New Delhi, Apr 9 (IANS): While smartphones contribute an estimated 47 per cent of the total sales value of e-commerce in India, reseller fraud by small to medium tier offline retailers may be increasingly hurting its prospects, said a report on Tuesday.

According to market research firm techARC's TechInsight report, an estimated 40-45 per cent of online sales are reseller frauds that are adversely impacting the online e-commerce value chain of smartphones.

The reseller fraud is played upon by small to medium tier offline retailers who sneak through various checks and balances of e-commerce platforms and procure smartphones in bulk for reselling purposes.

"Reseller fraud is a modern-day malpractice adopted by few making the entire digital commerce of smartphones appear shoddy and shabby. The entire ecosystem needs to work in tandem to fight it out," Faisal Kawoosa, Founder and Chief Analyst, techARC said in a statement.

The reseller fraud has several implications for the industry, including on online sales contribution, misappropriation of discounts and offers on e-commerce platforms such as Amazon and Flipkart, strategic importance of online channel and offline prospects, the report said.

It suggested that both the online as well as offline channel players shall have to come together to address this issue with support from the brands.

"While the brands could come heavily on such resellers who are caught in such unethical trade practices, the digital commerce platforms need to reinforce their business processes to arrest reseller fraud," the report noted.

The offline trade bodies need to use their influence on such resellers not to resort to such practice. The government also needs to look in detail into the issue as it could potentially lead to tax avoidance as well as creation of unaccounted wealth with such traders, it said.