The government of India is imposing a ban on flash sales conducted by various e-commerce platforms in the country. In addition, the government also plans to prevent the listing of e-commerce affiliates from being listed as sellers.
This a move to strengthen the rules and regulations in the e-commerce field in the country and could hurt the sales figures of platforms such as Amazon, Flipkart and so on who are operating in the country. The proposed rule comes from the Ministry of Consumer Affairs who addressed the complaints from the offline physical store owners in India. They blame that the foreign e-tailers are bypassing the Indian laws laid with their business models. The other concerns raised also point fingers at the unfair practices by Amazon and Flipkart to expand their operations in India.
The rule will restrict e-commerce players from hosting flash sales which are their way to conduct sales during the festive seasons and reap billions of dollars worth of profit. The customers are offered jaw-dropping discounts during these sales which the offline sellers cannot match. Besides several smartphone companies also resort to flash sales to create hype and sell a limited number of devices. The rule also says that the online platforms must also ensure that none of their “related parties and associated enterprises” are listed as sellers on their shopping websites, and no related entity should sell goods to an online seller operating on the same platform.
Joining the recently passed IT act for Social Media and OTT platforms, the new rule instructs online platforms to appoint a Chief Compliance Officer, a nodal contact person for 24×7 coordination with the law enforcement agencies, and officers to ensure compliance to their orders as well as a resident grievance officer for redressing of the grievances of the consumers on the e-commerce platform.
The new rule could also prohibit r-commerce platforms from selling products with a private brand or label and has asked to ensure that none of their related and associated parties is listed on their platforms as sellers for selling to customers directly. Previously, to counter the rule that prevents these companies from holding inventory or sell items directly to users these giants partnered with local manufacturers that offer inventory holding spaces.
Amazon has come out and informed that they are reviewing the proposed policies whereas the Walmart owned online platform, Flipkart has not commented on the issue. This new proposal will be applicable to both regional and international companies and will be under public consultation till July 6.
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