Proposal to Ban ‘Flash sales’ on E-commerce Sites

Proposal to Ban ‘Flash sales’ on E-commerce Sites

Part of: GS Prelims and GS -III – E-commerce

In news

• The government proposed changes to the Consumer Protection (e-commerce) Rules 2020, banning all “flash sales” in order to monitor the deep discounts offered on e-commerce websites.

Rationale for Making Changes

• Conventional flash sales by third party sellers are not banned on e-commerce platforms but only the predatory ones.
• Small businesses complain of misuse of market dominance and deep discounting by e-commerce marketplaces such as Amazon and Flipkart.
• Certain e-commerce entities are engaging in limiting consumer choice by indulging in ‘back to back’ or ‘flash’ sales wherein one seller on a platform does not carry any inventory or order fulfilment capability but merely places a ‘flash or back to back’ order with another seller controlled by platform.

Other Important Proposals

• The e-commerce sites are also directed to ensure appointment of Chief Compliance Officer (CCO) for 24×7 coordination with law enforcement agencies.
• These companies will also have to name a resident grievance officer who has to be a company employee and a citizen of India.
• To tackle growing concerns of preferential treatment, the new rules propose to ensure none of the related parties are allowed to use any consumer information for ‘unfair advantage’.
• The companies will also have to identify goods based on their country of origin and provide a filter mechanism at a pre-purchase stage for customers.
  • They will also have to offer alternatives to these imported goods to provide a “fair opportunity” to domestic sellers.
• In the event a seller fails to deliver a good or service, the final liability will fall on the e-commerce marketplace.
• E-commerce firms operating in India will also have to register under the Department for Promotion of Industry and Internal Trade (DPIIT), under the Ministry of Commerce and Industry.

About E-Commerce

• Electronic commerce (e-commerce) is a business model that lets firms and individuals buy and sell things over the Internet.
• The Indian e-commerce market is expected to grow to USD 200 billion by 2026 from USD 38.5 billion in 2017 due to following reasons:.
  • Rising smartphone penetration
  • The launch of 4G networks 
  • Increasing consumer wealth
• It is expected to surpass the US to become the second-largest e-commerce market in the world by 2034.