People in India love to shop online for a lot of reasons, but the primary reason always remains the same – DISCOUNTS! Online stores are preferred because they offer comparatively competitive prices, jaw-dropping discounts with the items delivered to their doorstep. However, all of us might be disappointed very soon as the government in India is intending to tighten its noose around the practice of “deep discounting”. In a country, known for its price sensitivity, almost all the e-commerce giants, including Amazon and Flipkart, employe the strategy of deep discounting to lure internet users.
For acing the “Indian” online enterprise, the government is planning to introduce a policy that could make a strong case. This policy would aim at ensuring a level playing field for the offline vendors as well as small and new entrants in the online market, who don’t have a big cushion to offer discounts.
Many online platforms covered under the policy
As of now, it’s just a draft of the e-commerce policy that has been formulated. The proposed draft depicts the idea of stopping the “deep discount” starting from a fixed date in order to regulate the sector. The decision is taken in order to keep a check on the e-commerce sector, along with regulating it. The policy is unique, being the first of its kind for the booming segment. It has also proposed legislation that would include other sites – such as food delivery companies like Zomato and Swiggy, online service aggregators like UrbanClap. Besides, it would also cover platforms that offer financial and payments products, Paytm, Freecharge and Policy Bazaar being a few of them.
All in all, multiple aspects would be included in the legislation as of now. Starting from FDI and the local storage of items along with the protection of micro, mini and medium businesses to consumer protection and grievance redressal.
Where do the online discounts come from?
As of now, the policy is in the proposal stage. Even if it comes into existence it’s quite unlikely that it would affect the regular consumers. But the next key point of the draft policy would surely leave a lot of people disheartened.
The government has planned to keep a tab on the discounts, which is the primary concern the offline stores have been raising for long. The Indian e-commerce is growing exponentially as is expected to reach almost $200 billion in the next ten years.
The e-commerce marketplaces have often justified themselves by quoting that the discounts are offered by the sellers and not by them. However, the executives have acknowledged that a specific element of discounts are necessary to make people friendly with online shopping, as a result of which there was a huge cash infusion to sustain the operations.
Indian government is searching for methods to back these online market players, along with attempting to not violate the agreements of the international trade. It is working on executing a few steps, such as devising measures to promote home grown ecommerce organizations by providing them with incentives, following the footsteps of China. Moreover, it is looking forward to engaging the Indian majors in giving preference to the local companies on their websites – within the country. At the same time, it is also being ensured that the local firms do not get defeated in front of the international players. Hence, more laws or a nodal agency can also be formed.
For organizations which are launched by the Indian entrepreneurs and selling 100 percent goods manufactured in India, a special policy is introduced. A new dispensation would permit an “inventory based” model, where these firms would straight away sell to the customers with almost 49 percent FDI. This strategy is totally different from the present regime, in which all the ecommerce business is carried out through a “marketplace” or in simple words, a place where others sell.