The Navhind Times Archive

Protecting Offline Retailers From E-Commerce Firms

The central government has tightened norms to regulate the business activities of the e-commerce firms. They have been barred from selling products of the companies in which they have stake. The Union commerce and industry ministry has also prohibited e-commerce companies entering into an agreement for exclusive sale of products. The new regulations would hit major e-commerce players in the country such as Flipkart and Amazon and is likely to trigger a shakeup in the way they conduct business in the country. One of the new rules bars any entity related to e-commerce platforms from selling on their site and imposes a limit on how much one vendor can sell on a particular portal. The ecommerce marketplaces or entities in which they have direct or indirect equity participation or shared control have to provide services to vendors on the platform at arm’s length and in a fair and non-discriminatory manner. This is likely to end selective promotional schemes, such as cashbacks or faster delivery, which will now be deemed unfair and discriminatory. The new policy also prohibits e-commerce platforms giving any preferential treatment to any supplier.

The government’s new measures are aimed at checking the shrinking of market space for brick-and-mortar retailers, which have had a longstanding grievance against e-commerce sites for offering discounts to win over customers. Though the government made changes in the law in 2016 to provide a level playing field, the changes fell short of expectations of the brick-and-mortar businesses. Spokesmen of Flipkart and Amazon have said that it appeared to them that someone has studied their business models and brought changes to ‘kill’ the two companies. They claim that the changes come at a time when e-commerce companies are providing jobs and investing in an ecosystem in India. However, the government is not going to roll back the changes, which have been made to address complaints from brick-and-mortar businesses that e-commerce entities were distorting the market by sourcing and selling goods on their own platforms, violating the policy that disallows foreign direct investment in business-to-consumer e-commerce. The Confederation of All India Traders (CAIT) says the move will bring clarity as e-commerce companies and multinationals were “adopting all kind of tactics to control and dominate retail trade in India.”

Though e-commerce has picked up in the country in a big way there are some problems unresolved. One of them is information asymmetry, which is more prominent in e-commerce in view of complexity of terms and conditions. The consumers are vulnerable to misleading and deceptive conduct of business. In order to make informed purchasing decisions in e-commerce transactions consumers should have relevant and accurate information about goods and services and the traders supplying them. The web-based environment provides a lot of scope for unfair commercial practices. Winning the consumer’s trust in digital markets is one of the main challenges in the development of e-commerce. Though the Consumer Protection Act of 1986 has defined right to information as “the right to be informed about the quality, quantity, potency, purity, standard and price of goods or services, as the case may be so as to protect the consumer against unfair trade practices,” there have been numerous cases in which consumers have been taken for a ride by e-commerce firms through their not-so-transparent operations. Consumers face number of challenges to buy a certain product online, with the most common challenges being unfair contract terms and online payment security.

Though the government has taken steps to provide a level playing field for e-commerce firms and traders in the country, it also needs to set up a stronger consumer redressal mechanism. With e-commerce becoming a preferred mode of making purchases unscrupulous players in the field have been cheating consumers in many ways. There is need to promote fair, effective, transparent and impartial mechanisms to address consumer complaints through administrative, judicial and alternative dispute resolution. The dispute redressal system in e-commerce litigations has to be simpler and faster. The government should now focus on establishing alternative dispute resolution mechanism which should provide solution to the consumer to resolve their cases privately and without having to initiate litigation in courts. The issue of level playing field having been settled at least for now, the government has to focus on tightening the screws on the shortcomings and ensure that rights of consumers are not compromised. The authorities should provide consumers doing e-commerce transactions an expeditious, fair, transparent, inexpensive, accessible, speedy and effective dispute resolution system without unnecessary cost or burden, which will save them from exploitation and at the same time, promote e-commerce.

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