ONDC — E-commerce Revolution or A Hype?
ONDC — Open Network for Digital Commerce
Recently, the term “ONDC” has been floating around all over the internet for the past few days. It is expected to change the whole Indian online commercial economy. In this article, we’ll go through the specifics of “what” and “how” the large Indian tech experiment aimed to democratize digital commerce business.
What is ONDC?
ONDC is a government initiative driven by private enterprises to provide new opportunities, reduce digital monopolies, and assist micro, small, and medium firms, as well as small merchants, in gaining access to online platforms. The goal is to assist thousands of small shops that are unable to access the e-commerce industry.
I am a tech geek. Help me understand ONDC in my language.
Sure!
T. Koshy (CEO, ONDC) In one of his interviews has explained it very well.
A Gmail user can send an email to another user with a yahoo account. How? Because all emails use the same underlying SMTP protocol. Similarly, ONDC is to digital commerce what SMTP is to email.
Why ONDC?
Because of its rising internet user base and favorable market conditions, India has significant e-commerce potential. Despite the tremendous increase in e-commerce in India over the last decade, overall buyer participation remains less than 10%. The next generation of vendors and buyers will require more user-friendly and comprehensive platforms.
Many local and foreign enterprises compete for the most prominent market share. As of April 2017, Amazon India was the country’s top online marketplace, with more than $500 million in sales. The local market was dominated by Flipkart and Myntra. In such circumstances, the Indian government had an opportunity to attempt something to encourage small businesses to step out and take leads. With all of this, it gave rise to ONDC — Open Network for Digital Commerce.
How does ONDC benefit the average buyer and seller?
Consider a housewife who excels at making several types of pickles. How can she begin selling to thousands of people online without using several platforms (Amazon/Flipkart) or creating a personal website?
You got it correctly: the answer is ONDC. She only needs to be on the ONDC network to make the pickle catalog readily available to a large number of buyers online via Paytm/Flipkart/etc. At the moment, only buyers and sellers inside the same network (such as Flipkart) can deal. Because ONDC is open and free, merchants no longer need to pay commission to the enabling platform, as opposed to today’s proprietary systems. This should result in higher volumes and cost benefits for the end consumer.
Will it spell the end of the present big players?
According to T. Koshy (CEO, ONDC), a seller can be on Amazon to reap its benefits while also being on ONDC to broaden reach and penetration. ONDC does not compete with anyone; rather, it serves as a facilitator of digital commerce. As of now, most of the major players are in discussions, and some have even begun to integrate into the network.
How are we getting along with the experiment?
On April 29, 2022, the ONDC pilot soft launch took place in five cities across India, including the Delhi National Capital Region, Bhopal, Bengaluru, Shillong, and Coimbatore. Paytm is now collaborating with ONDC and doing active experiments in five different cities. They are carrying out a few transactions and fine-tuning the network with real-world data.
Some of the businesses in the process of integrating with the network include Flipkart’s logistics arm eKart Logistics, hyperlocal delivery firm Dunzo, and payment service provider PhonePe.
Is it really that simple?
Yes! The basic concept of ONDC is to make the entire e-commerce grow faster and easier to access. However, every simple solution has its own set of difficult corners. These are some of the unanswered questions,
- How will refunds and exchanges be handled?
- Who will ensure the products’ quality?
- Who is responsible for the delivery timelines?
- Who should we contact for assistance with other problems and concerns?
Conclusion:
As India has recently registered its 100th unicorn, the ONDC endeavor is about to set India on the road we’ve always desired in the e-commerce space. With that said, it will be very intriguing to watch India on track to become a USD 5 trillion economy by FY26.
Reference:
Thank you for reading!
Follow me on Medium for more such content. 😃
Follow me on LinkedIn for all the latest updates.🚀
