earlier last week, in an attempt to create a level playing field for small retailers that still operate, majorly, out of brick-and-mortar stores.

The amendment has been lauded by several traders and associations like the Confederation of All India Traders (CAIT), but industry experts fear that the policy may not be in their best interest.

In a recent webinar conducted by public-policy think-tank ‘The Dialogue’ on the “Draft e-commerce rules and its impact on the industry”, industry experts highlighted that the ecommerce industry and the retail industry will have to coexist, not only in the best interest for the end customers, but for themselves.

Deepak Shetty, director of software solutions firm Zed-Axis Technologies, highlighted that the Indian micro, small and medium enterprises (MSMEs) are reaching out to the global market these days and it would not have been possible without ecommerce platforms. “I [from the perspective of a small seller] would have to spend so much more money to set up offices abroad and go to trade shows, but today I am able to do it at the least possible cost,” he added.

Meanwhile, Aruna Sharma, an Indian Administrative Service (IAS) officer and former secretary to the government of India, noted that the consumer behaviour is now shifting towards e-commerce portals, just like it shifted to malls over a decade ago. The retail and e-commerce platforms will have to coexist, as technology takes over.

Meanwhile Sharma highlighted that the e-commerce industry should not be treated so differently from the retail industry. Though e-commerce platforms are barred from giving preferential treatment to any sellers under the foreign direct investment (FDI) rules, retailers are free to do so. She explained any retailer can position the products based on the commission they earn on their sale, but e-commerce companies are not allowed to apply similar tactics to promote products that give them higher commissions.

Similarly, Shetty noted that the e-commerce policies are not something dynamic, but are based on the practices that even retailers follow. “If I remove the ecommerce from the guidelines and put retail in it, it will still mean the same. I cannot hold the platform responsible for a seller,” he added.

Minimal policy may be the best way out to help sellers

Jehangir Gai, joint honorary secretary of the Consumer Welfare Association emphasised that minimal regulation is required in this space to ensure that the consumers’ demands are met. He also highlighted that more regulations lead to more corruption and interference. “The objective is laudable, but the methodology is flawed,” he added.

He also agreed that there are some issues within the segments, but “let’s not kill the entire industry, in the name of a few black sheep.”

Echoing Gai’s thoughts, Shetty drew comparisons between the real world and a classroom. “Let teachers make rules or allow students to come up with their own ideas to find the solutions. Second part where we nurture creativity, and that’s the one that works. Restriction is going to lead to restricted business growth,” he added.

The latest amendment to the Consumer Protection (E-Commerce) Rules of 2020 have barred e-commerce companies from carrying out flash sales that offer products at “significantly reduced prices, high discounts or any other such promotions or attractive offers for a predetermined period of time on selective goods and services or otherwise with an intent to draw large number of consumers.”

Grievance system may prove beneficial for customers

It also aims to smoothen the grievance redressal process on e-marketplaces by making it mandatory for each of these platforms to appoint a Chief Compliance Officer, a Resident Grievance Officer and a nodal contact person in India.

Commenting on the same, Zed-Axis’ Shetty said that there should definitely be a grievance officer, but the government should give them “enough teeth to make decisions in the favour of the consumer”, otherwise it’s not really the right solution. However, Gai noted that the Indian grievance-redress mechanism has failed across other segments and it may happen in this segment as well.

He also mentioned that flash sales help consumers. “For over the years, we had monopolistic practices and restrictive trade behaviour, I think it comes from traditional systems. I think these flash sales ultimately help the consumers,” he said.

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