Govt Bats Against E-Commerce Flash Sales, Consumers Cry Foul

The Ministry of Consumer Affairs proposed changes to e-commerce rules and suggested a ban on flash sales.

The Ministry of Consumer Affairs proposed changes to the Consumer Protection (E-Commerce) Rules, 2020, as part of which it suggested a ban on 'flash sales'.

(Photo: IANS)

"Government's proposed changes to stop online flash sales is absurd. We don't want to buy from retail stores. These offline stores are far more expensive," said Prashant Kulkarni, 27, a resident of Pune.

Citing an example, Kulkarni told The Quint that when he went to buy a Xiaomi phone at an offline store, he was asked to pay Rs 25,000, but the same product at a flash sale on Amazon was priced at Rs 19,000.

On 21 June, the Ministry of Consumer Affairs proposed changes to the Consumer Protection (E-Commerce) Rules, 2020, as part of which it suggested a ban on 'flash sales'.

Meanwhile, a survey by LocalCircles has found that 72 percent of people who use e-commerce to buy products or services feel that the government should not ban or intervene in sales or discounts offered on e-commerce platforms.

'Flash Sales Important, Govt Should Reconsider Ban'

Nisha Kumari, 23, an HR consultant said that she only shops during mega flash sales. "Every time there is a flash sale especially Big Billion Day sale on Flipkart, and Amazon Mega Fashion sale, I stock up clothes, and accessories. These sales provide at least 50-60 percent which I will never get if I visit an offline store."

Frustrated by the new draft rule, Pulkit Jain, 26, of Madhya Pradesh told The Quint that the government does not have any right to ban flash sales. "The government has increased prices of every other commodity, petrol has touched Rs 105 plus, the only thing where we could save some bucks was via flash sales. How can even the government propose such a change?" he asked.

Joel Thomas, 35, a civil engineer said, "Some Babu felt the need to ban flash sales because for the first time Indian consumers were experiencing the joy of buying things at a discount, which wasn't possible earlier with the cartelised overpriced model of brick-and-mortar shopkeepers."

On the contrary, Sanjay Kakade, 47, of Akola believes that such flash sales are fraudulent and should be banned. Sharing a terrible experience, Kakade said that he received an empty bottle when he ordered wireless earphones on a flash sale.

'49 Percent Say They Prefer Online Shopping’

A report published by Fintech Razorpay, an online payment gateway, said that online transactions in India grew by 80 percent in 2020, indicating an increased adoption of digital payment methods by consumers.

The report published by LocalCircles said that in the last one year, 26 percent of the 10,818 respondents said that they “visited malls, local retailers, markets and shops”, 22 percent said they “called local retail stores and got home deliveries”, while 49 percent – the highest – said “eCommerce sites and apps” have been their preferred mode of shopping.

Why India Wants to Put an End to Online Flash Sales?

The Indian government proposed to ban all flash sales – a sale of specific products that lasts for a short period of time and offers discounted deals starting from 50 to 70 percent on MRP.

The government, in the amended policy, defines flash sale as “the sale organised by an e-commerce entity at significantly reduced prices, high discounts or any other such promotions or attractive offers for a predetermined period of time on selective goods and services or otherwise with an intent to draw large number of consumers.”

Chinese smartphone makers Xiaomi and OnePlus have used flash sales to increase their sales since their inception in their country.

"Certain e-commerce entities are engaging in limiting consumer choice by indulging in ‘back to back’ or ‘flash’ sales wherein one seller selling on platform does not carry any inventory or order fulfilment capability but merely places a ‘flash or back to back’ order with another seller-controlled platform. This prevents a level playing field and ultimately limits customer choice and increases prices,” the ministry said in a statement.

The government has argued that such sales create a false sense of demand, and often leaves consumers in the lurch, because they are unable to buy devices within short time frames.

Several experts have also alleged that these e-commerce companies also artificially lower the number of devices they put up on flash sales, which is also in contravention to the promises a consumer might expect.

Offline Retailers to Benefit

The proposed plan is expected to benefit offline retailers who have in the past argued that e-commerce giants Amazon and Flipkart give deep discounts and eat into their businesses.

The Confederation of All India Traders (CAIT), which had also demanded stricter e-commerce norms to protect the interest of offline traders, has welcomed the draft norms.

CAIT Secretary General Praveen Khandelwal told The Economic Times that the new draft is "a guiding stone to purify the e-commerce landscape of the country which has been greatly vitiated by various e-commerce global companies to the extent that not only the domestic trade has been damaged but even the consumers are also feeling the heat of their unethical business practices."

(With inputs from The Economic Times)