Market Study On Ecommerce In India

The Competition Commission of India (CCI) released a full-fledged report on Market Study on e-commerce in India. The CCI launched this study in April 2019. For the most part, this report relies upon the surveys, stakeholder interaction, focused bunch conversation (FDG), one-on-one meetings, studio deliberations, and written entries of the stakeholders covering three general categories of e-commerce that include consumer merchandise, convenience, and food services. This study gives knowledge into the conceptual and insightful questions relevant to the enforcement of the Act. 

Points Covered in the report:

The three areas which have been focused on in the study are:

• Key market trends and fundamental features of eCommerce
• Key competition issues have emerged from the review.
• The observations of the Commission based on the research

Developing Trends of E-Commerce

The report states that India is the fastest developing market for the e-commerce sector. As indicated by quoted figures, the revenue from the e-commerce sector is expected to increase from USD 39 billion in 2017 to USD 120 billion by 2020, developing at a yearly rate of 51 percent, the highest on the planet. The vast majority of this development is credited to the increasing financing received from across the world since 2009 and to the higher engagement with the consumer base by increasing internet and smartphone penetration in India.

The report recognizes some categories as instrumental in developing the E-commerce sector: food, online travel appointments, and the food tech industry.

Importance of E-Commerce:

The review affirms that the development of e-commerce has been at an increasingly high rate, and a comfortable and adjusting environment would continue to increase this rate. The scope of E-commerce is a\the computerized economy even though it is highly varied among the three different sectors. While the retail sector treats e-commerce as an essential means of sales just for a few items, with others relying on actual retail, online travel agencies (OTA) and food services have considered the importance of stages to be very high and feel the need for expanding their online presence.

The report recognized competition-related issues in the E-commerce sector:

Platform Neutrality

The competition issue recognized herein is that e-commerce sites, when they serve as both a marketplace and a competitor on that marketplace, have the incentive to leverage their command over the stage for their preferred vendors or private label items to the disadvantage of other sellers/. The report states that the access that stages have to the two consumers and price information has enabled a strategic fortress on the retail market with different stages entering the market with their private labels.

Platform to Business Contracts

The report states that the inconvenience of erratic terms in agreements by large platforms creates what is happening where a retailer’s business is at the mercy of the enormous platform players and their unilateral revision of terms, as was observed by the CCI in FHRAI v MakeMyTrip and Go-Ibibo.

Price Parity Clauses

Price equality clauses, which require that retailers do not offer better prices on other marketplace stages and websites, were potentially distortive. This reduces inter-stage competition and encourages oligopolistic coordination between stages to control the market’s competitiveness.

Exclusive Agreements

Exclusive agreements are as per stage packaging, where an item might be launched on a specific stage or where a stage would just rundown results of a particular brand in a category.

High Discounts

In a market where consumers tend to run towards limits, the highly oppressive rebate policies of stages have been identified as an enemy of the competitive element by the CCI. Constraining prices to be lower than costs has led to productivity erosion, while non-support for markdown policies has led to prejudicial demotion in search rankings.

Role of Online Marketplace Platforms

As per the study, marketplace stages have been responsible for 64% of digital retail trade in India. The change in retail from offline to online is a fast escalation that will not dial back with the adjusting of networking and technology.

Conclusion:

While recognizing the competition-related issues in the e-commerce market, the report likewise suggests measures for ensuring a free market and keeping away from market contortion, which among other things, includes increased transparency in search parameters, increased transparency for limiting, and information regulation. The report is restricted to the discoveries relating to competition matters, even though issues relating to non-competition matters likewise tend to come up during the review. This report discusses issues that may directly or indirectly have a bearing on competition or hinder the full favorable to the competitive potential of e-commerce.