High consumer welfare dividend in e-commerce demands careful policy intervention: CUTS International

KNN India, February 24, 2022

The government needs to carefully formulate policy intervention due to high consumer welfare dividend, CUTS International said in its study on “Status of E-Consumers in India: Consumer Welfare Index”.

The aim of the study is to gauge the consumer sentiment on e-commerce.

It has also recommended e-commerce platforms and online sellers to curb the sale of counterfeit and pirated goods as it hampers consumer confidence with respect to online markets.

In this primary study about 2000 online consumers were surveyed from different regions of India through which it has been found that the degree of consumer welfare is quite high at 80 per cent.

The consumer welfare was assessed based on responses on five parameters –cost effectiveness, convenience, consumer confidence, grievance redressal and healthy competition.

The data, however, shows that e-consumers are not very comfortable with respect to sharing personal data and saving their financial data on platforms. They have also shown suspicion on the genuineness of products sold online, and hence given a low score. All these adversely affect overall score on ‘consumer confidence’ as reflected in the scorecard.

The study findings also suggest significant scope for improvement in the grievance redressal mechanism. Their scores were quite low with respect to satisfaction, timeliness and ease of complaint resolution.

While ‘electronic and appliances’, ‘apparels and footwear’, and ‘personal care and hygiene’ are mostly bought online by e-shoppers, they largely prefer offline mode for ‘grocery’, ‘home and kitchen items’, and ‘books and stationary’ as per the study findings. Interestingly ‘time-saving’ featured ahead of ‘cost-saving’ as perceived benefits from e-commerce.

Looking at the high quotient of consumer welfare vis-à-vis e-commerce, CUTS International urges governments to guard against any sub-optimal policy intervention, which can go against consumer interests. CUTS International also recommend to e-commerce platforms and online sellers to curb the sale of counterfeit and pirated goods.

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