Ecommerce Sellers Undergo Audits to Prove Authenticity

#DigitalErra
Jul 22, 2017 · 3 min read

Paytm Ecommerce Pvt., the latest entrant into India’s online retailing market, is taking a hard line with suspect merchants to avoid backer Alibaba Group Holding Ltd.’s reputation as a haven for fakes.

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Paytm Mall, the e-commerce arm of Paytm, has delisted about 85,000 sellers from its platform. The move comes at a time when the Noida-based company is trying to enhance its customer experience on the platform as it has to fight established rivals.

“It is a drastic measure but we need to do that to create the right kind of e-commerce platform,” said Amit Sinha, the newly-appointed chief operating officer of the Indian company, which received $200 million in a funding round led by Alibaba. “We wanted to clean up our house and reset Paytm Mall on the trust count,” he said to BloombergQuint.

Paytm has made it mandatory for sellers to furnish brand authorization letters. “The sellers will undergo strict quality and service audits that will include their registration number, location of the commercial establishment, shop photos and goods and services tax identification number, among other things, to list products on the platform. These criterion blocks fraudulent merchants from signing up and creating a bad customer experience on the platform,” the company said.

The company said as a part of its strategy, it will continue to partner with reputed shopkeepers and brands that will bring their catalogues online and enable smoother discovery and buying experience.

It will also provide the shops with Paytm Mall QR Code solution, which will enable consumers to scan for browsing their products and placing an order instantly.

The company is all set to hire around 2,000 people across various verticals, including back-end tech, business development and marketing. It recently inducted almost 800 personnel from its parent firm as it was expanding its operations.

Sinha said Paytm Ecommerce will still have millions of product lines and will add 3,000 agents to scour smaller Indian cities to digitize catalogs of neighborhood shops and brand-authorized stores.

Authenticity of Goods

Given the seemingly boundless scope of the internet, luxury brand owners come across anonymous online counterfeit sellers every day.An excerpt from Decoding Luxe states,

“Growing at a compounded annual growth rate of almost 40–45 per cent, the counterfeit luxury products market in India is likely to more than double to Rs 5,600 crore from the current level of about Rs 2,500 crore.”

It adds that over 80 per cent of the imitation luxury products being sold in India comes from China and most of these consists of handbags, watches, shoes, clothes, hats, sunglasses, perfumes and jewellery.

Fake Swarovski jewelry, Lacoste shirts, Apple iPhones, Mont Blanc pens and Harman Bluetooth speakers are plentiful, often sold at dirt cheap prices. The country does have a legal framework to protect trademarks but the processes are cumbersome and consumer protection laws don’t cover e-commerce effectively.

“Online commerce offers even a small seller of fakes a national footprint instantly,” said Devangshu Dutta, chief executive officer of the New Delhi-based retail consultancy, Third Eyesight. Any e-commerce company that does not vet its merchants is risking selling fakes, stolen and damaged goods, he said.

In February, Flipkart got entangled in a similar case when it announced the selling of OnePlus 3 at a discounted rate albeit the smartphone maker had an exclusive partnership with Amazons India. OnePlus was only available online at that time and was not available in the offline channels. Hence, it raised a few eyebrows on how the sellers of Flipkart got access to the yet-to-be launched devices.

Flipkart says it constantly monitors sellers for quality and has a three-strike policy to blacklist them. However, if sellers are found pushing fake products or refurbished items as new, they are immediately blacklisted.To ensure ethical business practices among sellers, they have a strict seller review/rating process along with on-ground teams carrying out regular quality checks at seller facilities.

Amazon has more than 200,000 sellers on its platform and Flipkart about half that, both are known to de-list dubious sellers. While in China, Alibabahas struggled to take off its name from the notorious markets list put out by the Office of the U.S. Trade Representative. To avoid similar problems, Paytm has joined the race to create an authentic seller base across its products categories.

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