India’s Consumer Affair Ministry has proposed some new consumer rules for the e-commerce sector that could be troublesome for some e-commerce companies like the U.S.-based Amazon and Walmart’s Flipkart.
India’s Ministry of Consumer Affairs outlined some norms for e-commerce companies including limiting “flash sales” by online retailers, regulating a private-label push, compelling companies to appoint compliance officers and impose a “fall-back liability” if a seller is negligent.
The government said in its press release that it has numerous complaints from consumers, traders and associations against inescapable cheating and unfair trade mean practice in the e-commerce ecosystem.
Thus, the Ministry of Consumer Affairs in its proposal has said that “ no e-commerce platform should be allowed to hold flash sales in India.” ‘ E-commerce Giants in India like Amazon, Flipkart hold flash sales especially during the time of festivals like Diwali, Republic Day or Christmas. While these sales could be pocket friendly for customers and beneficial for e-commerce firms, the government may not let the sales anymore.
“Certain e-commerce entities are engaging in limiting consumer choice by indulging in ‘back to back’ or ‘flash’ sales wherein one seller selling on the platform does not carry any inventory or order fulfilment capability but merely places a ‘flash or back to back order with another seller controlled by the platform. This prevents a level playing field and ultimately limits customer choice and increases prices,” the ministry said in a statement.
The new rules may impact the businesses of an e-retail market in India that is supposed to touch the value of $200 billion by 2026, with key market players like Tata’s BigBasket, Reliance Industries’ JioMart and Softbank-backed Snapdeal, Amazon and Flipkart.
The rules have come in times of growing confrontation between U.S. tech giants and New Delhi over several policy-related issues.
Just similar to what the government had ordered Facebook, WhatsApp and Twitter to appoint nodal and compliance officers, it has proposed to the e-commerce firms appoint a chief compliance officer and a nodal officer as well as resident grievance officers in India.
“To ensure compliance of the Consumer Protection Act, 2019 and Rules, the appointment of Chief Compliance Officer, a nodal contact person for 24×7 coordination with law enforcement agencies, officers to ensure compliance to their orders and Resident Grievance Officer for redressing of the grievances of the consumers on the e-commerce platform, has been proposed. This would ensure effective compliance with the provisions of the Act and Rules and also strengthen the grievance redressal mechanism on e-commerce entities,” the ministry said.
The ministry also plans to prohibit e-commerce platforms from listing associated parties as sellers for direct selling to customers. Besides this, e-commerce platforms will also need to provide the essential information related to a product, such as “ best before or use before date” to let consumers make an informed purchase decision.
Making the rules is Good but it is one of the reason that Ecommerce site’s sellers increasing price day by day as they are making very less profit.