© 2019 IJRAR May 2019, Volume 6, Issue 2 www.ijrar.

org (E-ISSN 2348-1269, P- ISSN 2349-5138)

Impact of 2018, E-Commerce Policy on E-

Commerce entities and How This Policy Affects
Both Mortar-Brick and E-Commerce entities.
S. SRIKANTH1, SHARANAPPA1,UMA SHARMA2.
1Student, R V Institute of Management, Bangalore
2Faculty, R V Institute of Management, Bangalore

Abstract
Electronic Commerce (E- Commerce) has turned world Flat by connecting the buyer and seller for the
exchange of goods and services or for transmitting the funds and data over an electronic network.
Technological Revolution provoked the usage of e-commerce and thus many customers got benefited by the
e-commerce entities. E-commerce sites which are basically platforms for the Marketing products but their
inventory business model affected many retailers in India. In developing country like India many retailers
failed to adopt to the new model of commerce and has been suffering a lot to survive. Many retailers still run
on the convention model of business “Aage Dukan Piche Makan” (Shop at front and the house behind).
To keep the competition alive in Market and to protect the interest of small retailers DIPP issued a new policy
on E-commerce entities which turns the business to Marketing Model from Inventory Model.E-commerce
sites like Amazon and Flipkart will be badly hit by this policy.
In this paper we are trying to explore, How E-commerce can sustain with new policy and how small retailer’s
interest can be protected against the biggiants of e-commerce.
Keywords- Electronic commerce, Technological revolution, Convention model, Policy

Introduction
Ecommerce or electronic commerce is a flat form that facilitates both buyers and sellers to transform their
goods or services online. E commerce in other words can also be called as online shopping where it is not
only selling or buying of products but also provides various other technological services like transfer of
money, bookings, mobile commerce and many more. In India e commerce is transforming the traditional
method of business by its new model. E commerce emerged in the year 1994 at USA where a person through
net market successfully sells a CD to one of his friend by band sting this is considered to be the first example
of consumer purchasing the product online known as e commerce. From then E commerce took its own stand
and started its own revolution in the world.
India being one of the world’s largest populated countries we have the internet users of around 475 million
it is closely near 40% of the total population. Although India being the world’s second largest internet user
base still the e commerce has not made stand alike in other countries like USA, France etc. But as per the
research it is said that the growth of e commerce is growing in a very unpredictable rate. E commerce in
India transforming the business structure that is being practicing from very earlier days. It is expected that
the e commerce growth in India meets 200$ by 2026. Supporting to this government of India have taken
various initiatives in order to bring digitalization and improve the innovative practices that can be practiced
to grow digital flat form which also includes E Commerce. Government has come up with make in India,
digital India, start-up India in order to improve the skills of people and to have economic growth. Although
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earlier to 2004 though it was facing various problems related to network, security issues and various other
factors the government of India brought various policies and made frame works to strengthen and grow the
e commerce in the country and to see that the people feels that is safe to use.
There are Various types of ecommerce models which clearly depicts the overall transactions that takes place
between consumers and the business entities they are as follows business to consumer i.e. B2C, business to
business i.e. B2B, consumer to consumer i.e. C2C, consumer to business i.e. C2B.
Indian government has framed various polices for the e-commerce where it regulates about many issues like
FDI, selling and buying of products, merger and accusation related rules that should be followed while
merging or accusation with any other foreign entities and many other related factors that affects the economy
of the country and the business of the people of country. Government of India drafted its first national policy
on December 2018 which purely constrains to e-commerce which then came into force at 1st February 2019
from then these polies impacted both the e-commerce retailers and brick and mortar retailer, where many
policies were in favour to small scale retailers and had a negative impact on the foreign ecommerce entities
mainly amazon, wall mart acquired Flipkart where they could not have huge inventories and they cannot sell
the products of their favourable vendors which all results in big slash on offers and sales. The policy that has
been framed by the department of industrial policy and promotion beneath the central ministry of commerce
statured the policy in a very technical way where it contributes in uplifting the economy of the country.
Literature survey
DIPP (2018), under the ministry of commerce department of industrial policy and promotion drafted the first
national e-commerce policy and the same which they presented in public domain which clearly speaks about
what all are the policies that the government framed in order to attain the basic security for the vendors who
sells online and also the brick and mortar retailers. Here in their draft policy framed they mainly focus on
how to protect the business growth of the country and not to give key to the foreign entities taking the
economy of the country. In one of the policy they have it clearly depicts the cash flow will be within the
country only rather flowing out which keeps rotation of money within the country. In the policy it also brings
better negotiation with the world trade organization on multilateral issues.
Anand Upadhyay (2017), in his paper he has studied about the consumer’s behaviour and their buying
pattern. They have found that the E-trailer companies which are in India mainly depends on its own
popularity, the policies framed and the relationship with their consumers and so on. Their research mainly
focusses on the factors that affect the consumers buying process where the consumers hold back in shopping
online. They have also researched that what made the people to stay back at the earlier stage from using
online for shopping. They have finally concluded by discussing the transaction that is being happening in the
shopping sector that is from traditional shopping to online shopping. And suggested about the safety way of
transactions of money.
Department of industrial policy and promotion (2017), under ministry of commerce and industry
government of India they have consolidated the FDI policy which effectively came in into existence from
august 28, 2017 in this they have brought the policies which was already in existence into enforcement by
giving some other additional value to it and making the policies to be followed in a very effective manner.
In this with other FDI policies they have also written about the FDI polices that are also related to E-
commerce which clearly specifies that how much foreign investments can be made and what all are the rules
and regulations that should be followed by any E-commerce companies while buying and selling of the
product which makes the E-commerce to run in an ethical manner which also will not affect the Indian
economy

