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New E-comm Policy To Address Deep Discounting By Online Retailers

The Centre is working on an e-commerce policy, likely to be out in 2020, which would clarify its stance on deep discounting by online retailers, the Business Standard reported.

Among other things, the policy would lay out the maximum discount on products and ensure that the concessions originate from sellers, the paper quoted a senior ministry official saying.

Moneycontrol could not independently verify the report.

Deep discounts are larger or greater than a usual price reduction, especially compared to the product’s retail value. Traditional channels have consistently raised objections against the practice as it distorts the playing field.

The issue has recently gained traction as e-giants Amazon and Walmart-owned Flipkart kicked-off their festive sale offers.

“E-marketplaces continue to advertise mega sales during Diwali or New Year under their own brand name, not those of major sellers who are providing discounts,” another source told the paper, adding that they would speak to major sellers on those platforms as well.

The first source further pointed out that e-tailers’ calls for improving ease of doing business ultimately boil down to them being allowed to hold discounts and sale offers.

“These two things are completely different and in the e-commerce policy, we will make this clear. We, under no circumstances, will allow or condone predatory pricing,” the official added.

The policy would mandate break-down of pricing discounts to ensure that it originates from the original sellers’ end. Companies would also be required to conduct independent yearly audits of discounts to weed out predatory pricing, the source added.

The practice of pricing products at such low levels, which other firms cannot compete and, thus, forces them to leave the market, is known as predatory pricing.

The policy is in line with the government’s intent to ensure that offline or traditional channels are not rendered defunct by online channels.

The policy, however, has seen several delays and may only be out by 2020.―Money Control

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