By Priya Saraff
On June 23, 2017, the government introduced an amendment in the Legal Metrology (Packaged Commodities) Rules. E-commerce websites are now supposed to publish the Maximum Retail Price (MRP), expiry date (best before date), name and address of the manufacturer, along with the packer and importer of products from January 1, 2018.
A case for consumer protection
This comes as a measure of Consumer protection. A survey by LocalCircles showed that 98 percent of Consumers want the expiry date to be shown on perishable goods sold online. 42 percent of consumers have come across e-commerce platforms selling products at a price above MRP. Such sites often trick consumers with “fake discounts.” They provide generous percentages off on inflated MRPs. The discounted price may, therefore, be equal to, or even greater than, the actual MRP. When it comes to perishable items, the lack of expiry date has posed problems. Consumers buy goods with unexpectedly low shelf life and find it hard to return them.
The effect of this move can be seen from two perspectives. In the short-term, e-commerce websites will be forced to show the true MRP, and will not be able to make unethical profits through fake discounts. Depending on how often this tactic is used, it will lead to a dip in revenues. Websites will not be able to give discounts as generous and as often as they do now. It will also keep websites on their toes when it comes to inventory management. They may face losses if consumers refuse to buy older goods. Inventory turns will increase, when it comes to sites like Gophers and Big Basket that sell their own goods. Communication between producers and platforms will tighten, in the case of Flipkart, Amazon etc.
The long-term effect
The long-term effect, however, will be better e-commerce credibility and consumer awareness. Consumers will find themselves coming back to platforms that provide reliable information. This will translate into an increase in revenues and consumer traffic. Consumers will also learn to be wary of websites offering incredible discounts. Thus, consumer loyalty will be directed towards the transparent websites and this will benefit businesses in the longer run.
The reality of the implementation is different. Despite having had half a year’s time to comply with the amendment, only 10-12 percent of e-commerce sites have started showing products at MRP. These products are mostly their own. Non-compliance is punishable under Section 36 of the Act, with fines from Rs 25000 to 1,00,000, and even a possible jail term, depending on the number of offences committed.
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