Dr. Rita Sharma (2017) in their paper they discussed about the business that is being changing in India day
by day after the existence of E-commerce in India. They Specifies about the various initiatives that has been
taken by the government of India like make in India, digital India and many more by giving space to
entrepreneurs to grow in the field of E-commerce. They have attempted to bring the various factors that are
influencing in the process of growth of e-commerce in India
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Objectives
 To analyse the E-commerce policy of DIPP 2018
 To determine the impact of E-commerce policy 2018 on boat and mortar

Methodology
For our research purpose we have collected both primary and secondary data. Primary data we have collected
from interacting with few small scale retailers and e-commerce company representatives. Secondary we have
collected from government websites, newspapers, international journals etc.
Findings and discussion
It is noticed that the Indian retail sector is considered to be most regulated sector where due to large amount
of population it is also considered to be politically sensitive part. In order to regulate foreign investments
being invested to Indian retail trade the government has brought many policies that favours Indian business
restricting foreign direct investments which largely effects on Indian economy. The 2018 E Commerce policy
frame work which was introduced by department of industrial policy and promotion beneath the ministry of
commerce made e commerce retailers like amazon, Flipkart and other retailers to change their trade practices
accordance to the policy frame work.
Impact of e-commerce policies on e-commerce retailers
The DIPP issued a policy in the month of December 2018 that
a. Vendors that have any stake owned by an e-commerce company cannot sell their products on that e-
commerce company’s portal.
b. Any vendor who purchases 25% or more of its inventory from an e-commerce group company will
be considered to be controlled by that e –Commerce Company and there by barred from selling on
its portal.
c. E-commerce firm will not be allowed to influence the price of a product sold on its portal by giving
incentives to particular vendors.
These provisions of e-commerce create equal field for the small scale vendors and they can also participate
in the e-commerce entity.
Second provision aims to ensure that vendors in which marketplaces such as amazon, have a stake do not
sell the bulk of their items to a third-party vendor who then goes on to sell these items on the e-commerce
market place. Policy seek to ensure small players selling on the portals are not discriminated against in favour
of vendors in which e-commerce companies have stake.
The major players like cloud tail, WS retail, Myntra and private label brands amazon basics and Flipkart’s
MarQ will be affected.
From the research we found that the 2018 e-commerce policy frame work impacted on the e-commerce
retailers in a very negative way having only few advantages. the policy 2018 stating that a particular vendor
can have only 25% of sales transaction which will affect the vendors like cloud tail and other vendors who
were selling more number of products giving high discount to customers keeping huge number of inventory
to minimize their sales. Similar to this policy one more policy that is being stated is that the market place
operators can only allow other vendors to facilitate the process rather the entity being itself owning large
number of inventory and selling. Which facilitates the advantage to the vendors to explore into the market in
large number through e-commerce. Policy liberates vendors by not making any regulations or agreements
with the vendors by entities which facilitates vendors to sell their product more than in a single site. Any
entity holding the stakes in vendor’s company cannot sell its product and cannot exercise and control on
inventory of such vendor which restricts the entity not partnering with any of such vendor. The entities cannot

