The rules should cover both online and offline retail: The Tribune India

Sushma Ramachandran

Senior financial journalist

The online delivery of goods and services has become an integral part of our daily lives. The desire to avoid infection with Covid by visiting shopping malls in person has greatly increased the lure of the online marketplace. Now that we are relying on e-commerce for the full range of essential supplies, the new guidelines proposed by the government to regulate online marketing platforms should concern us all.

The new draft e-commerce rules must be seen against the background that it is not only India that is scrutinizing the activities of the global e-commerce giants. Both the US and the European Union have launched antitrust investigations against Amazon and other big tech companies. One of the central fears is that the tech giants play a dual role as marketplace operators and sellers and are therefore exposed to accusations of being anti-competitive.

Similar issues were raised in this country nearly three years ago when Amazon and Flipkart, owned by Walmart, were asked to make sure they were only operating as a marketplace and not as a seller as well. Exactly the same issues have been raised by US and European regulators, who have indicated that third-party data is being used to make Amazon first-party business decisions. They highlighted the fact that the company has access to privileged third-party data that is inaccessible to others and this is used to customize the sales strategies of its own products.

The latest set of rules that is being proposed for e-commerce players in this country is linked to precisely these concerns. The new regulations do not only apply to foreign online marketplaces, but also to domestic players. The determination that companies affiliated with the online marketplace cannot be available on the website is likely to hit domestic players like Tatas and Reliance. This is fair enough as there should be a level playing field for all sellers in the online marketplace. The benefit of third-party access to privileged data should not be available even if the online platform is owned by an Indian company.

At the same time, consumer protection must be taken into account both online and offline when formulating regulations for the e-commerce sector. The need to prioritize the interests of consumers is gradually being given priority on the online platforms under the new provisions of the draft guidelines. For example, the new rules suggest that online marketplaces should be held liable for faulty or faulty products, rather than leaving responsibility to the seller alone. This is all good as these platforms should do some basic checks before allowing unscrupulous operators to do business on their websites.

On the other hand, the question arises whether there are regulations for consumer protection in stationary retail. The answer has to be no. In fact, consumers have great difficulty trying to return faulty products or get a refund through the physical shopping channels. The tradition of the “caveat emptor” or “buyers watch out” has dominated the markets in this country for decades, despite the flood of consumer protection laws.

Buyers can only seek remedy through consumer courts, which is a time consuming and tedious task, especially if it is only a product or a product of little value. In most cases, consumers are at the mercy of the retail stores who generally reject complaints. In stark contrast, the online marketplace has brought relief to Indian consumers by adopting global standards for returns and refunds. One of the charms of buying online is not just the huge discounts, but the prospect of simply returning a product for a quick refund, or alternatively exchanging it for another item. In fact, it would be wise for merchant associations to examine these questions and make the much needed changes before just complaining about the unfair discounts on products offered by online marketing platforms.

This is where the government needs to step in and play a more proactive role in favor of the common man. What is certain is that small stationary kirana stores are the backbone of the retail economy and as such need support if they are not to be wiped out by large retailers and e-commerce. Still, it is high time that such retail stores became more consumer-friendly.

Some changes have already been made in this area. The introduction of the goods and services tax (GST) brought about a fundamental change in the small retail segment with the introduction of the computerization of accounts. This radical change also brought it under the tax network. It now needs to take a more consumer-centric approach – ‘vendors’ reservations or ‘sellers watch out’ – and take responsibility for products sold in accordance with global ethical business practices.

It is clear that strategies for the retail economy must be developed in such a way that both the stationary segment and e-commerce are taken into account. The fact is, many e-commerce players also operate in the former segment, with physical stores in many locations. Even big tech has visualized the growth of smart supermarkets where consumers can make purchases without even making a physical payment.

So the futuristic merging of online and offline is indeed on the horizon, and policymakers need to keep an eye on this merging rather than siloing guidelines for one or the other. It must be recognized that the potential for growth is enormous, as Forrester Research predicts that the size of the retail economy in this country will grow from its current $ 883 billion to $ 1.3 trillion by 2024. Protection for small Kirana stores is certainly necessary as consumers rely on them much more than large retailers or online platforms. But modernization cannot be stopped, and it is a process that the government should aggressively pursue to meet consumer needs.