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With technology opening up new dimensions every day, and access spreading to every nook and corner of the world; it is important to ensure that the benefits of technology are equitably and fairly distributed.
Image Graphics by Team Geostrata
The Government of India’s initiative, Open Network for Digital Commerce (ONDC) is seen as the next revolution, to take these principles forward; providing a new outlook to the entire Indian e-commerce industry. India’s UPI (Unified Payment Interface) was a massive hit, attracting global attention and collaborations.
Now, many analysts envision ONDC to lead the way forward in regulating competition in the digital market space, calling it a game changer that will break the big monopoly of companies such as Amazon, Flipkart, Zomato and others in the online space.
WHAT IS ONDC?
ONDC is a not-for-profit initiative started by the Government of India, which was launched in 2022. It is an open platform that aims to build an interoperable network where buyers and sellers can engage in a transaction without being present on the same platform. It also aims to help small retailers expand their business and prevent the monopoly of large tech e-commerce companies.
Initially, its pilot phase was conducted in five cities; New Delhi, Bengaluru, Bhopal, Shillong, and Coimbatore. Accordin,g to the latest data, ONDC has expanded its operations in 236 cities adding more than 36,000 merchants. ONDC is not an app, a website,, or an aggregator. It is also not a source of competition, but a network. Any existing seller can sign up and join the ONDC network.
HOW DOES ONDC WORK?
Currently, if a small offline seller wants to sell pan-India and take his business online, he lists his products on platforms such as Flipkart, Amazon, etc. and pays certain platform service charges. Now with ONDC, a seller can join the ONDC network and not be restricted to a particular platform and even the charges associated with ONDC are quite low compared to the exorbitant commission charges of other monopolies in the e-commerce space.
A buyer can visit a buyer-side interface that has joined the ONDC network, for example- Paytm, from where he can browse and search for products of his choice. A buyer will be presented with a wide range of options from different sellers of the ONDC network without being restricted due to any particular platform.
PREVENTING ABUSE OF AGGREGATOR SUPERPOWER
ONDC is seen as a pivot from the existing platform-centric structure of the e-commerce value chain that breaks the duopolies in the sector. Big companies like Amazon have vast amounts of data which present them with information about products that have high demand and are repeatedly bought by customers.
So, these companies make a cheaper alternative of the product available under a private label and sell it on their platform, which is listed under the ‘best seller’ or ‘choice’ category, making it harder for small sellers to compete. Solimo is a prime example that is created for the Indian market and leverages the Amazon platform to attract customers.
THE ADVANTAGES
The Indian government aspires to make e-commerce more inclusive and accessible for consumers. ONDC will help the consumer with real freedom of choice by providing access to a wide variety of products and sellers to choose from and not restricting the availability of products.
It will also benefit small sellers and local vendors and give a boost to MSMEs which form the backbone of India’s retail economy. Additionally, it tends to make the distribution of the e-commerce cycle even in the economy and increases the visibility of sellers on multiple platforms.
THE CHALLENGES
The cut-throat competition from existing e-commerce giants like Swiggy, Amazon, Flipkart, Zepto and more, will be a major roadblock to ONDC’s expansion. People are likely to choose companies which are trustworthy and huge in their presence. Therefore, strategic marketing by offering incentives and popular marketing of the network is extremely crucial for its projected growth.
On the other hand, to extend the benefits of this open network, it is important that there is participation from almost all the stakeholders. Currently, in the facilitation index, Paytm and Snapdeal are the only major companies, which have been integrated into the network.
However, T. Koshy, the Managing director and CEO of ONDC is confident of the rapid expansion ONDC is set to embark on, claiming that “the market compulsion is what will drive adoption and that’s the beauty of a network-centric approach.”
The speed of delivery of goods, quick returns and digital transactions; along with ensuring a fair work environment for delivery partners and providing a quality customer experience, will determine the growth and expansion of ONDC.
There remain multiple areas where the network needs to work to provide a wholesome user experience. It took years of experience, expertise and development inputs in designing and reforming the platforms, to provide a wholesome, fast-paced and user-friendly network of operations. ONDC should consider the popular demands of the market and catch up with the rapid innovations that these private tech players have embarked on.
CONCLUSION
Just like the digital transactions revolution by UPI, the Open Network for Digital Commerce (ONDC) will facilitate the digital e-commerce revolution in India. As India’s External Affairs Minister, Dr S. Jaishankar, recently said in his speech, “Technology, Data and Artificial Intelligence will be the new expressions of power”; India is grasping the opportunities and flexing its technology muscle well in advance.
As the world moves into the era of AI and machine learning, it's very important for governments to ensure that these expressions of power are fair and regulated. The global focus on e-governance is quite evident through repeated emphasis in various multilateral forums, therefore, India’s unique experiment in e-market governance will definitely show the way ahead.
BY JNANITA AND AMBROSH
TEAM GEOSTRATA