E-commerce Rules Expected To Shake Up The Sector For The Better – Part 2

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In the previous article, we discussed the types of markets as defined by economic theory, the high-growth e-commerce space, aided by continuous innovation in digital payments, and some of the draft e-commerce rules proposed by the Indian Government with the rationale behind them. We shall conclude this series with a look at the other key provisions in the draft rules. 

 

Key aspects of the new draft e-commerce rules

The Indian Government has reiterated that the new Rules are a sincere attempt to ensure India’s enforcement powers are at par with those of other global counterparts. The Indian Government has proactively enforcing consumer protection reforms that need to be abided by e-commerce players, especially those that are foreign players and operate solely through a digital route, without a physical presence. For example, 148 notices were issued to e-commerce entities to comply with the ‘disclosure of country of origin’ clause on their platforms.  

 

The following are the other provisions:

 

• Prevention of discrimination against domestic-manufactured products

 To give a thrust to AtmaNirbhar Bharat, e-commerce players are supposed to display Made-in-India products along with foreign products.  

> Rationale: This would bring in parity at the pre-purchase stage ensuring that customers are free to choose between products. 

 

•  Prohibition of flash sales that benefit certain select sellers

E-tailers are not allowed to hold flash sales where only certain select sellers are permitted to sell their products.  

>  Rationale: While general flash sales with discounted prices to customers are not banned per se, providing a special benefit only to certain sellers is not permitted. This is in the spirit of fair competition. 

 

• Prohibition of related party sellers from selling on the platforms

Sellers who are related parties, associated enterprises, or share parent-subsidiary relations with the e-commerce players are not allowed to enlist as sellers and sell directly to customers. 

>  Rationale: Segregation between e-commerce marketplace players from the sellers on the platform, to prevent the possible promotion of certain related-party sellers.

 

• Prohibition of empanelled logistics service providers to differentiate between sellers within a category

Logistics players associated with the e-commerce marketplace are not permitted to prioritize deliveries of certain sellers to provide prompt delivery to customers of certain sellers. 

>  Rationale: E-tailers prefer that sellers opt for their in-house logistics, which might unfairly influence the customer purchase decisions on considerations other than product quality. 

 

• Fall-back liability to be charged on the e-commerce entity

This applies when a seller enlisted on the platforms fails to deliver the goods, owing to negligence 

> Rationale: Mitigates loss to end consumers and ensures e-commerce entities conduct thorough checks of seller quality.

 

• Stringent compliance norms

 E-tailers need to provide data to regulatory agencies within a certain stipulated time.

> Rationale: This would tighten the noose on e-tailers and ensure adherence to fair practices.

 

• Explicit consumer consent to be obtained on cancellation charges

E-tailers mark certain products that are non-returnable at the pre-purchase stage itself. 

> Rationale: Prior consent would strengthen consumer protection as a best practice. 

 

 

Concluding thoughts

Consumer protection should be a #1 priority, especially for digital businesses like e-commerce and digital payments. Being traditionally, a high transaction volumes nature of business, besides providing a superior customer experience by way of prompt transaction completion, variety of products to choose from, convenience by way of touchless payments or home delivery of products and optimal pricing, it is equally of utmost importance to set up a robust framework that is customer-centric and addresses all concerns of the customers at all stages- pre-transaction and post-transaction. No one likes to be short-changed- definitely not the tech-savvy digital customer!