ONDC- Indias Project For An Open E-Commerce Network

By siliconindia   |   Monday, 13 June 2022, 06:03 Hrs
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ONDC- Indias Project For An Open E-Commerce Network

India's government in April launched its Open Network For Digital Commerce (ONDC) as a prospective alternative to dominant global giants Amazon.com and Walmart in its fast-growing e-commerce market.

FREMONT, CA: Over the last few years, India has undergone a tremendous digital change. Initiatives like AADHAR, UPI, FasTag, the National Digital Health Mission, and others have proven to be successful. ONDC (Open Network For Digital Commerce)  is set to dominate Indian e-commerce, and it will play a key part in leveling the playing field for both big and small shops. It is intended to enhance India's MSME industry. ONDC is a non-profit organization whose network will allow products and services from all participating e-commerce platforms to be displayed in search results across all network apps. If Amazon and Walmart's Flipkart both integrate their platforms with ONDC, a consumer looking for a Bluetooth headset on Amazon will also receive results from Flipkart on the Amazon app.  In a country of 1.35 billion people, ONDC plans to increase e-commerce participation to 25 percent of consumer purchases in the next two years, up from almost eight percent presently.

Within the next five years, ONDC expects to sign up 900 million buyers and 1.2 million sellers on the shared network, with a gross merchandise value of USD 48 billion. India's e-commerce business was valued at more than USD 55 billion in gross merchandise value in 2021, according to the government, and is expected to expand to USD 350 billion by the end of the decade. Amazon and Walmart's Flipkart currently controls more than 60 percent of the market.

Existing platforms, according to the government, work in silos and are tightly managed, excluding many small businesses. ONDC is expected to increase competitiveness and encourage start-up innovation. It also intends to attract logistics companies and others who can work with vendors to deliver goods to customers. With apps in Indian languages, the focus would be on small merchants and rural consumers. Officials from the ONDC compare the network to a mall with thousand gates rather than just two, restricting the potential for selected sellers to receive preferential treatment- a typical charge leveled at major e-commerce companies. On ONDC, users will be able to rate service providers, with their ratings being relevant and visible across the network. The government also promises that ONDC would help to end predatory pricing, particularly in high-margin, high-value products. Amazon and Flipkart both deny using exploitative pricing tactics.

According to the Confederation of All India Traders, which represents 80 million small enterprises, ONDC seeks to tap millions of small firms that frequently lack technology competence, so the government will have to undertake a large awareness campaign to bring them on board. Smaller firms with low volumes may also lack the resources to compete with Amazon and Flipkart in terms of discounts. The ONDC ecosystem will create a new breed of delivery companies that specialize in specific types of deliveries, such as 10-minute delivery. ONDC will provide numerous interfaces for interaction and transaction. Indian customers, for example, will be able to do transactions in their native language. It's envisaged that fresh inventions will emerge on this front on their own.