What is ONDC
ONDC is a private non-profit company that will establish the public digital infrastructure needed to expand access to India’s e-commerce ecosystem, which is pegged to reach about $200 billion opportunities by 2027. It simply means that if a user is looking for a specific product, then with the help of ONDC, they would be able to see results from multiple online platforms like Flipkart or Amazon.
India’s extremely keen to help e-commerce operators widen their digital marketing access for various small businesses across the country. ONGC would serve as an alternative for platforms like Amazon, Walmart, and Flipkart, which have thus far monopolized India’s e-commerce landscape.
It is currently spread across different regions in India like Delhi NCR, Bhopal, Shillong, Coimbatore, and Bengaluru. Since it is not one platform-centric, this initiative’s objective is to match online consumers’ demand with the nearest available source of supply.
How does ONDC work
This can prove to be a significant opportunity for the Indian e-commerce retailers as it would be a neutral platform with specific protocols for vendor match, cataloging, and price discovery. This means that buyers and sellers will be able to transact on ONDC irrespective of whether they are linked to any specific e-commerce portal.
Knowing the key Stakeholders of ONDC
Twenty government and private organizations have confirmed their investments worth INR 2.55 billion. Various public and private sector banks like HDFC, Axis Bank, and State bank of India have picked up the stakes in ONDC. Axis Bank, SBI, HDFC, and Kotak Mahindra have acquired a share of 7.84% each and have invested INR 100 million to purchase 10,00,00 equity shares with the face value of INR 100 each.
There are about 80 firms currently working to integrate the marketplace with the ONDC platform. These films are making enterprise software and app platforms and payment gateways. Platforms like Dunzo and payment service provider PhonePe are also in the process of integrating with ONDC. Paytm is also looking to pivot to ONDC as its primary focus, and I’m looking to explore opportunities in export businesses. On the other hand, Google is also in talks with the Indian government so that they can integrate its shopping services with the network.
ONDC’s take on Amazon, Flipkart
The government feels that existing bad firms are tightly controlled, keeping many small players out of the field. With ONDC, expect that the competition will increase, and it will foster innovation by different start-ups. It also has high hopes that it will be able to bring in logistic firms and others who would be able to collaborate with sellers so that products can be delivered to customers. The main focus would be on small merchants and rural consumers, and the app would be available in Indian languages.
Users would be able to read the service providers on ONDC that will be applicable and visible across the network. The government is hopeful that it will help end “predatory pricing, especially in high margin, high-value products. ” Although Amazon and Flipkart have denied that they have not engaged in any predatory pricing.
Challenges of ONDC
The main aim of ONDC is to tap millions of small businesses with technological expertise, so the government will have to run a massive campaign to get them on board. This was said by the Confederation of all India Traders, representing 80 million such businesses. Smaller businesses also lack the resources to match the discounts offered by huge platforms like Flipkart and Amazon.
Expected benefits of ONDC
You know some of the benefits of ONDC –
- It will help with price discovery and comparison
- Formalisation and democratisation
- Local retail business growth
- Variety of choices
- Outsourcing services
- Reduction in monopolistic domination
- Rational business process and opportunities because of an open platform
The Significance of ONDC for Digital Commerce in India
The E-commerce market will evolve into a huge industry and is expected to grow to a $200 billion industry in the upcoming few years. The brand value of the companies can affect the sales of local stores. Successful start-ups like Swiggy or Zomato can become stronger by getting more funding, which will affect small businesses. Many loss-making start-ups have taken funding, and we can get massively impacted due to this platform. Government should think properly to eliminate these problems. However, this plan looks excellent for small-medium players.
Cultural diversity will also lead to more changes in lifestyle and habits in our country. This will lead to people spending more money to showcase their identity and culture. As the Indian economy grows, more consumption is at the forefront, which will further lead to the growth of the e-commerce industry.
Frequently Asked Questions
1. What is ONDC in India?
The Indian government announced the Open Network For Digital Commerce (ONDC) in April as a potential alternative to Amazon.com and Walmart in the country’s fast-growing e-commerce business.
2. How does ONDC work?
The Open Network for Digital Commerce (ONDC) is an open protocol network that will allow any network-enabled application to identify and engage in local commerce across areas such as mobility, shopping, food order and delivery, hotel booking, and travel, among others.
3. What is the main aim of project ONDC?
The ONDC platform intends to open up new opportunities, reduce digital monopolies, and empower micro, small, and medium businesses, as well as small traders, by assisting them in gaining access to online platforms. It is a project of the Ministry of Commerce and Industry’s Department for Promotion of Industry and Internal Trade (DPIIT).