Addressing the challenges in new-age digital commerce
Polity & Governance
12th Aug, 2022
Despite the rapid advancement of the digital platform, the process of integration of local businesses with a platform-centric e-commerce system is moving at a snail’s pace.
Transformation in India’s Consumer Behaviour:
- Increased penetration of smartphones: Rise in smartphones and affordable data plans has catalyzed the online revolution in the country. The e-retail sector has received a push due to the cumulative effect of cheaper data plans and the increased use of smartphones.
- Coronavirus pandemic: It worked as a blessing in disguise in terms of changing the behaviour of Indian consumers. It has further accelerated the process of digital inclusion. From groceries to online medical consultations and even to resolving disputes online- all of this has become a reality now.
- Additional Factors:
- Adoption of Time-Saving Products and Services
- Growing Interest in Customized Products
- The Rise of the Female Decision Maker
Major problem faced by small businesses:
- Additional cost and Restricted participation: The local store/enterprises are still confined to a digital vacuum, owing to the additional cost to register their presence on numerous platforms. This not only restricts their participation despite of rapid advancement of digital platforms.
- Different terms and conditions: Every e-commerce platform has distinct terms and conditions which limit the sellers’ flexibility.
- Centralizing Tendency of Digital Commerce Transactions: Transactions on a single platform create a single point of failure. Single Points of Failure are possible in both software and hardware layouts or in the context of cloud computing, on which the e-retails services heavily rely upon.
Steps taken by the government to make e-commerce a level playing field:
- Open Network for Digital Commerce (ONDC): Department for Promotion of Industry and Internal Trade (DPIIT) has established the Open Network for Digital Commerce (ONDC), which is open e-commerce and enables access to small businesses and dealers.
- It has made it possible for products and services from all participating e-commerce platforms to be displayed in search results across all network apps.
- The project to integrate e-commerce platforms through a network based on open-source technology has been tasked to the Quality Council of India.
- ONDC is expected to digitise the entire value chain, standardise operations, promote inclusion of suppliers, derive efficiency in logistics and enhance value for consumers.
- Dual objective:
- Wider choice for consumers
- Access to a wider consumer base for sellers
- Pilot projects: The ONDC began its pilot in five cities in April 2022, i.e., New Delhi, Bengaluru, Coimbatore, Bhopal, and Shillong.
- Currently, the project has been expanded to 18 cities, and there are immediate plans to add more cities.
Need for ODR:
- Disputes will be the obvious by-product of this e-commerce revolution. Therefore, it is imperative to support this initiative with a modern-day, cost-effective, timely and high-speed dispute resolution system. This can be done by Online Dispute Resolution or ODR. Online Dispute Resolution (ODR) can offer affordable, enforceable outcomes and can be tailormade for the specific use case keeping the participants in mind.
- ODR is the system of resolution of disputes, particularly small- and medium-value cases, using digital technology and techniques of Alternate Dispute Resolution.
- ODR has received impetus across Government, businesses and even the judicial processes to tide over the constraints due to the Covid-19 pandemic.
- The ODR is not restricted to the use of legal mechanisms such as mediation, conciliation and arbitration in an online environment but can be tailormade for the specific use case keeping the participants in mind. The ODR will help mitigate litigation risk and provide valuable insights into problems faced by consumers.
Benefits of the Online Dispute Resolution System:
Problems Associated with Online Dispute Resolution:
- ODR has the potential to reduce legal costs, by way of reduced time for resolution
- Flexible Nature
- Encourages Negotiations:
- Simple to Access
- Availability in regional languages
- Easing the Judicial logjam
- Lack of Digital infrastructure
- Lack of Digital Literacy
- Privacy and Confidentiality Concerns
- Mutual Consent of Parties:
Example: eBay Resolution Centre uses the ODR and resolves over 60 million disputes between small traders every year. Another example is Alibaba, an e-commerce company, that has also adopted the ODR to resolve disputes arising out of transactions over the platform.
Improve Online Dispute Resolution Mechanism:
- Increase Access to Digital Infrastructure: Increased physical access to technology and infrastructure can only be achieved by the combined efforts of two key stakeholders - the Government and the judiciary.
- Increase Digital Literacy: Physical access to technology and infrastructure is only one aspect of access to digital infrastructure. To unlock its true potential, users of such technology should be digitally literate.
- Mainstream E-stamping: As ODR often deals with inter-state disputes where disputing parties are residing in different jurisdictions, there is a need to harmonise stamp duty and procedural requirements across different States.
- Block-Chain Technology: It can be leveraged for the protection of e-evidence from being tampered with, thereby providing tamper-proof storage of evidence.
- Government Participation: Government and Public Sector Undertakings (PSUs) are amongst the biggest litigants in India.
- Governments, regulators and private enterprises have been adopting and encouraging its use. For example, the National Payments Corporation of India (NPCI) has mandated platforms in the UPI ecosystem to adopt the ODR for complaints and grievances connected to failed transactions. Ingram, SEBI SCORES, RBI CMS, MahaRERA (or the Maharashtra Real Estate Regulatory Authority), and RTIOnline (or the Right to Information Online) are other examples of ODR systems that are widely used in the country.
With India’s e-commerce industry set to reach $200 billion by 2027, this shift from a platform-centric paradigm to the democratization of the nation’s online market will catalyze the inclusion of millions of small business owners and Kirana businesses. And in this process, ODR can help to mitigate litigation risk and provide valuable insights into problems faced by consumers.
A dispute resolution framework that includes a customised ODR process can play a role in the network achieving its steep five-year target of adding $48 billion in gross merchandise value to India’s e-commerce market.