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CCI Backs Self Regulation To Tackle Ecommerce Discounting Woes

CCI Backs Self Regulation To Tackle Ecommerce Discounting Woes

Ecommerce companies urged to publish reviews only from verified purchasers

CCI focussed on search ranking and search criteria as well

The Indian ecommerce industry is growing at an annual rate of 51%, the body said

As ecommerce companies are still waiting for the finalisation of the National Ecommerce Policy, the Competition Commission of India (CCI) has stepped forward pushing for self-regulation to mitigate some of the issues that are plaguing the sector.

In its report, ‘Market Study on E-commerce in India: Key Findings and Observations’, released on January 8, CCI has asked ecommerce companies to keep a check on themselves in various matters including discounting, revision in contract term, data collection, review mechanism and search ranking.

The commission called for clear and transparent policies on deep discounts. CCI asked ecommerce platforms to also note the basis of discount rates for different products and sellers, while also highlighting the implication of participation or non-participation in discount schemes.

In addition, the competition regulator has also asked ecommerce companies to ensure transparency over user review and rating mechanisms to keep information symmetry intact. However, CCI has asked ecommerce platforms to only publish reviews for verified purchases and develop a mechanism to prevent fraudulent reviews/rating.

Among other things, the CCI has also given due importance to data collection, calling for a “clear and transparent” mechanism of data collection and sharing.

“Set out a clear and transparent policy on data that is collected on the platform, the use of such data by the platform and also the potential and actual sharing of such data with third parties or related entities,” CCI’s report read.

The CCI has also asked ecommerce platforms to bring into effect changes that would enable the following:

  • Notify “business users” about any proposed changes in terms and conditions. These changes cannot be implemented before the expiry of the notice period.
  • Add a general description of the main search ranking parameters among other things in the terms and condition section.
  • Note any possibility of influencing the ranking through direct or indirect remuneration paid by business users to the company.

Apart from setting up self-regulation policies for the ecommerce platforms, CCI’s report also noted that Indian ecommerce is the fastest growing in the world. As per the report, ecommerce segment’s revenue is expected to reach $120 Bn in 2020, noting a 51% year-on-year (YoY) growth since 2017, when revenue from the ecommerce segment was at $39 Bn.

The report also attributes this growth to deeper penetration of smartphones and internet services in Tier 2 and Tier 3 cities. Moreover, the report also notes that schemes like cash on delivery, discounts, deals offered and faster deliveries have made the segment popular against the customers.

Well, while ecommerce discounts might have been the main attraction for consumers, not everyone is happy with the practices.

With 2019 being filled with protests against ecommerce companies like Amazon and Flipkart, 2020 seems to be going on the same path as traders organisation Confederation of All India Traders (CAIT) is launching another series of protests against the discounting and predatory pricing practices of ecommerce companies.