E-commerce is restructuring retail markets in an unprecedented way, and online retail sales are expected to exceed 20% over the next few years (in some products such as fashion, this figure is already 40% in developed markets).

In the light of these developments, it is necessary to study and analyze how e-commerce companies work, so that competent authorities can organize their work in a way that encourages innovation and competition in this sector. It is also important to avoid creating monopolistic conditions dominated by large corporations within a few years, which will harm consumers and the national economy.

Experience worth studying

India's experience with major e-commerce companies is an important experience worth studying and analyzing. For several years, the Indian government has allowed 100 per cent foreign direct investment in e-commerce platforms, which offer third-party products for sale through an Internet site, These products are owned by the company that manages the website through which the sale takes place. However, the Indian government continued to apply foreign ownership restrictions to the multi-brand retail sector. As a result of this policy, major e-commerce companies, such as Amazon, FlipCart, and eBay, have entered India's markets and invested large sums of money in order to gain a share of these over 1 billion consumers.

The giant e-commerce companies have been able to exploit many of the gaps, with the aim of pushing prices heavily, which in practice leads to other small companies out of the market, because of their inability to compete.

In 2018, Amazon and FelipeCart (now owned by Walmart) combined accounted for $ 20 billion of retail revenue, which led to a slowdown in Indian retail balances. Of course, these results were not acceptable. Major companies were authorized to invest 100% directly in India to build platforms, technology bases and payment systems technology. National companies and retailers would sell to consumers through these platforms and technologies. In fact, more than 80% of the sales were done by Amazon and Fleecart, which implemented huge price discounts to get other companies out of the market.

This policy ended up turning the market into a closed sphere of control, dominated by big companies, without other companies having any chance of fair participation, because of the aggressive policies of the Amazon subsidiaries, which used to sell to consumers. This situation has resulted in considerable suffering from other companies, increased closures, and deteriorating shopping center conditions. As a result, the Indian government was forced last week to introduce new laws aimed at preventing monopolies in the e-commerce sector and ensuring genuine and effective participation by national retailers. This is a very important development. The Indian government should have taken this initiative as a result of negative reactions to increase the influence of giant e-commerce companies such as Amazon and Walmart in India.

Digital Trading Centers

In the e-commerce sector, third-party product platforms can be compared to online shopping centers, which require tenants to sell those products to consumers. If that system works properly, third-party retailers can participate in these markets and compete and make sales to customers and consumers who shop online. However, what happened in reality was that those who managed the digital market, such as Amazon, ended up owning and operating a large number of stores directly in this digital business center, and thus managed to control the bulk of the market revenues through Her own stores.

Because the companies that manage the market platforms have all the data and information about everything that is sold through these platforms, they can easily control the price levels, the quality of products that appeal to the consumer, and thus exclude other retailers, and deal directly with suppliers Those products, with a view to getting more profit margin. In the end, with all the data on the quality of products and goods that appeal to consumers, these companies start working directly with the factories that produce those goods and exclude all other parties from this system. The result is the creation of a full-fledged monopoly process, with no consumer choice, as all major players exit the market.

Government steps and lessons learned

India's new e-commerce policy and laws have been designed to balance the interests of key players in this sector by ensuring competition from retailers and national companies, and to avoid creating long-term monopolies in this sector. This law encourages large companies to invest in technology and innovation, in exchange for a fair profit to provide these services, but at the same time prevents them from controlling the retail market through indirect methods and exploiting loopholes, through the following legal requirements:

1. Large companies based on the management of electronic platforms for the sale of third parties may not, either directly or indirectly, have any proportion, or have an interest in any of the companies that sell through the platform. These companies should act as neutral "shopping centers," in which other companies can sell their products at the prices they specify. By applying these principles, 100% of the value of the retail sector will remain within the national economy. At the same time, large companies are encouraged to invest, transfer technology, sales methods, customer service and online shopping experience into the national economy. In addition, the application of this policy prevents the use of financial support methods by large companies, which limit the competitiveness of smaller companies.

2. Companies based on the management of electronic platforms for the sale of third parties may not have any control or ability to control the levels of prices or discounts, or refund part of the purchase price to the consumer, which is based solely on the seller of the product alone. The law explicitly prohibits large companies based on the management of a third-party product platform from supporting companies that sell their products on their platforms. This ensures the long-term competitiveness of national retail companies and also prevents the formation of monopolistic conditions over time.

The bottom line is that the role of e-platform management is the engine's role in e-commerce, not the role of a retailer. The new law set by the Indian government aims to achieve that balanced result.

3. Do not allow support policies and unfair subsidies for shipping and other logistics services associated with the consumer sale process, for example free incentives for e-commerce companies to obtain non-competitive advantage, because local traders can not compete similarly, In accordance with the new law, companies operating in this field must apply fair and sustainable service fees.

China and India are preparing to be the world's two largest economic powers over the next decade, both taking decisive action to protect their national markets while promoting investment in technology and digital markets.

With this new law, India has taken an important step towards promoting healthy competition and ensuring long-term and sustainable growth of an important strategic sector. We, in turn, need a deep analysis of this complex sector and take the necessary steps to protect the long-term interests of both the national economy and the consumer.

- Electronic platform management companies are limited their role on the engine for the trade process, not the retailer.

India's new e-commerce laws aim to ensure competition from retailers and national companies, and to avoid creating long-term monopolies in the sector.

- China and India

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