India eCommerce Reform

Today, India’s Ministry for Consumer Affairs unveiled a new eCommerce proposal that would seriously impact how both Amazon and the Walmart owned Flipkart promoted their marketplaces.

This proposal aims to deal with the ‘widespread cheating’ claims aimed at the eCommerce giants by a growing number of bricks and mortar sellers in the country, claiming the giants have an unfair advantage.

Perhaps most striking in the proposal is the language around flash sales, and whilst not being banned in their entirety it is clear they are looking to restrict them somehow.

“eCommerce entities are engaging in limiting consumer choice by indulging in “back to back” or “flash” sales wherein one seller selling on the platform does not carry any inventory or order fulfillment capability but merely places a “flash or back to back” order with another seller controlled by the platform. This prevents a level playing field and ultimately limits customer choice and increases prices.”

India Ministry For Consumer Affairs Statement

The proposal will act as an amendment to the 2020 Consumer Protection (eCommerce) Rules. It does not just potentially threaten flash sales in the region but also private labeling too, something which Amazon has been doing for years with great success. The proposal states how it may prohibit Amazon, Flipkart, and other eCommerce players from running their in-house / private labels. They plan on asking firms to ensure that none of their related and associated parties are listed on their platforms as sellers for selling to customers directly.

On top of this the amendment is also seeming to go after marketplaces that are being disproportionately selective with their search results and favouring certain sellers.

“…the rapid growth of  eCommerce platforms has also brought into the purview the unfair trade practices of the marketplace eCommerce entities engaging in manipulating search result to promote certain sellers, preferential treatment to some sellers, indirectly operating the sellers on their platform, impinging the free choice of consumers, selling goods close to expiration, etc.”

India Ministry For Consumer Affairs Statement

It doesn’t stop there, to help alleviate some of the complaints from the domestic Indian sellers it appears that the new rule if approved will require marketplaces to highlight which items are from India and which are imported.

“To ensure that the domestic manufacturers and suppliers get a fair and equal treatment on the eCommerce platform it has been provided that where an eCommerce entity offers imported goods or services, it shall incorporate a filter mechanism to identify goods based on country of origin and suggest alternatives to ensure a fair opportunity to domestic goods.”

India Ministry For Consumer Affairs Statement

The India eCommerce reforms would be far-reaching for Amazon and Flipkart alike and would undoubtedly impact their strategy and trade in the country. Especially as both have come under increasing scrutiny for their practices over recent years.

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