- The way we travel, amuse ourselves, learn, shop, communicate, and even get our food is drastically changing as technology flattens the planet.
- There are clear winners and losers as a result of how this has affected various national stakeholders.
- The existence of numerous e-commerce platforms has made life more convenient and simple. But taking a broader view shows that e-commerce giants have seriously hurt small and mediumonline firms with strategies like steep discounts and cashbacks, among others.
- Let’s learn more about “E-commerce and its Functioning” in this area.
What Exactly Is E-Commerce?
- The word “e-commerce” refers to a business strategy that enables organisations and people to purchase and dispense goods and services over the Internet.
- E-commerce transactions make almost every good or service conceivable accessible, including books, music, airline tickets, and financial services like stock trading and online banking. It is seen as a very disruptive technology as a result.
What are the advantages that e-commerce offers?
- Closeness between the buyer and seller:
- E-commerce enables businesses to get closer to their customers, which boosts productivity and creates ideal competition.
- Additionally, the buyer has a choice of merchants from which to purchase the best products for their needs.
- Customers can now access online shops whenever they want.
Wider Range of Buyers and Sellers:
- With few investments, it offers a wider reach and reception on the global market.
- It makes it possible for both buyers and sellers to reach a global market. Geographical limitations and difficulties are eliminated or much diminished.
Reduction in Product Distribution Cost:
- This e-commerce approach significantly shortens the product distribution chain by interacting directly with ultimate customers.
- There is established a clear and direct line of communication between the product or service provider and the final consumer.
- In this manner, goods and services are developed to satisfy the diverse preferences of the target market.
- Other advantages include increased export revenue, increased tax revenue for ex-cheques, increased employment, and long-term improvement of goods and services for consumers.
- The micro, small, and medium enterprises (MSME) in India have been directly impacted by the e-commerce sector, which also has a positive cascading effect on other industries by offering means of financing, technology, and training.
What worries people about the big e-commerce companies?
- Predatory pricing is a pricing strategy where a dominating corporation in an industry will intentionally lower the prices of a product or service to loss-making levels in the short-term. This is undercutting on a wider scale.
- These businesses use predatory pricing to attract clients even as they continue to incur losses.
- It might be seen as a tactic of exclusion that drives out other businesses. The consumer will ultimately bear the brunt of the loss since they will have less bargaining power as a result of less competition and will be susceptible to the arbitrary nature of monopolistic behaviour.
Affiliated Partner Bias:
- While neutrality is the cornerstone of a marketplace, assertions made by companies like Flipkart or Amazon that they are a platform for a diverse range of merchants can be called into doubt.
- Selected platform affiliate sellers benefit from more visibility and improved terms of trade, including lower commissions and platform-funded discounts.
- It is claimed that Zomato, like other food aggregators, operates cloud kitchens.
- Many of them operate private-label businesses in markets where other vendors have found success.
- In order to limit, control, or attempt to manage the production, distribution, sale, or price of, or the trade in, goods or the supply of services, producers, sellers, distributors, traders, or service providers form cartels.
- Online travel agencies are frequently charged with cartelization.
- In response to the Competition Commission of India’s inquiry into the OYO-MakeMyTrip collusion issue, MakeMyTrip was required to relist Treebo and FabHotels properties.
- When using these sites, users voluntarily and unknowingly share their data.
- The aggregators compile consumer preferences, shopping patterns, and other private information.
- The platforms are charged with stealing customers from other retailers on their platform by using this data to develop and enhance their own goods and services.
- The aggregators prey on the organisations they claim to support by taking advantage of this information asymmetry.
- Lack of Transparent Dispute Redressal Mechanism: Sellers on these platforms do not have access to a fair and open dispute resolution process.
- Payment delays, arbitrary fees, and hidden costs are frequent occurrences.
- Small, devoted businesses suffer as a result of these platforms’ power:
- Small businesses claim that they are held accountable when food-service aggregators are unable to fulfil a consumer request.
- As a result of overcommitting, hotels featured on these platforms are held responsible for client complaints.
- In certain circumstances, it appears as though restaurants and motels are closed at random.
What E-Commerce-Related Steps Have We Taken?
E-Commerce Rules 2021 Draft:
- E-commerce businesses must register with the Ministry of Commerce and Industry’s Department of Promotion for Industry and Internal Trade (DPIIT).
- A person who owns, operates, or manages a digital or electronic facility or platform for electronic commerce is referred to as a “e-commerce entity.”
Setting Flash Sale Limits:
- Flash sales in traditional e-commerce are not prohibited. Only specific back-to-back deals or flash sales that restrict customer options, raise prices, or otherwise hinder a level playing field are prohibited.
E-commerce websites must see to it that a Chief Compliance Officer (CCO) and a nodal contact are appointed so that law enforcement authorities may be coordinated 24 hours a day, seven days a week.
Restricting Linked Parties:
The new regulations propose making sure that none of the related parties are permitted to utilise any consumer information (from the online platform) for “unfair advantage” in order to address growing concerns of preferential treatment.
Clause of Country of Origin:
- The entities must also categorise products according to their country of origin and offer clients a filtering system before making a purchase.
- To provide domestic vendors a “fair opportunity,” they will also need to provide alternatives to these imported goods.
Reporting Cybersecurity Risks:
- All e-commerce businesses are required to respond to any request for information made by an authorised government agency, including those looking into cybersecurity issues, within 72 hours.
- Rules for Consumer Protection in E-Commerce, 2020
- A grievance officer must be appointed by both marketplaces and sellers as part of the grievance redress system.
- Limitations on Unfair Trade Practices, Manipulation, and Discrimination: No e-commerce entity is permitted to manipulate the price of goods or services in order to make an arbitrary profit, to discriminate against customers who belong to the same class, or to arbitrary categorise customers in a way that impairs their rights.
Should Not Submit Fake Reviews or Misrepresent:
- No seller or inventory e-commerce company shall falsely identify itself as a consumer and post reviews regarding products or services or misrepresent the features or quality of any products or services.
- Maintaining a record of information to identify sellers who have repeatedly offered goods or services that have been removed from the market or subject to restrictions under the Copyright Act of 1957, the Trade Marks Act of 1999, or the Information Technology Act of 2000 is required of e-commerce entities.
- By transforming e-commerce from a platform-centric paradigm to an open network for buying and selling goods and services, the Open Network for Digital Commerce (ONDC), a publicly available government-backed platform, intends to democratise e-commerce.
- resulting in the creation of a platform that any internet shops can use.
How Can We Make E-Commerce Work Better?
- In order to properly protect consumer rights and put an end to unfair practises, the government should revise the Consumer Protection (E-Commerce) Rules, 2020, according to a parliamentary panel. Important suggestions are:
- Clear Definition: To address these legal loopholes used by e-commerce companies, there should be a clearer definition of what constitutes an unfair trade activity.
- Define “drip pricing,” which is when the final price of the product increases owing to additional fees, and include procedures to protect consumers from this by establishing sanctions for violations.
- E-commerce businesses should offer a dedicated customer service number as well as a way to track how long it takes customer service representatives to address a problem.
- Discourage Deceptive Technique: In order to prevent any harm to the interests of the consumer, some corrective methods to dissuade deceptive strategies, such as algorithm manipulation and phoney product evaluations and ratings, must be developed.
- The EU’s Digital Markets Act, which aims to counter unfair conduct by these gatekeepers, offers a wealth of lessons.
- At the level of micromarkets and product segments, market dominance should be recognised and then result in the application of fair competition laws.
- Punitive sanctions for unfair practises ought to be permitted by the rules.