E-commerce market growth & hindrances

Published: December 29, 2019

The e-commerce market is poised to grow to $84 billion in 2021, as per the reports of Deloitte and Retailer’s Association of India’s Unravelling the Indian consumer report of February 2019. It is expected to reach to $200 billion by 2026 and this growth is the result of factors which include rising penetration off internet (there will be rise a in number of internet users form 432 million to 647 million from 2016 to 2021. Another major factor for rising e-commerce market is the deep discount policy.

The deep discount issue was addressed by the Department for Promotion of Industry and International trade in 2018 where through a press note it insisted on maintaining an equal level playing field by the e-commerce entities by prohibiting deep discounts. An effect of deep discounts is on the brick and mortar stores as consumers switch to prefer buying products via e-commerce entities. The government looks to digitise Kirana stores to help them compete with the e-commerce entities. For example, Reliance Retail is working in a technology platform to help smart retailers as a part of its new commerce plan. Jumbotail, a Bengaluru based start-up looks to help Tirana stores procedure consumer goods and maintain stock of inventory via mobile apps. Flipkart also went ahead to onboard kirana stores ahead of it Big billon day sale.

Issuance of Draft rules

The ministry of consumer affairs in November 2019, issued draft e-commerce rules which aimed at consumer protection by ensuring quality control, addressing counterfeits and ensuing a smooth return & refund procedure. Quality contour needs to be addressed by e-commerce entities to ensure that goods advertised are as per the actual characteristics. If any counterfeit product is sold, the e-commerce entity needs to notify it to the seller and if seller cannot prove the genuineness of the product, it may be removed as the listed product with the consumer being notified about the same.
For late delivery or defective goods, the e-commerce entities are required to accept returned goods and refund the amount within 14 days. E-commerce entities are also required to comply with the IT (amendment) act, 2008.

The rules also seek to protect local traders via restricting e-commerce entities from influencing price of goods/services being displayer. The rules have been issued under the consumer protection act and seeks to protect the consumer’s interest via undertaking certain measures. The statement of objects and reasons of the consumer protection bill also highlight the need of the new act in case of changes that have occurred since enactment of the 1986 consumer protection act.

The statement notes the factors like development of e-commerce provides new opportunities to customers it also renders them vulnerable to new forms on unethical business and trade practice. Consumers may benefit with deep discounts, however the draft rules attempt to prohibit the discounts while favouring the kirana store over the end user.

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