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Effect of new Ecommerce rules

Updated On:09-April-2016

Indian Government has recently framed certain rules for ecommerce sector which has created an impact among the online and offline retailers. It has made these new rules with the motive to help the offline retailers who are suffering due to the discounting offers provided by ecommerce platforms and enable them a level playing field. Most e-commerce players did not welcome this move while offline retailers see it as a benefit for them.

Some experts say that there is a strong possibility that prices of products online will revert to levels that are comparable with offline prices. This will make ecommerce platforms less attractive to shoppers and investors. At the same time, young mobile ecommerce players welcome these guidelines as they connect brick-and-mortar merchants directly to customers. They feel that it has also opened the gateway for more merchant acquisitions.

The new rule allows 100 % percent FDI on online retail goods and services through automatic route, prohibit online marketplaces to offer discounts and promotional offering and restrict ecommerce players to get only 25% of sales from one vendor. Department of Industrial Policy and Promotion (DIPP) also have given the definition for e-commerce, inventory-based model and marketplace model.

The rule permits the ecommerce websites to offer support services to businesses selling on their platform. It is also beneficial for the Indian online retailers as the restrictions on sourcing products and pricing do not apply to companies that have not received foreign investment. According to the new policy, e-commerce companies must online sellers contact details. The warranty/guarantee of products or services sold online will also be borne by the sellers, not the e-commerce company.

The new Ecommerce rules have its pros and cons but still the ecommerce players have to change their strategies accordingly to sustain in the market.