E-commerce giants like Amazon and Flipkart, which dominate the Indian e-commerce sector operate on a b2c online business model, which allows business consumers to make the purchase and sell things online. For using the technologies and processes, these companies charge a certain amount from the retailers, which can be a pain point for many small retailers, with fewer profits.
However, the government-backed open network e-commerce platform (ONDC), will come as an aid for these smaller retailers, charging less commission than the e-commerce giants.
The newly launched e-com platform will cost only a quarter of what small retailers pay to e-commerce platforms like Amazon and Flipkart.
Small retailers pay about 18-40% of the selling price to Amazon and Flipkart for using their platforms. But at the ONDC platform, they will only require to pay 8-10% of the selling price of products as per the government sources.
A commerce ministry official said that it is the market that would dictate the fee/commission charged on the platform and not the government.
The official said, “We have no intention of fixing any cap on commission charged by the platform, it would be purely decided by the market forces”.
IF existing e-commerce platforms such as Flipkart or Amazon wish to be a part of the ONDC, they will have to bring both their sellers and buyers onto the platform.
Unlike e-commerce platforms like Amazon and Flipkart, wherein both buyers and sellers platforms are hosted together, the ONDC platform will host buyer and seller apps separately.
So far now, none of the top e-commerce platforms have evinced any interest in onboarding on ONDC.
ONDC’s Beta Testing
The ONDC– an initiative of the Ministry of Commerce and Industry, on Friday, 30th September, commenced its beta testing process with small retailers across 16 pin codes in Bengaluru.
Based on open specifications, ONDC will boost small merchant digitization and e-commerce scale and will reduce the dominance of big players such as Amazon and Walmart-backed Flipkart.
Three buyers apps – Paytm, Spicemoney and Mystore – were on the platform on the first day of the beta testing. As many as 11 seller apps, which basically are aggregators of small retailers and Kirana stores, were also integrated with the system on the first day.