Working as a blogger & writer for the last 3 years and have great experience in the same. I am always eager to learn new things.
The world is growing at a pace that one cannot comprehend easily. That's because of digital innovation that is happening while we speak. Our daily lives are highly influenced by technological innovations, from the moment we wake up until we go to sleep. Here we are going to discuss something interesting that has shaken the Indian eCommerce sector, the ONDC (Open Network For Digital Commerce).
What is ONDC?
The Open Network for Digital Commerce (ONDC) is a Government of India (GOI) initiative to unify India's eCommerce and retail businesses under one umbrella. The Department for Promotion of Industry and Internal Trade (DPIIT) will establish an open public digital infrastructure that will display products from all participating Indian eCommerce platforms in search results across all applications present on this network. The goal is to create a digitally-centric eCommerce model in which both buyer and seller use the same platform to conduct online business.
For example, if Amazon and Flipkart merge their platforms with ONDC, a user searching for any product on Flipkart will also receive matched results from Amazon and other ONDC-integrated shopping applications on that portal.
Let us now get acquainted with the major terms used above:
E-commerce (electronic commerce) is a digital network that primarily uses the internet to support the buying or selling of goods and services as well as the transmission of funds and data.
Open-source software/Open digital infrastructure is a platform that has been coded or designed to be public accessibility. This means many parties have the access to it and can modify, collaborate and distribute the information to others as needed to fit in the setup. On the other hand, Closed source code/closed-source software are those that cannot be modified, altered, copied, or shared with anyone other than their owners.
For example, Android is an open-source code that can be optimized according to a person’s smartphone whereas IOS is a closed-source code the user pays only to use the software as intended and cannot incorporate new modifications in the system.
What are Open Network for Digital Commerce Targets?
This is the beginning of the transformation of the Indian digital commerce ecosystem by ONDCs. It hopes to implement the following -
- Increase the reach of the Indian eCommerce sector to every individual and business enterprise by creating new opportunities for micro, small and medium-sized enterprises as well as assisting small traders to get on online platforms.
- ONDC aims to increase e-commerce penetration in India to 25% of consumer purchases in the next two years, up from nearly 8% now.
- They also aim to reduce digital monopoly in every way possible in a country of 1.35 billion people where Amazon and Flipkart control nearly 60% of the market.
- It also plans to add 900 million buyers and 1.2 million sellers to the shared network over the next five years with a gross merchandise value of $48 billion on the platform.
- According to the market, India's e-commerce market was worth more than $55 billion of total gross value in 2021 and is expected to grow upto $350 billion by the end of this decade.
- A unified payments interface will resurface for making payments in the exchange of all goods and services.
- Open protocols would be used for building public digital infrastructure in the form of open registries and open network gateways that will allow the exchange of information between providers and consumers. This will provide flexibility to use any compatible application of one’s choice for carrying out transactions over ONDC.
- The ONDC will also undertake all measures to ensure the confidentiality and privacy of the data in our network.
Who all have joined so far?
ONDC is in the initial phase of implementation in five cities namely: Delhi NCR, Bengaluru, Shillong, Bhopal, and Coimbatore. According to our sources, Ekart and Dunzo have already integrated with ONDC for logistical services.
PhonePe, which happens to be owned jointly by Flipkart and Walmart, is in the final stages of integration with ONDC. Paytm has already signed up to be a part of the network. Google is also putting its efforts into negotiations to become a member of ONDC India.
What does ONDC do to Improve Competition?
As per the government, the current platform works in a silo and is controlled closely while excluding the small players. This initiative expects to increase innovation by startups and competition. And also bring in logistics firms and others who can collaborate with sellers to deliver products to customers. The main focus would be on small traders and rural consumers with apps in Indian languages. You can consider ONDC as a mall but with 1000 gates instead of just two. That provides opportunities for selected sellers to receive preferential treatment. As per our research, we have found that ONDC users will be able to rate the service of providers which will be visible across the network.
Significance of ONDC in the Indian Marketspace
As you have already read the aforementioned information on ONDC. Now you would have a clear idea about what it is and how it is supposed to be helpful. This initiative is supposed to digitize the entire value chain, foster inclusion of suppliers, augment value for consumers, and usher in inefficiency in logistics. Its plan aims to connect 10 million merchants and 30 million sellers online while reaching at least 100 cities and towns by August 2022.
All E-commerce companies in India will have to operate using the same processes as android based mobile devices, irrespective of the brand. This open-source functioning will provide a boost to smaller online retailers as well as new entrants, which helps others to use, modify and redistribute it accordingly. The main motive of this initiative is to empower consumers and suppliers by helping in breaking the monopoly of giant platforms to drive innovation and transform businesses in sectors like mobility, retail, and food.
Some of the Potential Benefits of ONDC for Both Sellers & Buyers
Customers will be able to access sellers through any app that is integrated with the ONDC platform. Meanwhile, sellers will benefit from a tie-up with logistic firms that will handle deliveries and other operational processes. Added advantages include -
- A better way to discover products at lower prices
- Reduced costs of doing business
- More buyers to reach
- Value chain services like fulfillment and logistics would be more readily available
- Better customer experience
- There are more sellers to choose from and therefore more choices to enjoy
- Hyperlocal retailers provide better service and faster delivery
- Adaptive pricing
- Keeping track of inventories
- Cost-effectiveness of delivery
- Will homogenize the cataloguing process and inventory management
- Also, standardise order management and order fulfilment protocols
- More visibility & Less Hassle
- Helps in beating down the competition, in other words small brands can easily enter to grow
- ONDC would standardize operations to enhance value for consumers.
Challenges to ONDC
Challenges are always there with new findings. That’s the same case with Open Network For Digital Commerce. The emergence of this initiative happened in response to protests from merchants, sellers, and market bodies who were concerned about the growing dominance of Some big E-commerce firms in India’s Digital commerce market. This initiative will definitely bring challenges to private companies as it offers the sellers the freedom to choose.
There are various challenges that ONDC shall face as per various industry insiders and techies mentioned some of them below:
- Does the delivered product come from a genuine or fake seller?
- How to determine the delivery experience of the buyer?
- Did the buyer receive the product that he ordered?
- Not able to get Behavioural insights from your customers.
- No control over the shopping experience and user interface.
ONDC envisions to make E-commerce more equitable, encompassing and accessible to consumers. Customers will now be able to discover any sellers, products or services by using any compatible application or platform to the network. Buyers will not only have more options but will also be able to match their requirements with the available supply. Users can thus compare and choose from their preferred local business store they want to buy from.
For sellers, ONDC will make a larger pool of buyers available to them. Services such as ledgers and payment processors will also be made available.
ONDC is poised to democratise and end the monopoly of E-commerce giants in India without compromising the confidentiality, privacy, and data of all its customers.
© 2022 Lilly James