Lok Sabha Question No. 74 (UNSTARRED), answered on 2020-02-03
Subject: CCI Report
Ministry: CORPORATE AFFAIRS
Asked by: Sudheer Gupta, Sanjay Sadashivrao Mandlik, Gajanan Chandrakant Kirtikar, Bidyut Baran Mahato, Shrirang Appa Barne

## GOVERNMENT OF INDIA

## MINISTRY OF CORPORATE AFFAIRS

## LOK SABHA UNSTARRED QUESTION NO. 74 ANSWERED ON MONDAY THE 03 RD  FEBRUARY, 2020 [MAGHA 14, 1941 (SAKA)]

CCI REPORT

QUESTION

74. SHRI SUDHEER GUPTA:

SHRI SANJAY SADASHIV RAO MANDLIK:

SHRI GAJANAN KIRTIKAR:

SHRI BIDYUT BARAN MAHATO:

SHRI SHRIRANG APPA BARNE:

Will the Minister of CORPORATE AFFAIRS be pleased to state:

कारपोरेट कार्य मंत्री

- (a) whether the Competition Commission of India (CCI) has recently released a report titled 'Market study on e-commerce in India';
- (b) if so, the details thereof including observations, the key findings, the aims and objectives of the said report;
- (c) the details of the participants participated in the study conducted by the CCI to prepare a report in this regard and the areas covered in such study;
- (d) whether the share of online commerce is gaining importance day-by-day as compared to the traditional channels across the country;
- (e) if so, the details thereof and the reasons therefor; and
- (f) whether e-commerce has helped expand market participation by facilitating the consumers and aiding innovative business models and if so, the details thereof?

## ANSWER

THE MINISTER OF STATE FOR FINANCE                    (SHRI ANURAG SINGH THAKUR) AND CORPORATE AFFAIRS

वित् त एिं कारपोरेट कार्य मंत्रालर् में राज् र् मंत्री

(

श्री अनुराग स ंह ठाकु र )

(a) & (b): The Study was initiated in April 2019 to better understand the functioning of e-commerce in India and its implications for markets and competition. The objective was to identify impediments to competition, if any, emerging from e-commerce and ascertain the Commission's enforcement and advocacy priorities in light of the same. The detailed report is available in public domain on CCI website (url: https://www.cci.gov.in/sites/default/files/whats\_newdocument/Market-study-on-eCommerce-in-India.pdf).

- (c): It covered three broad categories of e-commerce in consumer goods (mobiles, lifestyle, electrical & electronic appliances, and grocery), accommodation services and  food  services.    In  total,  16  online  platforms,  164  business  entities  [including sellers (manufacturers and retailers) and service providers (hotels and restaurants)] and 7 payment system providers from across India participated besides 11 industry associations, representing different stakeholder groups.

(d): The results of the study confirmed that online commerce is gaining importance across the sectors studied. (e): Goods Category: findings reveal that share of online distribution and its relative importance as a sales channel vis-à-vis the offline channels varies significantly across products, like, online sales of mobile phones reportedly account for around 40% of total  sales  in  India;  more  smartphones  selling  online  than  feature  phones.  Latest models often launched exclusively on e-commerce platforms. For electronic/electrical appliances and lifestyle related products including apparels, shoes, accessories and fashion products, the respondents considered online as more of  a  supplementary  channel,  brick  &  mortar  sales  being  the  predominant  mode  of sales.  Nature  of  goods  and  the  extent  of  price-differential  between  sales  channels were among the factors cited by stakeholders that explain the variation in the onlineoffline split of sales between products. Accommodation services: online bookings as a proportion of total bookings has been rising,  though  bookings  via  offline  travel  agents,  corporate  tie-ups  and  walk-in customers remain significant. Hotels in the budget and mid-market segments, now consider  distribution  through  online  travel  agencies  (OTA)  to  be  a  necessary  and increasingly important access route to consumers. Food  service  category:  83%  of  respondent  restaurants  reported  having  online presence with online sales accounting for nearly 29% of the respondent restaurants' revenue. 69% of respondent restaurants went online during 2016-18. Casual dining and quick  service  restaurants  in  particular  were  found  to  be  considering  e-commerce significant for their survival and growth. (f): Mixed  response  was  observed.  A  section  of  business  users  of  platforms, consisting primarily of manufacturers and omni-channel retailers (having both online and offline presence), responded that size of business has not increased significantly, but shift of business from the physical to the digital space is at rapid pace. Another section of small-scale enterprises confirmed expansion of markets. Food service: emergence of online delivery-only formats (cloud kitchens) observed as the most important trend. As an offshoot, the trend of opening up of cloud kitchens as means for low-cost expansion into new cuisines/geographies is increasing, even with the  established  players.  Online  order/delivery  platforms  have  also  entered  into  the domains of cloud kitchen infrastructure, i.e. provision of delivery-only kitchen facility to partner restaurants, while some  have launched their own  cloud kitchen brands/private labels. Accommodation service: e-commerce has enabled a new business model in the form of large franchise chains in the budget hotel segment. These chains access online customers through their own websites and mobile applications while also listing their properties on online travel agencies (OTAs).  Some OTAs have launched assurance programs, lending their brand names to a set of selected hotels while listing them on their platforms, which act as signal of quality to the customers.

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