Open Network for Digital Commerce (ONDC) is a one-of-a-kind initiative by the Government of India, the pilot of which has been launched already in 5 cities, with the aim to democratize e-commerce in India. Launched in April this year, the non-profit organization’s ethos includes widening the market access of sellers, consumers and providers of ancillary services. In this special feature, we try to answer some most common questions about ONDC and how it will impact India’s logistics landscape.
As the name suggests, Open Network for DigitalCommerce (ONDC) was set up in order to provide an open network for all aspects of the exchange of goods and services digitally. It is based on open-sourced methodology, using open specifications and open network protocols independent of any specific platform.Since the pandemic, there has been an evident increase in the daily e-commerce transactions, both B2C and B2B, and the industry as a whole has picked up momentum. The e-commerce platforms not only connect buyers to sellers and vice-versa, but also provide an array of integrated services like warehousing, logistics and payment gateways. However, the extent of investment to be onboard such large integrated e-commerce platforms is sometimes unaffordable for smaller enterprises.
This also brings the problem of portability of trust, which means that even if a seller has earned his reputation and credentials by selling on a particular e-commerce platform for a number of years, he may not be able to retain it if he decides to move to another platform or launch his own application.
T Koshy, CEO, ONDC explains the e-commerce model further, “Today, only a few platforms have held the market share for e-com globally and for each of them, if you are a seller on Platform A, you can only sell to those buyers who are registered on that platform. The same goes for Platforms B, C and so forth. Being a Platform A seller, if you want to sell to buyers on Platform B, you’ll have to register yourself with Platform B as well. Another disadvantage of it is that there are no buyer-only or selleronly platforms. Because, if you are a buyer platform, unless you have sellers, who will you buy from? And vice-versa.”
The structure as defined by Koshy is a much more challenging one than it seems. To be aboard multiple platforms, they are required by the platforms to maintain separate infrastructure and processes, adding to their cost which also limits participation. Each platform also has its own terms & conditions that limit the flexibility of the sellers and with such limited flexibility, the extent and diversity of participation could be constrained.
“In traditional offline B2B commerce environments, geography and authenticity of buyer/ seller, are the biggest silos. A transparent ecosystem that allows for authentic and verified players to interact with each other digitally will eliminate a lot of frictions that exist in the market today and allow for supply constraints to be plugged even in far-flung areas of the country,” adds Amit Bansal, CEO, Solv.
WHAT TO EXPECT
A lot of people believe that ONDC is going to be a competitor to existing e-commerce giants like Amazon and Walmart-owned Flipkart. However, experts don’t agree. Yatish Rajawat, CEO & Founder, Centre for Innovation in Public Policy says, “ONDC is not a competitor to Amazon, Flipkart or any other e-commerce platform. It is more of a standard which these platforms will integrate with. They are not exactly true marketplaces because they aren’t interoperable or transparent. ONDC will create a bridge connecting all the stakeholders of the marketplace.”
This is an abridged version of the original story that was published in the July edition of the Logistics Insider magazine. To read the complete article, Click here.