By Lloyd Mathias
In all the analyses around the government’s proposed e-commerce policy effective February 01, an important element that is being ignored is its impact on consumers.
It’s rather tragic, because while the other three affected parties; viz. the global e-commerce marketplaces like Amazon & Flipkart-Walmart; the domestic e-commerce players like Snapdeal & Paytm; the Indian retail majors like Reliance, Future, Croma and the brick and mortar traders lobby – have had their views tabled and aired on media, the voice of the consumer has completely been missed.
This is even more tragic as the Indian consumer represents the largest chunk of many categories, most notably mobile phones, wherein the world’s biggest brands including Samsung, Apple, Huawei, Xiaomi, Vivo and Oppo are wooing consumers assiduously with tailormade products and latest offerings.
The new norms bar exclusive tie-ups between e-commerce firms that follow the ‘marketplace model’ and vendors using their platform. Therefore, special offers like cashback, extended warranties, faster deliveries to some brands will be prohibited, with the view to provide a level playing field.
This impacts the flexibility in doing business for some brands that may choose to go exclusively online. Most customers shop online for deep discounts and exclusive offerings, which may not be available on other online platforms, or in offline stores.
Once implemented, the real impact of the policy changes will be felt by the Indian consumer. By stipulating that global e-commerce players cannot open their marketplace to any entity where they have more than a 25% stake, the new policy effectively bars private labels and even products like the Amazon Echo and Kindle, from their marketplaces.
At the same time, private labels from offline retailers and Indian e-commerce players may continue. Clearly seems like a regressive trade practice denying consumers full choice and a strong case for the Competition Commission of India to intervene.
Consumers will bear the brunt of these changes, as prices will go up, discounts evaporate and product options and availability shrink as e-commerce marketplaces will strive to remain compliant with the new rules.
Issues being raised by trader lobbies such as the Confederation of All India Traders (CAIT), about brand exclusivity, predatory pricing, deep discounting, and loss funding – are all consumer boons. The telecom sector in India boomed in the last two decades precisely because of hyper-competition between multiple players and the resultant aggressive price discounting benefitting the consumer and leading to phone penetration in excess of 80%.
For a government that has advocated freeing up businesses from control and actively sought foreign investments, these new e-commerce rules reek of vigorous economic nationalism, seem regressive, create unpredictability and may have a negative impact on the growth of online retail in India.
Also the fact that the new rules are being notified without real consultation and are akin to changing rules in the middle of the game. This lack of consultation and transparency in policymaking, coupled with a total disregard for consumer interest may impact consumer and business sentiment and future investment.
(Lloyd Mathias is the former APAC Marketing head of HP’s Consumer PC business. Views expressed above are his own)
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