Pack size regulation in India - how can the consumer benefit?

Consumers in India are spoiled for choice now. You can walk down the aisle of a grocery store and devote a good portion of your time in deciding which of the 200+ pack size and brand combination of toothpaste or toilet soap or shampoo would you like to buy.

My concern with the plethora of choice does not stem from the Paradox of Choice, a thesis by American psychologist Barry Schwartz in his book by the same name where he argues that eliminating consumer choices can greatly reduce anxiety for shoppers. He’s got a point there, but my concern is with the cognitive load that is placed on deciding which pack is the best bargain.

Of course, there is the media onslaught through the ad jingle on the TV, bill boards on the road, and the personalised and targeted ads on the websites which “help” me in making that choice – at least at the brand level. The cognitive load lies in deciding which pack size gives the best value, even after I narrow the choice down to one or two brands. There is one heuristics that we implicitly believe – the larger the pack size, the lower the unit cost (Cost per litre or per kg). It’s when I do not want to go with the heuristic and actually do the computation mentally that my head starts spinning – there are TOO MANY pack sizes.

Take for instance- the ubiquitous shampoo. Flipkart, one of the e-retailer for all things under the sun, stocks over 50 brands of shampoos in 1500+ different brand-pack sizes combination. A brick and mortar retailer has fewer options on display, but still in the excess of 50.

How does one compare which is cheaper? …….You need a calculator, or need to be a savant

And after you have spent about 30 seconds trying to juggle those number around, you kind of feel sorry for yourself and say: “It’s not worth it- go with the big pack heuristic”

Is there a case for protecting the consumer’s interest by regulating pack sizes?

In India, we do have such legislation. The Legal Metrology (Packaged Commodities) Rules, 2011, which itself derives authority from Legal Metrology Act-2009, does impose some restriction on pack of pre-packaged commodities for direct sale to consumers.

It identifies 19 different commodities that are to be packed only in specified quantities by weight, measure or number. For example, biscuits are to be packed only in the following sizes: 25g, 50g, 75g, 100g, 150g, 200g, 250g, 300g and thereafter in multiples of 100g up to 1 kg. 

This kind of stipulation doesn't much help the computationally challenged, for there are still too many permitted pack sizes to facilitate easy comparison.

For instance which pack of biscuits is the best buy:

150 g pack for Rs 10, Or

250g for Rs 15, Or

400 g for Rs 25?

Was that easy? I doubt it.

The only perceivable benefit of legislating pack size in an economy like India with 5% + inflation is that the manufacturer/retailer cannot reduce the pack sizes to counter inflation while keeping the price constant.

However, since the Indian act permits even for these 19 commodities to be packed in a size other than that prescribed by simply affixing a declaration on the pack that it is 'Not a standard pack size’, not much purpose is served.

Is there a simpler way of helping the consumer make informed choice?

It would have been far simpler to make it mandatory for retailers to display the unit price of each commodity so that the user can make an informed choice, and leave the pack size itself unregulated. This is what the European Union had done in 1998 vide EC Directive 98/6/EC on consumer protection which made it compulsory to indicate the selling price and the unit price of all products offered by traders to consumers, in order to improve consumer information and to facilitate price comparisons.

I had observed this personally in the retail outlets in Vienna. This makes bargain hunting a very easy exercise- every pack size of a product shows both the price of the pack, and the equivalent price for a standard unit, eg Euros per KG, or Euros per litre.

Here is the data for the three biscuit pack sizes mentioned earlier:

Pack Size	Price	Unit Price (Rs per Kg)
150 g	₹ 10	₹ 67
250 g	₹ 15	₹ 60
400 g	₹ 25	₹ 63

As far as standardising the pack sizes is concerned, a working paper of the EU (2002) had examined whether there is an “overriding need” of a public nature for legislating mandatory ranges of sizes Union-wide, and concluded that there is no public need for regulation of mandatory sizes, as the existing legislation on unit price labelling requirements (price per kg/litre of Directive 98/6/EC) enables consumers to do a price comparison easily. Mandatory sizes may actually impede innovation and hamper competitiveness.

Consequently, as per EU Regulation Directive 2007/45/EC, since April 2009, EU sizes apply for wine and spirits and national sizes were abolished for all products.

So, while Europe from 2009 has moved away from attempts at standardising pack sizes, India enacted legislation to do just the opposite.

In the US, display of unit price is not a uniform requirement. Currently, nineteen (19) states and two (2) territories have unit pricing laws or regulations in force.

Can the e-retailers volunteer to fill the informational gap?

While the physical retail outlets will have to incur some cost in displaying unit price information against every pack size, the e-retailers can do it for practically free.

So why don’t I see the unit price information on the various Indian e-retailers such as Flipkart, or Snapdeal, or Big Basket?  Is it simply a case of lack of awareness of customer needs, or is there something more to it?

An interesting pointer on this issue is the recent news article (June 2014) carried on Bloomberg about the agreement of six major retailers including WalMart and Costco with New York’s attorney general to put the unit prices on the Web-based shopping platforms. Significantly, Amazon declined to participate in New York’s initiative.

I hope that the e-retailers in India volunteer to display unit price information. If not, they stand to lose the trust of the consumers.