Factbox: India’s new e-commerce guidelines that might jolt international, native gamers

In this illustration from March 19, 2020, small toy figures can be seen in front of the displayed Amazon logo. REUTERS / Dado Ruvic / Illustration

MUMBAI, Jun 22 (Reuters) – India’s proposed changes to consumer rules for the e-commerce sector could affect some of the country’s largest online shopping websites, including US-based Amazon (AMZN.O) and Walmarts (WMT .N) Flipkart. Continue reading

The rules come as U.S. firms battle allegations by traders circumventing foreign investment regulations for the sector, and could further complicate the operating environment for Amazon and Flipkart, even if the companies tackle antitrust allegations in court. The companies deny any wrongdoing. Continue reading

India’s e-commerce market is expected to grow 30% annually to $ 200 billion through 2026. Key players also include JioMart from Reliance Industries (RELI.NS), BigBasket from Tata, Snapdeal and Future Retail (FRTL.NS) supported by Softbank.

Here are some of the new proposals open for public consultation until July 6th:

AFFILIATES AS SELLERS

Ecommerce businesses must ensure that none of their “related parties and affiliates” are listed as sellers on their purchasing websites, and no related entity should sell goods to an online seller operating on the same platform.

The changes could affect the business structures of Flipkart and Amazon, sources and lawyers said. In particular, Amazon has indirect stakes in two of the top sellers on its website. A Reuters investigation in February showed that Amazon helped a small number of sellers thrive online, giving them reduced fees and classifying some as “special merchants.”

Some of Amazon’s top sellers also bought goods through Amazon’s wholesale unit in India before reselling them on the website, Reuters reported, a practice that may be affected.

FLASH SELLING PROHIBITION

Ecommerce businesses shouldn’t hold flash sales – which offer deep discounts – when they’re “fraudulently” organized using “technological means” to help select sellers, the rules say.

Indian traders say the U.S. firms are working with select vendors to offer certain models of smartphones and other products during these promotions, a claim the companies deny.

Online sales are very popular on all websites including Amazon, Flipkart, and Reliance’s JioMart.

OWN BRANDS

Brands associated with the ecommerce company will be banned from advertising or selling on its platform, the rules say.

This harms private labels, which are brands owned or licensed by companies like Amazon to specific sellers who then market them on their online platforms.

Both Indian and overseas suppliers have developed extensive private label offerings in recent years to help them increase their overall profitability.

IMPORTED PRODUCTS

Websites that sell imported products should identify them by their so-called “country of origin”. In addition, they should add a filtering mechanism and display a notification to “propose alternatives to ensure fair opportunity for domestic goods”.

Misleading advertising, liability

No e-commerce company may allow the display or promotion of “misleading advertisements” on its platform. You must also assist government agencies with investigative or cybersecurity activities within 72 hours of receiving an order.

The new rules also suggest increasing the liability of e-commerce companies that could be held liable if a consumer suffers from the negligent behavior of a seller or the failure to deliver goods.

SEARCH RESULTS

Online websites should not mislead users by manipulating search results and providing a ranking for goods, while at the same time ensuring that their parameters do not discriminate against domestic goods and sellers.

COMPLIANCE NEEDS

E-commerce companies will put in place a grievance mechanism, including the appointment of a chief compliance officer. The government’s mandate for such appointments, which already applies to social media companies, increases the compliance requirements of e-commerce companies.

Reporting by Abhirup Roy and Aditya Kalra; Editing by Emelia Sithole-Matarise

Our Standards: The Thomson Reuters Trust Principles.

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