India seeks to regulate its nascent live commerce sector

India’s nascent live commerce market is expected to notch up a gross merchandise value of around US$5 billion by 2025, according to Redseer Strategy Consultants.

Debarshi Dasgupta

Debarshi Dasgupta

The Straits Times


Amazon India is among several leading e-tailers in India that have adopted live commerce to further expand their growth. PHOTO: REUTERS

January 25, 2023

NEW DELHI – India may be the largest “connected” nation with more than 800 million Internet users, but its online shopper base is just around a fourth of this number. A key reason for users staying away from online shopping is scepticism over the quality of products sold on the Internet as well as after-sales service.

E-commerce players looking to reach out to this large untapped customer base are now turning to the next frontier of online shopping – live commerce, or selling products online through live video, often in collaboration with influencers, giving shoppers the real-time ability to establish a rapport with brands.

India’s nascent live commerce market is expected to notch up a gross merchandise value of around US$5 billion (S$6.6 billion) by 2025, according to Redseer Strategy Consultants. As this sector soars in India, the government is now looking at regulating this sector to curtail unfair trade practices and misleading promotions online.

Last week, the government announced guidelines for social media influencers, including virtual ones, making it mandatory for them to disclose material benefits they may have received from brands in lieu of promoting their products and services online.

These disclosures should be clear and “extremely hard to miss”, said the Department of Consumer Affairs in a guide released last Friday. For instance, they should be superimposed on an image or placed in the video, and not just in its textual description, to make them noticeable.

Disclosures should be displayed continuously and prominently during an entire live-streaming session as well. Influencers have been advised to review claims made on their channels and also use the products or services before endorsing them.

Mr Rohit Kumar Singh, secretary at the Department of Consumer Affairs, told reporters that the guidelines were “an obligation for them (social media influencers) to behave responsibly”.

Failure to disclose benefits can invite prosecution under India’s consumer protection legislation. This could involve a penalty of up to 1 million rupees (S$16,200), with subsequent offences incurring fines of up to 5 million rupees.

The government has, meanwhile, also initiated discussions with stakeholders, including experts and e-commerce entities, on the need to regulate the wider real-time online selling practice in the country.

The Bureau of Indian Standards has reached out to members of its retail, e-commerce and e-payment services sectional committee seeking their feedback by the end of January on live commerce norms proposed by the International Organisation for Standardisation (ISO).

“The thought process is essentially whether this should be the standard that India adopts or if it should frame its own rules,” Mr Sachin Taparia, a member of this committee, told The Straits Times.

The ISO standard draws from the regulatory framework in China, which is acknowledged as the market leader for live commerce. The gross merchandise value of China’s social commerce industry was valued at US$363 billion in 2022, and could hit as much as US$2 trillion by 2028.

Mr Taparia said India should look at framing its rules to address specific needs of Indian online shoppers, many of whom seek greater interactivity with sellers online.

According to a Jan 11 report released by LocalCircles, a community-based social media platform, seven out of 10 Indians surveyed think live commerce will enhance their e-commerce experience, with individuals wanting to use the facility for product demos and queries such as those related to terms of sale, returns and warranty.

Around 35 per cent of those surveyed were even keen to bargain with sellers if live commerce capability is introduced. “This behaviour comes from years and years of offline purchases that we’ve always done as a society,” Mr Taparia pointed out.

While many Indian Internet users look at products online, they still prefer to purchase them, especially high-value ones, at a physical store. Some even negotiate cheaper prices using deals they may have found on the Internet as a bargaining tool.

“If that same interaction, including price discussion, is brought online, a lot more can happen with e-commerce from a growth standpoint,” he added.

Among the several leading e-tailers in the country that have adopted live commerce to further expand their growth are Amazon India and Myntra, a fashion e-commerce platform. The former introduced Amazon Live in September 2022, through which it ran 15 live streams daily with over 150 content creators during the 2022 Amazon Great Indian Festival.

Myntra launched its live commerce option, M-Live, in November 2021, following which its live-streaming commerce traffic has grown by more than five times.

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