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make any sales agreement with vendors forcing them to sell products in a particular site only. The discounts
that was being offered earlier will all be no longer available for the customers due to certain changes in the
policy which effects the sales of the entity as the customers look for more discounts and offers in e-commerce
this will make the entity frame up new business model in order to continue their business in india. It was
analysed by the price water cooper that the e-commerce retail sales growth may be directly or indirectly be
affected by this 2018 e-commerce policy and predicted that there may be the reduction in the goods sold in
online by around 800 million dollars and may hit to low $46 billion by 2022.
This specifically impacted certain e-commerce retailers like flip kart, amazon, eBay etc. where they cannot
encourage their favoured vendors anymore and should open for all the small scale and large scale vendors.
The policy will mainly aim in clamping down the huge online retailers and at the same time it strengthens
small retailers and facilitates them to sell their own branded products.
Impact of 2018 e commerce policy to brick and mortar retailers
As per the research we got to know that the 2018 e-commerce policy helping the small scale local retailers
say brick and mortar retailers where the customer will come back to traditional method of buying the products
as they see no much offers, discounts or products being offered in online market place and the small scale
retailers are able to compete with these corporate entities. This policy implemented by the government of
India will also facilitates the projects that is being undertaken by the government say make in India concept
where the major products sold should be of India and the cash inflow and out flow will be circulated within
the country contributing to economic growth where this was not happening from many years because
whenever a person buys a product most of the products will be of foreign products where the money flew
from India and the market were of cashless which all restricted the money circulation. This policy gives the
opportunity to brick and mortar retailers to find its place in e-commerce
Future findings
It is unclear that if the E-commerce entities create large amount of vendors who can procure material from
the subsidiary organisations of the e-commerce entities about 23 %, then How a fair ground for the
competition will be protected?
DIPP should ensure such kind of loop holes in the policies should not be taken advantage by the e-commerce
giants it also need to create a policy that involves local retailers into e-commerce

References
 Anand Upadhyay, Ambrish Pathak, Nirbhay Singh, Assistant Professor, Thakur College of Science
and Commerce, “Evolution of online shopping: E-commerce
 Insights IAS “Draft National E-Commerce Policy”
 DIPP, Ministry of commerce department of industrial policy and promotion drafted “The first
national e-commerce policy”.
 DIPP, Ministry of Commerce and Industry, Government of India, “Consolidated FDI Policy”.
 Dr. Rajasekar, S. and Sweta Agarwal Principal and scholar, Akshaya Institute of Management
Studies,”A STUDY ON IMPACT OF E-COMMERCE ON INDIA’s COMMERCE”.
 www.livemint.com
 https://inc42.com/resources/ecommerce-policy-changes-and-its-impact-on-indian-ecommerce/
 Jonathan Coppel, OECD Economics Department , "E-Commerce: Impacts and Policy
Challenges," www.researchgate.net

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