Stringent draft e-commerce rules are not in best interest of consumers, survey finds

The proposed amendments to e-commerce rules seek to ban flash sales, raise compliance requirements, and fix liability on platforms for the failure of the sellers.

Representational image | Pexels

New Delhi: The stringent draft e-commerce rules will put significant limitations on the consumers’ ability to purchase products at discounted prices and pay a premium for faster delivery of products among other services, a new survey has found.

According to the survey by New Indian Consumer Initiate (NICI), a community-owned platform on the new economy, Indian consumers will face restrictions as the recently proposed amendments to the e-commerce rules 2020 directly target services like ‘flash sales’ that various platforms offer.

To assess the sentiment of consumers, NICI conducted an online pan-India survey of around 3,500 respondents from nearly every state across the country.

While 85 per cent respondents didn’t want flash sales to be banned, around 70 per cent wanted local sellers to sell their products and services online.

The survey also found that 90 per cent respondents preferred shopping online during lockdowns due to the pandemic. 

In its assessment, NICI said the draft amendments will have an adverse impact on consumers if they are implemented without revision.

“We are concerned with some clauses in proposed amendments and request the Department of Consumer Affairs to review their effectiveness to achieve intended objectives of improving consumer trust in the online ecosystem,” NICI Convenor Abhishek Kumar said in a statement.

“Consumer interest isn’t defined only at the consumer end, it needs to include all elements to ensure they get choice, quality and affordable price. Draft amendments don’t fulfil adequate consumer welfare criterion and can’t be called consumer-friendly,” Kumar said.

The rules

The amendments to e-commerce rules seek to ban flash sales, raise compliance needs, and fix liability on platforms for the failure of the sellers registered with them to deliver the promised goods or services (‘fallback liability’).

The stringent provisions were seen as a sign that the Narendra Modi government plans to increase scrutiny on e-commerce platforms operating in India.

Last month, Union Commerce and Consumer Affairs Minister Piyush Goyal attacked e-commerce giants operating in India, stressing that they are wielding influence to hurt domestic small businesses, traders and even consumers in the long run.

The Department of Consumer Affairs is currently reviewing the suggestions that it sought from the stakeholders last month.

Other findings

NICI assessment said the new rules might result in higher compliance costs for small businesses, which will result in either burden being passed on to consumers in the form of higher prices or inability of such businesses to engage in e-commerce activities — both restricting consumer choice.

The constraints on curating searches, as the proposed rules call for, will inconvenience consumers while forcing them to spend hours to find relevant products. E-commerce platforms also won’t be able to list products based on seller’s ratings making consumers apprehensive about the product quality they are purchasing.

“Flash sales are a well-accepted phenomenon everywhere, especially after a pandemic there’s a huge amount of inventory, which will go out through discounted sales,” Kumar told ThePrint.

“Competitiveness cannot be improved through e-commerce rules, it can be improved through reducing fixed costs of logistics and raw materials among other things. Fixing it through e-commerce rules is an artificial fix rather than addressing the structural issues.”