The anti-counterfeit measures proposed in the recently released draft national e-commerce policy are being hailed as a step in the right direction by the industry and online sellers.
Industry insiders and sellers ET spoke to said that save for a few issues, the government’s anti-counterfeit measures would help in stemming the sale of fake products online.
The government has proposed that e-commerce firms must give trademark owners like a brand or a reseller the option to approve the sale of every product that carries their trademark listed for sale by a vendor on their platform. In the case of luxury goods, cosmetics should seek the trademark owners authorisation to sell such products on their platforms.
While e-commerce companies do not share any statistics on fake or counterfeit products, some studies have pegged the share of fake products being sold online as high as 20%. Categories such as apparel and accessories are highly affected by counterfeits being sold.
“This certainly seems doable, especially since it’s in everyone’s interest,” said a top executive from one of India’s top two e-commerce marketplaces. “Till counterfeits exist, the cost to original brands will remain high, but if the entire demand comes to the original brand, they will be able to bring down costs.”
He added that the technology needed to enable this would not be hard to build and while the removal of low-cost counterfeit options from online marketplaces might hurt sales temporarily, it would eventually recover as brands began enjoying better economies of scale and pass on the benefits to the consumer.
Others pointed out that introduction of the rules may accentuate some trade channel conflicts between brands and sellers. By allowing brands to determine which seller and product gets listed on e-commerce marketplaces, they could clamp down on those who are selling their products at big discounts, something offline retailers have protested.
“Every year there’s a big tussle with brands that their products shouldn’t be bought on e-commerce platforms because they’re being sold at large discounts compared to brick-and-mortar prices. Offline still makes up nearly 90-95% sales for these brands, so traditional sellers put pressure on the brands,” said another top e-commerce company executive.
This person added that by allowing brands to clear products for sale on e-commerce marketplaces, they could begin blocking non-authorised sellers who offer discounts, even though the products are genuine and purchased from genuine wholesalers.
On the seller front, the policy also proposes for e-commerce marketplaces to create financial disincentives for vendors found to be selling counterfeit items. While most of them are open to the idea of rogue sellers being fined for violating the norms, they say more clarity is required from the government to ensure they don’t become targets for e-commerce marketplaces.
“The solution the government has proposed is good, but we feel some of this power being given to brands and marketplaces could be misused. For this, we believe that an appeals process to help sellers needs to be prescribed,” said a member of the All India Online Vendors Association (AIOVA). Companies, sellers and industry groups have until March 9 to send in their thoughts and suggestions to the government regarding the draft policy, following which the government will begin framing the final policy.
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