By Dr V. V. Gopal
There’s a renewed discussions on adopting the amendments to the Consumer Protection e-commerce Rules 2020 by the Government, for which it had sought comments for almost two years in June 2021. Still, subsequently, the whole thing was put on the back burner. The challenge will persist for policy makers if they continue to view e-commerce play and its participants in silos rather than viewing from the perspective of the unique role being played by the platform and the participants in conjunction as an Ecosystem.
Therefore, what, then, is the role of regulation in a scenario of evolved competition? Simply hypothesis tells us that only light-handed regulation works well in such a market. Over-regulation leads to micro-management; which in turn leads to discouraging enterprise. For the growth of this industry, regulation should pass the test of enabling in nature. Any Regulation which provides just the guardrails at the extreme edges.
When (over)regulation stifles a market, it is to the detriment of both the seller and the consumers. If the number of such participants reduces, it means fewer choices for the consumers and less activity on the platforms. In the long run, platform (s) may even be forced to exit, entirely removing the element of consumer choice. Transparent and symmetrical availability of information only reinforces consumer choice and consumer protection.
Though more comprehensive in its scope, the term ‘ecosystem businesses’ have often been used for the e-commerce business models such as those deployed by Amazon and Flipkart
Simplicity – the holy grail of regulation
While this appears simple, we are reminded of an adage – that handling simplicity is possibly one of the most challenging and complex tasks anywhere in the world. So, how can the regulation of e-commerce, with its global penetration, be any different? The platform has to provide a technology-based / virtual space where one finds the product of one’s interest with alternatives most reliably.
Therefore, an e-commerce platform’s role is to provide a space that is easy to use, fair in retrieving alternatives and has adequate usage information. The venue, being a technology / virtual space, would be expected to ensure consistent, similar /non-discriminatory formats and ground rules to the participants, i.e the sellers must be required to meet the same set of information standards. Wherein the quality of the product, however, remains the participants’ responsibility and not that of the platform.
Drawing such distinction should be at the centre of effective regulation without overstepping; otherwise, it would discourage the platforms or the participants. For example, if a platform is asked to bear the liability of a poor product sold, it would be challenging and far beyond its capacity to take the underlying risks. Such liabilities have to lie with the sellers. However, the platform must ensure that the seller provides detailed product information in a consistent format to avoid mis-spelling.
Any regulations in the garb of consumer interest have the potential to damage not only the sector but the consumers too. A robust online marketplace would be one that, apart from being competitive and focused on providing consumers with a wide choice, is the best assurance from any consumer’s interest and protection perspective.
(By Dr V. V. Gopal, Dean, VIT Business School Vellore. Views expressed are author’s own and do not represent those of FinancialExpress.com.)