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E-commerce India snapshot and deep discounting issues

India is the fastest growing market for the e-commerce sector. According to quoted figures, the revenue from the e-commerce sector is expected to increase from USD 39 billion in 2017 to USD 120 billion in 2020, growing at an annual rate of 51 percent, the highest in the world. Most of this growth is credited to the increasing funding received from across the world since 2009 and also to the higher engagement with the consumer base on account of increase in internet and smartphone penetration in India.

The big players in all of these sectors have been gearing up to tackle the challenges of the digitization of economy head on while attempting to capitalize on the various avenues of new opportunities. Retailers believe it is essential to expand upon their online presence in order to engage with their consumer base. Retailers have started either launching their standalone web stores or have increased reliance on marketplace platforms. 

According to the study third party marketplace platforms have been responsible for 64% of digital retail trade in India. The shift in retail from offline to online is a rapid escalation which with the adapting of networking and technology will not slow down.

In a market where consumers have a tendency to flock towards discounts, the extremely discriminatory discount policies of platforms has been identified as an anti-competitive factor. Forcing prices to be lower than costs have led to erosion of profitability while non-participation in discount policies has led to demotion in search rankings which is discriminatory in nature.

While recognizing the competition related issues in the e-commerce market also suggests measures for ensuring free market and avoid market distortion which inter alia includes increased transparency in parameters of search, increase transparency for discounting, data regulation.