Consumer welfare dividend is quite high with e-commerce, demands careful policy intervention

In a primary study “Status of E-Consumers in India: Consumer Welfare Index” undertaken by CUTS International, surveying some 2000 online consumers from different regions of India, it has been found that the degree of consumer welfare is quite high at 80 per cent. The consumer welfare was gauged 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, which hampers consumer confidence with respect to online markets.

The study “Status of E-Consumers in India: Consumer Welfare Index” can be found here, and a two-page summary can be accessed here.

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