Impact of the New E-commerce Rules on Businesses

Impact of the New E-commerce Rules on Businesses

New Rules for a New Dawn; Protecting the interests of consumers using e-commerce platforms 

Current Trends 

Given the huge spurt in e-commerce transactions since the pandemic, approx $80 billion, a 36% growth in 2020 alone is reflective of the digitalisation revolution. With such high volumes of transactions, it is only natural to revise the regulatory norms. As a part of the Consumer Protection (E-Commerce) (Amendment) Rules, 2021), the new rules aim to protect the interests of consumers using the various e-commerce platforms. 

New Rules for a New Dawn

To manage and regulate the mushrooming of new players in the industry, there are new rules brought in to accelerate and formalise the way e-commerce functions in India. While certain rules are beneficial to the consumers, some favour the business owners. 

As India sees a surge in e-commerce trends, it is time the rules get revised. We see that the changes do not have all questions answered as yet, however, the change is reflective of the change for the good, in the long term. Let us examine what these new rules are, how it affects and impacts businesses and consumers.

Key Takeaways of New Rules

There are increased responsibilities for the e-commerce platforms towards their consumers and tightening of restrictions on e-commerce trade. Any enterprise which is associated with an e-commerce company, will NOT be allowed to be listed as a seller on that platform. For example, Amazon cannot list Appario (a subsidiary of Frontizo – JV unit of Amazon & Patni Group) as a seller as they’re associated.

Other than this, here’s what platforms need to take care of:

1. Requirement for a company outside India (or a company having an office/ branch/agency outside India), to be controlled by an Indian resident

2. Appoint nodal officer/ alternate senior designated functionary to ensure adherence to the rules and provisions.

3. The amendments to the rules seek to ban flash sales, raise compliance needs, fix liability on platforms for the failure of the sellers registered with them.

4. Add details of the country of origin for all products listed and recommend local alternatives for all imported goods.

5. List out the terms and conditions which deal with their relationships with the sellers.

6. Maintain a record of all the sellers whose offerings have repeatedly violated trademarks, copyrights or the Information Technology Act.

7. No misleading advertising and promotions to consumers

8. Data needs to be updated within 72 hours with reference to the inventory of goods.

9. Certain restrictions and obligations when it comes to the pricing of their products, returns, late deliveries and false customer reviews.

10. No cancellation charges can be imposed unless similar charges are payable by the Platform due to the said cancellation.

What to Expect

In the longer term, the new rules will bring in a change in a way that solves the concerns that were lingering before the New rules came into force. Despite the uncertainty, the new rules are looking out for a better future for the e-commerce industry.

These New Rules are a welcome step in ensuring the welfare and protection of the interests of consumers using the various e-commerce platforms.

Since November 2021, the rules have been notified by the ministry and this wave of the new e-commerce rules has come in just in time when we observe exponential, consistent growth of startups and small businesses. Online platforms have provided a much-needed shift from a B2B mindset, to a B2C one, getting into a digital ecosystem beyond the geographical limits.

This blog is a precursor to another blog of the series, titled ‘13 Reasons Why: New E-commerce Rules Haunt Businesses: Flipside of the Coin’. Watch out for more in this space.

Author

Ajoy Thomas

Business Head & VP
TeamLease Services Limited

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