The government may regulate e-commerce brands

ET reports that the government is proposing to regulate e-commerce. It has realized that deep discounts and direct to customer processes…

ET reports that the government is proposing to regulate e-commerce. It has realized that deep discounts and direct to customer processes are harming the local retailers and businesses.

Why does it want to do that?

• Only a handful of e-commerce brands have access to limitless capital.

• It distorts the market and harms millions of businesses ( 20 million SMEs in India).

• If Amazon, Flipkart and Paytm do not have access to interest-free capital, they may not offer huge discounts.

So, what will it do?

• Keep data local.

• A regulator to restrict deep discounting.

• The level playing field for brick and mortar retailers.

• Support for local businesses and small & medium enterprises.

How will it impact Delhi-NCR?

• Brands such as Snapdeal and Shopclues are already struggling due to the lack of capital.

• Lack of deep discount will encourage local businesses. Paytm Mall, now owned by Alibaba, is already moving in this direction.

• Small traders, merchants, and businesses will be able to differentiate on the basis of better products and services, and not just price.