Your online shopping experience might soon turn rough. The government is planning to curb the deep discounting model adopted by e-commerce companies to acquire users and drive sales at the cost of traditional small retailers.
Your online shopping experience might soon turn rough. The government is planning moves in the upcoming e-commerce policy, which may result in curbing deep discounts offered by e-commerce companies to drive sales, PTI reported citing sources. E-commerce companies have adopted deep discounting model to acquire users and drive sales, which often comes at the cost of traditional small retailers.
India’s offline or brick-and-mortar retailers have long complained about unfair competition and lack of level playing field from large e-commerce companies such as Flipkart, Amazon, Paytm Mall and others, due to enormous capital they have raised to offer cash backs and discounts and continue funding losses.
“The formulation of e-commerce policy in under consideration of the government for which no timeline has been fixed,” Commerce and Industry Minister Suresh Prabhu told Lok Sabha on Monday, in response to a question around when the draft e-commerce policy is expected to be out.
Suresh Prabhu sounded caution on e-commerce companies over unfair use of their size and position in the retail market to dampen the competition from local retailers. “It (Competition Act) lays down the framework for regulating anti-competitive agreements, including vertical restraints,” he said.
“The conduct of certain e-commerce players who enjoy a position of dominance in the relevant market may also be brought under the radar of Indian competition law if they abuse their dominant position,” the minister said in the Lok Sabha.
Offline retailers up in arms
The minister said that the stakeholder consultations on ‘Framework for National Policy on e-commerce’ with representatives from government ministries, RBI, industry bodies, e-Commerce companies, telecom and IT companies and payment companies were held in April and July this year.
Trade bodies such as Confederation of All India Traders and All India Online Vendors Association have suggested to commerce and finance ministries to check heavy discounting that has led to predatory pricing by online retailers.
“We have recently met officials of the ministry, who are making the new e-commerce policy. We have urged to put certain clauses to check e-commerce firms giving huge discounts and freebies as it is damaging the trade fabric of the country,” PTI quoted CAIT’s secretary general Praveen Khandelwal as saying.
The draft e-commerce policy had suggested introducing a dedicated time window where e-commerce companies would be able to offer differential pricing or deep discounts to customers.