India’s E-Commerce Sector
India’s e-commerce is in a fast growth zone and the e-commerce platforms are transforming the way products & services are consumed in India. The Indian E-commerce market is outpacing the offline retail growth and is expected to touch 230 Billion USD by 2028. India is at the cusp of a massive online boom, fueled by low data tariffs, affordable smartphones and growing Internet usage.
E-commerce in India has grown beyond the first wave of metro consumers in Tier 1 cities and is now rapidly adding millions of buyers from Tier 2, 3 cities and beyond. Another 400-500 million shoppers are expected to come online over the next 10 years, joining the nearly 100 million existing online shoppers in India.
However, to cater to the demand of a fast-increasing online consumer base, a strong seller ecosystem is essential. The growth of e-commerce is now creating opportunities for independent sellers, mostly small and medium enterprises. Most of these sellers operate in the various markets and bazaars of India and serve consumers who physically visit them.
Online marketplaces present these sellers with an opportunity to extend their operations online and serve consumers who are now moving online rapidly and will also buy online with growing frequency.
Context of this Survey
Given India’s vast and rich retail network, India has chosen the “Marketplace Model” to develop the e-commerce sector in India. These marketplaces are designed to be technology platforms connecting independent sellers to buyers. This is a conscious choice to ensure that existing retail is provided with an enabling opportunity to go online and explore further growth opportunities. Hence, medium and small enterprises are the foundation of the supply side of e-commerce marketplaces in India.
Over the last few months, a lot of attention has been focused on FDI guidelines, draft e-commerce policy and more recently on consumer rights. However, the voice of independent sellers has not been heard on e-commerce issues.
It is in this context that TECI - The E-Commerce Council of India commissioned a survey with Channelplay Limited to conduct this survey to understand the views of independent online sellers with regard to the emerging E-commerce policy issues.
The methodology adopted was random selection of sellers who were selling online for at least 12 months on at least two marketplaces namely Flipkart, Amazon, Snapdeal, Paytm Mall and ShopClues. 541 respondents participated in the survey.
This survey conducted in July 2019 focused on three issues relevant for independent sellers who sell on multiple marketplaces
- Role of Marketplaces
- Equality between online & offline channels
- Counterfeits / Fakes
The following were the top insights which came out of the survey:
1. Role of Marketplaces
FDI-funded marketplaces are mandated to be only technology platforms and are prohibited from exercising ownership over the goods sold on their platform or influencing (directly or indirectly) the price of goods sold on the platform.
However, as various media reports over the last three years detail and recent updates to the FDI policy (via press note 2 of 2018) show, the role of marketplaces has repeatedly been scrutinized.
In this regard, the respondents had the following responses to three questions asked to them:
- Marketplace as a Neutral Platform: 89% of the respondents said that neutrality of the marketplace was important as a core principle and that marketplaces should not have any of its own/related party sellers on the platform.
- Independent Sellers Hurt by Related Party Sellers: 94% of the respondents felt that sellers controlled by the marketplace (through various arrangements) hurt the business of independent sellers on the platform.
- Private Label Conflict of Interest: 90% of the respondents felt that private labels by the marketplaces create a conflict of interest for the marketplace and that marketplaces should not be allowed to sell their private labels on their platform. Sellers recounted that platforms use pricing and demand insights from their platform to introduce private labels, which puts competing third-party sellers at a dis-advantage.
2. Equality between online & offline channels
Online commerce is a part of the entire retail infrastructure of the country. Around 2-3% of the entire retail is online, while the balance ~ 97% is transacted in the physical markets of the country - malls, markets and bazaars - both wholesale and retail. Majority of the online sellers are also active in the physical retail - either sourcing, selling or both.
In the context of proposals contained in the draft e-commerce policy, sellers were asked three questions with regard to their obligations in online and offline business operations.
- Parity Between Online & Offline Responsibilities: 89% of the respondents felt that the laws, rules & responsibilities for online sales should have parity with those for offline sales. This is on account of the fact that most online sellers buy and sell across both physical and online markets - different rules for parts of the same business add compliance complexity.
- Similar Control of Offline & Online Channels by Brands: 87% of the sellers surveyed opposed brands attempting to exercise greater control over online channels vis-a-vis their control of offline channels. 87% of the sellers surveyed said that if an offline seller does not need permission from a brand to sell its product in their physical shops, the online sellers should also not be required to seek such permission.
- Equal Opportunity for All Online Sellers: Reacting to equal opportunity for all online sellers, 87% of the sellers surveyed said that brands should not have the right to restrict which sellers will sell their products online, if they do not make / enforce such restrictions for offline sellers.
3. Counterfeits / Fakes
The problem of counterfeits is spread across both physical and online markets. The issue of unscrupulous sellers attempting to sell counterfeit goods through online platforms is one that affects consumers, marketplaces and also the honest sellers. A vast majority of the sellers surveyed were in favor of strict action in this regard to mitigate the problem. Respondents answered two questions in this regard:
- Spread of Counterfeits: 81% of the respondents felt that the problem of counterfeits was common across both physical and online markets and needed to be tackled in an integrated manner. Balance respondents felt that the incidence of counterfeits was greater in either online / physical markets.
- Marketplace Action to Combat Counterfeits: Almost all sellers agreed that counterfeits needed to be acted on effectively, while suggesting varying approaches to tackle the same. 80% of the sellers felt that marketplace should first inform the seller and then remove the listing from the marketplace. They opposed a course of action which involved informing the seller later after removing the listing or blacklisting the seller from the marketplaces - choices they felt were harsh and deny sellers a fair opportunity to present their facts before a decision is arrived at.
TECI - The E-Commerce Council of India is an industry association of e-commerce marketplaces and digital-first brands in India. TECI is a not-for-profit, membership-driven professional organization.
TECI members, between themselves, account for more than 7.5 Lakh online sellers and service providers. Every month, more than 100 million users interact with the online businesses operated by members of TECI. More than 30 global and domestic institutional investors have invested more than USD 2.25 Billion in the enterprises founded by TECI members.
TECI’s mission is to help organize and support e-commerce industry initiatives, which will lead to inclusive and broad-based growth of the e-commerce ecosystem in India.
About Channelplay Limited
Channelplay is India’s leading retail execution (Visual merchandising, Sales Staffing, Sales Force Automation, Loyalty Programs) & measurement company (Market Research , Mystery Shopping & Audits). It conducts 2500+ surveys every month among Retail & Consumer across 10+ industries.
If you wish to download the insights of this research, click on India’s E-commerce Policy | Voice of Online Sellers
Disclosure: No incentive or fee paid to sellers who participated in the survey for the purpose of this study.