The Open Network for Digital Commerce (ONDC):
On April 29, 2022, India took a significant step in transforming digital commerce by launching the initial pilot phase of the Open Network for Digital Commerce or ONDC. This event marked the beginning of a new era for Indian businesses, as ONDC set out to empower small retailers and bring about a revolution in the digital commerce landscape. A key goal of ONDC’s launch was to address the issue of monopoly and duopoly in the industry. By offering a level playing field for retailers of all sizes, ONDC aimed to promote fair competition, foster innovation, and reduce the dominance of a few major players. This initiative demonstrated India’s commitment to creating a more inclusive and dynamic digital commerce ecosystem that benefits all participants.
Now let’s delve into the story and understand the story of ONDC, exploring its key features and the transformative impacts it holds for Indian digital commerce.
India’s digital commerce landscape took a big leap forward with the launch of the Open Network for Digital Commerce (ONDC). Created by the Government of India, ONDC aims to help small retailers succeed in the digital world. ONDC, much like the game-changing UPI revolution in digital payments, is set to transform the Indian digital commerce landscape. Similar to how UPI simplified and streamlined digital transactions, ONDC aims to empower small retailers by providing them with equal opportunities to thrive in the online marketplace. It wants to make sure that all retailers have a fair chance to compete and that no single company dominates the market.
ONDC is like a superhero for small retailers. It helps them overcome challenges like not having enough money or technical skills. With ONDC, small retailers can use a simple and easy-to-use platform to sell their products online, just like big companies do. This means they can reach more customers and sell more things.
India wants to create a digital commerce world where everyone has a fair chance to succeed. By launching ONDC, they want to break the power of big companies and encourage new and innovative ideas. This is good for small retailers and also good for customers because it means they have more choices when they want to buy things online.
ONDC also wants to include everyone. It wants to help small retailers from all over India, even in remote areas, connect with customers. This way, small retailers can grow their businesses and create more jobs. It’s like bringing opportunities to people who didn’t have them before.
Key Features of ONDC:
- Economic Development and Job Opportunities: ONDC creates jobs and boosts economic growth in the digital commerce industry. It offers opportunities in logistics, packaging, delivery, and other areas, benefiting businesses and individuals
- Inclusive Participation: ONDC allows businesses of all sizes and locations to participate in digital commerce. It ensures that everyone has a fair chance to sell their products online and reach a larger customer base.
- Improved Business Efficiencies: ONDC helps businesses become more efficient by reducing costs related to acquiring customers, establishing a digital presence, and managing inventory. This enables them to focus on growth and expansion.
- Support for Local Manufacturers: ONDC encourages the sale of locally manufactured goods. This supports small and medium-sized enterprises (MSMEs) and boosts investment and production within India.
- Formalization and Access to Finance: ONDC helps businesses formalise their operations by maintaining a digital record of their transactions. This makes it easier for them to access finance options such as loans, as lenders can assess their creditworthiness based on their digital history.
In India, there are more than 12 million people who make their living by selling and reselling things. But guess what? Only a tiny number of them, around 15,000 (which is less than 0.125% of all sellers), can sell online. It’s like a secret club that most sellers from small towns and rural areas can’t join.
Now, here’s something mind-blowing: the Indian e-commerce market is worth a whopping 80 billion dollars right now. And experts predict that by the end of this decade, it will grow to a staggering 350 billion dollars. But how is this possible when only a few sellers are a part of the e-commerce world?
Well, here’s the trick. Big companies like Amazon and Flipkart control 60% of the Indian e-commerce market. They offer big discounts and attract lots of customers. Small sellers just can’t compete with them. So while the e-commerce market is getting bigger, most sellers are left out in the cold.
Recognising this alarming situation the Indian government took a momentous step by launching a ONDC or open network for digital commerce. It’s like a superhero that wants to help small sellers succeed in the online world
ONDC is like a special door that helps local shop owners join the online shopping world. It lets them show their products and services to people who want to buy them. You know when we search for things on an app, like Amazon, we see many choices, right? Well, with ONDC, we can see even more choices from different places, like Flipkart, Myntra, and other sellers
For example, let’s say you want to order a pair of shoes. When you search for shoes on ONDC, it will show you the available options from different sellers and the prices on various apps. You can conveniently compare the prices and choose the best deal.
One of the unique features of ONDC is that if you rate a product on one app, your rating will be displayed in every app. So, let’s say you bought a pair of shoes from f-kart and rated it 3 stars. That rating will be shown in every app, like Amazon and Flipkart etc., so other people can see your feedback. It would be more helpful to identify the genuine quality of the product.
ONDC is not only about shopping and rating, but it also gives us the freedom to choose the delivery partner. Let’s say you want to order biryani, but the delivery charge on Swiggy is too high or their delivery boys are not available. With ONDC, you can switch to a different delivery partner like Dunzo.
ONDC is an intermediate layer between the interface hosting buyer and seller, and it is a platform that brings together multiple apps for different things like travel, food, fashion, and more. It’s like having a lot of options in one place. And guess what? In ONDC, there’s a special feature inspired by Trivago. It lets us compare prices. So, if we’re planning to buy shoes, we can search for them on ONDC and see the prices available on different apps. This way, we can find the best deal.
With ONDC, India is expected to experience significant growth in fintech, e-commerce, and especially for small business owners. It provides them with more opportunities to reach customers and grow their businesses. It’s like opening doors to success for small businesses in India.
However There certain challenges ONDC has to face
- Adoption and Awareness: One of the primary challenges is to ensure widespread adoption and awareness of the ONDC platform. Many small retailers may be unfamiliar with the concept of digital commerce or may lack the technical expertise to navigate the platform effectively. Therefore, educating and promoting the benefits of ONDC among small retailers becomes crucial.
- The visibility challenge arises due to limited screen space and the need to prioritise search results or product listings. ONDC needs to develop effective algorithms and mechanisms to ensure fair and equitable visibility for all sellers, regardless of their size or popularity. Balancing the visibility of established sellers and providing opportunities for new or lesser-known sellers is a delicate task.
- Now, while ONDC is currently offering significant discounts and attractive offers, it’s important to consider the sustainability of such discounts in the long run. Unlike government-backed initiatives, ONDC operates through funding obtained from several banks. On the other hand, other giant companies have the capability to secure billion-dollar funding, enabling them to offer similar discounts. This raises concerns about their continued dominance in the market
Let’s eagerly await how the ONDC tackles these challenges. If it succeeds like UPI, it could become a pivotal turning point for India and numerous MSME owners. To learn more about ONDC and its transformative potential, I encourage you to visit the official ONDC website.