What is ONDC? What do we know about ONDC?
The Open Network for Digital Commerce (ONDC) is a network based on open protocols that will allow any network-enabled application to discover and engage in local commerce across segments such as mobility, grocery, food order, and delivery, hotel booking, and travel, among others. It is the Government of India’s initiative.
Aim And Objectives of Open Network for Digital Commerce
The platform aims to create new opportunities, reduce digital monopolies, and assist micro, small, and medium enterprises, as well as small traders, 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).
ONDC aims to democratize digital or electronic commerce by transitioning it from a platform-centric model to an open-network model. Merchants will be able to save their data through ONDC in order to build credit history and reach consumers.
The proposed government-backed platform aims to level the playing field for e-commerce behemoths such as Amazon and Flipkart, as well as offline traders who have complained about these e-tailers’ unfair trade practices. The platform will also be compliant with the Information Technology Act of 2000, as well as the upcoming Personal Data Protection Bill.
Big players like Flipkart and Amazon have expressed an interest in supporting the programme. This will break their monopoly and allow them to source goods from the ONDC’s seller side. “The major commercial players have indicated to ONDC that they will back it.”
Aside from gaining new users, this will allow platforms with significant business-to-business verticals to supply goods through the seller side of the ONDC network.”
The ONDC is already piloting its program in five Indian cities: Bengaluru, New Delhi, Coimbatore, Bhopal, and Shillong. It aims to reach around 100 cities by August and expand its reach beyond the current five cities. The program is currently in beta testing, with only 5 sellers and a small number of buyers.
How does ONDC work?
Customers will be able to reach sellers on ONDC via any app that is network-integrated. Sellers will handle deliveries through partnerships with logistics companies. ONDC will also provide sellers with services such as ledgers and payment processors.
This means that buyers and sellers can transact on ONDC regardless of whether they are affiliated with any particular e-commerce portal. For example, even if a seller X is registered on platform A and a consumer is registered on platform B, the consumer can purchase products from seller X directly from the ONDC network without registering on platform A.
About ONDC’s Network Participants: Who all have joined ONDC?
Microsoft joined ONDC in August, becoming the platform’s first multinational technology firm. Digit, Paytm, Go Frugal, eSamudaay, Seller App, Growth Falcons, Dunzo, and Loadshare are among the platforms that have already integrated with ONDC. PhonePe, Kotak, Snapdeal, Ushop, Sonata, Ekart, Zoho, Bizom, and Shiprocket are among the platforms in the advanced stages of development.
State Bank of India, ICICI Bank, HDFC Bank, India Post, IDBI Bank, Marico India, ITC store, Samsung India Electronics, Nivea India, Airtel, and Delhivery have also expressed interest.
Also Read: How to Register Startup in Startup India Initiative by the Government of India
How will ONDC benefit MSME?
This would be a huge benefit for small and independent businesses because their business would be visible/discoverable to all buyers on any B2C (business-to-consumer) platform or via a direct search.
There would also be the added benefit of lower operating costs due to the elimination of high aggregator commission fees.
Overall, it will help to promote fair trade and restore power to small and independent business owners by allowing them to reconnect with their customers directly rather than being cut off by an aggregator barrier.
Small and independent businesses are increasingly looking for technology platforms that can act as a medium rather than a middleman.
Initiatives like ONDC are all aimed at shifting power away from the middle and towards the ends, putting an end to the era of middlemen aggregators who act as barriers between customers and service providers and ushering in a new era of de-aggregation, unbundling, and interoperability.
Difference between UPI and ONDC
While both systems are based on the same concept of connecting people and making things easier in the Indian market, they are very different in terms of functionality, complexity, magnitude, people, segments, markets involved, and more.
For example, the UPI system was involved in the secure transfer of finances, with the main goal of facilitating the transfer of funds while keeping them secure between banks, merchants, and customers. When it comes to ONDC, however, the concept does not involve a direct transfer of goods and services but is related to the same.
Furthermore, the ONDC has a list of subjective variables that the UPI does not. For example, ONDC must monitor the quality of the products sold, onboard sellers and shops, facilitate communication between them, consider the dependability of both sellers and buyers, monitor delivery speed, and more.
Moreover, nothing in the UPI system was dependent on physical interaction, which contrasts sharply with the ONDC system, which is heavily reliant on offline steps after online matchmaking.
ONDC Challenges
ONDC has developed a revolutionary product that will transform the Indian market in the near future. However, due to the product’s complex design, it has already begun to face numerous implementation challenges. In comparison to the UPI system, ONDC is far more difficult to design and implement.
Conclusion
The introduction of the ONDC should definitely be a welcome thing for any entrepreneur who wishes to provide their customers with as much value as possible. The more choices they have, the better the chances are that they’ll find something that meets their needs. This is also demonstrated by the fact that the Indian e-commerce industry is expected to grow from $46.20 billion in 2020 to $200 billion by 2026. So it’s certainly a win-win situation for everybody involved. It’s also good news for Indian consumers who will be sure to reap rewards from a variety of e-commerce platforms.
Featured Image Credit: Dilip Vamanan via Twitter
