Ban On Flash Sales: Hope For Offline Stores

Introduction

Following complaints from small businesses about market dominance and steep discounting by online retailers, India proposes to tighten rules for e-commerce marketplaces such as Amazon and Flipkart. The Central Government recommended changes to the Consumer Protection (E-Commerce) Rules, 2020, and requested public feedback on prohibiting fraudulent flash sales and mis-selling of goods and services on e-commerce platforms. The use of traditional e-commerce flash deals is not prohibited. Only certain flash deals that limit customer choice, raise prices, or create an uneven playing field are prohibited. According to the amendments in e-commerce legislation recommended by the ministry, e-commerce companies must also develop proper redressal mechanisms and appoint a chief compliance officer. These businesses would also be required to appoint a resident grievance officer, who must be an employee of the company and a citizen of India, to function as a point of contact for law enforcement agencies.

The government has stated that e-commerce businesses with a dominant position will not be allowed to abuse their position. The government has recommended that every e-commerce entity that wants to operate in India must register with the Department for Promotion of Industry and Internal Trade (DPIIT) within the time frame set by DPIIT for the issuance of a registration number.

E-commerce businesses are now registered under the Companies Act, the Indian Partnership Act, or the Limited Liability Partnership Act, rather than the Department for Promotion of Industry and Internal Trade (DPIIT). The government has urged e-commerce businesses to ensure that registration numbers and order invoices are publicly posted to users on their platforms in a clear and accessible manner. It also proposes that false advertisements should be prohibited from being displayed or promoted. Imported goods/services must also include the name and contact information for the importers, as well as the “Country of Origin.” Furthermore, it has recommended ‘ranking’ for goods and services provided on the platforms, with the ranking rules ensuring that local goods and services are not discriminated against. All sellers will be obliged to add a “Best Before” or “Use Before” date to ensure that customers are aware of the expiration date of the products they are purchasing on the e-commerce platform, allowing customers to make an informed purchase decision. When an e-commerce company sells imported goods or services, it must include a filter mechanism that allows customers to identify goods based on their country of origin and suggests alternatives to ensure that, domestic manufacturers and suppliers should be treated fairly and equally. The government has also recommended ‘Fall-back liability’ for every e-commerce business to ensure that consumers are not affected when a seller fails to offer products or services as a result of the seller’s carelessness in performing the duties as outlined by the e-commerce entity’s marketplace.

The new regulations aim to keep Indian e-commerce companies accountable. It will be interesting to observe how these amendments are applied practically at first glance and also this new regulation aims the regulate the customers’ consent for sharing their data with others through these e-commerce companies.

Does ban on flash sales will give hope for Offline Stores

I believe it’s a no because according to the study, consumers in emerging economies have made the most shift to online shopping. “The COVID-19 pandemic has sped up the transition to a more digital world. As the global economy recovers, the reforms we make today will have long-term consequences,” said UNCTAD Secretary-General Mukhisa Kituyi.[1]

Text Box: Source - UNCTAD and NetComm Suisse eCommerce Association

According to a survey mentioned below, e-commerce is quickly becoming one of the most popular means of shopping in India, owing to increased user uptake over the previous 12 months as a result of the Covid-19 outbreak.

Despite the recent opening of local markets, retail stores, and malls, the findings of a survey conducted by community platform Local Circles demonstrate that consumers who utilized e-commerce services in the previous year are still using them. Over the last 12 months, over half of all respondents said e-commerce websites and apps have become their preferred form of shopping, while another 18 per cent said they prefer having things delivered home from local businesses.[3]

Conclusion

If we observe the surveys globally and nationally, the use of e-commerce has gradually increased due to the pandemic and people are continuing using online platforms even though restrictions were lifted. Making amendments to legislation for flash sales banning will not give any kind of hope to local retailers i.e., offline stores. Finally, this works at the discretion of the Consumer’s interest, not by any kind of laws and restrictions by the government.


[1] https://unctad.org/news/covid-19-has-changed-online-shopping-forever-survey-shows Accessed on 3rd July, 2021

[2] Alnoor Peermohamed, https://economictimes.indiatimes.com/tech/technology/e-commerce-is-fast-becoming-the-default-option-for-shopping-in-india/articleshow/81502440.cms?from=mdr Accessed on 3rd July, 2021

[3] Ibid

By-

Allu Hari Narayana

Bennett University

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