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Country-of-origin rule will make work for Indian IT staff too

While country-of-origin labelling is expected to promote products “Made in India," it also means software developers and e-commerce retailers must get busy updating databases and websites

shopping carts bar code customer commerce sales by thinkstock
Thinkstock

In what is seen as a move to encourage products ‘Made in India’, the government has made it mandatory for all e-commerce platforms to display the country of origin of the products they sell. The new rule will apply to all e-tailers catering to Indian consumers, irrespective of whether they are registered in India or abroad. Failure to do this can lead to penal action under the Consumer Protection Act of 2019.

In addition, websites will be expected to display the expiry date of perishable products, warranty and delivery information and details of return, refund or exchange policies, with the goal of helping Indian consumers make an informed decision about the products they buy.

The move comes a month after the government procurement portal GeM (Government e-Marketplace) made it mandatory for its sellers to mention the country of origin of their goods.

The new rule is going to mean changes for retailers operating their own online store, for aggregators like Amazon or Flipkart and the businesses selling through them, and for the developers that create the software they run on.

Most of the e-commerce platforms currently do not make country-of-origin information available, and hence a consumer will not necessarily know where goods are made. Some e-commerce players have data fields in their systems pertaining to country of origin but might not have made it mandatory for all sellers to complete them.

A hurdle for homegrown merchandising systems

Data integration on e-commerce platform vendors’ end will be a relatively easy process. The real hurdle is faced by the smaller retailers, single-brand OEMs, and other medium sized sellers who use homegrown merchandising systems, says Ashutosh Sharma, vice president and head of research at analyst firm Forrester India.

Ashutosh Sharma, Vice President and Head of Research at Forrester India Forrester

Ashutosh Sharma, Forrester India
Retailers will have to worry about bad data. For instance, there might be a default country-of-origin or misattributed data. In such cases, they will have to undergo a tedious one-time data cleansing process.

Going forward, the service providers who created a custom-made ERP system for these sellers will have to make sure the country-of-origin field is enabled on its interface. E-commerce platform vendors won’t have the country-of-origin data unless it is obtained from the sellers. Since the information has to be passed on to them, service providers also have to make sure the integration of this data is done smoothly.

“For e-commerce players like Amazon and Flipkart, country of origin is about enabling just an additional field which their systems are already designed to handle. They may not have been mandatorily displaying it before, but will do so now,” says Sharma. “Large-scale sellers have advanced merchandising and inventory management systems which integrate with ecommerce platforms. For many small-scale sellers, e-commerce players provide access to software through which the product details can be uploaded. In these interfaces, now the country-of-origin field will also be made mandatory. To enforce that, marketplaces can simply refuse to list and sell products for which the country-of-origin field is not provided by the seller. From an e-commerce vendor perceptive, the process is relatively easy.”

Finny Chellakumar, head of digital commerce at Aspire Systems, a technology services firm that works with retailers, says his colleagues will need to help identify products for which the country-of-origin data isn’t available to comply with the new rules. He expects his clients to see higher rates of returns and queries from their customers, meaning their helpline centers will need to re-dimensioned.

He says accommodating country-of-origin information will require changes in ERP, PIM (Product Information Management) and order management systems, while processes for picking, packing and dispatching will also need to be modified to ensure customers get what they expect.

No easy way out

Some retailers might already be keeping track of the country-of-origin information without necessarily sharing it with the e-commerce vendors. But for some, the process might be absent altogether. In that case, there is no easy way out, explains Sharma, “Retailers in such cases have to do a one-time-manual activity to make sure the entire on-hand inventory isaccurately tagged with the country-of-origin, and that involves a lot of physical processes. This is why they are asking for at least three months to comply with this rule.”

Sharma says even if the country-of-origin field is enabled and filled, challenges for the retailers don’t end here: they also have to worry about bad data. For instance, there might be a default country-of-origin or misattributed data. In such cases, they will have to undergo a tedious one-time data cleansing process.

Finny Chellakumar, Head of Digital Commerce at Aspire Systems Aspire Systems

Finny Chellakumar, Aspire Systems
Accommodating country-of-origin information will require changes in ERP, PIM, and order management systems, while processes for picking, packing, and dispatching will also need to be modified to ensure customers get what they expect.

Chellakumar says they have to now go that extra mile to ensure to country-of-origin data is captured correctly, “If there are multiple suppliers from different countries, we might need to make sure that both are listed here so that the end customer is not misinformed.

“For retailers, if they have a strong merchandizing system, it should help in capturing the country-of-origin data and persist the same in the ecommerce portal. However, the challenge arises if there are suppliers from multiple countries. Initially, we might have to provide only one country-of-origin to the ecommerce channel.”

Omnichannel challenges

Chellakumar also shares that more challenges will arise in omnichannel scenarios – when customers compare country-of-origin details of the products from physical stores to that from an ecommerce site. Both might have different country-of-origin as they might be from different suppliers.

There are also debates about what the country of origin even means in today’s world of globalized manufacturing. Snapdeal, for instance, has contested that the last country of export cannot be declared as the country of origin for imported goods. Many finished products are shipped to different countries and are assembled or packed together in the third country before it is shipped to India.

The process of complying with this new rule will be similar for all e-commerce vendors, irrespective of whether they are registered in India or not. However, it might be slightly different for newer and smaller-scale e-commerce players. “Unlike the bigger players, smaller-scale players might not necessarily have the provision of capturing the SKU (stock-keeping unit) data that comes from sellers. In that case, extra coding needs to be done to bring that information in place. For large players, it might just be a matter of few click as they might already have that capability,” Sharma concludes.

This cannot be done without the help of our vendors, says Chellakumar. Vendors need to provide error-free country-of-origin data and also keep all stakeholders involved informed about the changes. A defined process that can keep track of dispute management like returns and creating checkpoints to check customer satisfaction are also to be considered.

Copyright © 2020 IDG Communications, Inc.

  
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