new rules for e-commerce
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new rules for e-commerce

new rules for e-commerce

proposed changes to regulation could bring more parity between online and offline sellers
finance
June 25, 2021
4 min read
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new rules for e-commerce

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online shopping has been going from strength to strength in India. it has come a long way from its nascent days to gain the trust of people who are now buying everything from their daily groceries to medicines online. e-commerce has some inherent advantages over traditional commerce. but things may change. last week, the government put out a list of draft rules and invited suggestions from everyone in the ecosystem. 

gone in a flash

the government has proposed major changes to the Consumer Protection Rules: 2020, which apply to e-commerce firms.

  • all e-commerce companies are required to register with the Department for Promotion of Industry and Internal Trade.
  • they cannot hold ‘flash sales’ on any goods or services. the government is yet to clarify what it means.
  • companies selling imported goods must clearly identify and allow customers to filter by country of origin. they are also to suggest local-made products as alternatives to support the manufacturing industry.
  • the companies shall be responsible for “fallback liability” where sellers fail to deliver goods or services.
  • no entities that are related to a marketplace can directly sell on its platform.
  • tighter rules will be applicable for private label products which are associated with the selling platform.
  • every e-commerce firm will have to appoint a Grievance Officer and a Chief Compliance Officer, somewhat similar to those for social media platforms under the new IT Rules.

the stakeholders have been given until July 6 to submit their views on the proposal.

keep it together

many trade-unions have repeatedly called for the imposition of limits on e-commerce firms. their primary complaint is that the price of products on the web is cheaper compared to in-store. the government appears to be stepping in to restore some kind of balance. restricting flash sales is one of them.

let’s understand the e-commerce industry a little. two of the biggest companies, Flipkart and Amazon, drive most of India’s ecommerce sales. almost 50% of their revenue comes from the sale of smartphones. and the fastest way to sell phones is via sales. India’s internet penetration has grown on the back of cheap mobile phones. according to reports, 45% of India’s phones have been bought via the internet. and during the pandemic, the demand for old and new devices have gone up. often, these e-commerce companies offer exchange programmes, where an old phone and a little cash can be swapped for a new device. this helps decrease the price for the customer. hence creating a price difference between e-commerce and retail stores. 

all of these nuances will be discussed by e-commerce companies, seller groups and the government.