15 May 2023 Pantul Kothari
Imagine a network that allows you to access popular e-commerce platforms like Amazon and Flipkart, ride-hailing apps like Ola and Uber or even Food Delivery apps like Zomato and Swiggy all in one place. A miraculous invention, isn’t it? Well, that’s what ONDC does.
Open Network Digital Commerce is a unique initiative by the Government of India to streamline digital commerce in the country. It is seen as a transformative force in the e-commerce industry in the same way that the Unified Payments Interface (UPI) revolutionised India’s digital payments system. It enables traditional retailers to sell their products online and compete with industry giants of all sectors.
ONDC aims to increase e-commerce penetration in India to 25% in the next two years, up from the current 8%, with a target of having 900 million buyers and 1.2 million sellers on their platform within five years. The goal is to achieve a gross merchandise value of $48 billion - Read more. Currently, more than 60% of India’s e-commerce market is controlled by Amazon and Flipkart, which will change if ONDC is successful in achieving its target - Read more. ONDC is rapidly expanding its footsteps and is on its way to transforming digital commerce in India.
Sponsored by DPIIT (Department for Promotion of Industry and Internal Trade), the network aims to bring together all stakeholders - buyers, sellers, logistics players and digital payment providers - on a single platform for convenience and growth, similar to UPI in the digital payment segment. ONDC allows buyers to enjoy easy access to great pricing, faster delivery, a massive merchant base and seamless customer experience. It allows digital visibility and transactions through an open network, regardless of the industry, platform or application. The beauty of this platform is that it provides an opportunity for anyone to join the network and embark on their digital commerce journey.
The main objective of ONDC is to onboard small businesses that lack technological expertise, but the lack of promotion on the ground is a significant obstacle. To address this issue, the government needs to run awareness campaigns that reach all corners of the country. This step is crucial as small businesses may not have the knowledge and expertise to compete with the discounts and benefits offered by industry giants.
Moreover, the initiative will face challenges related to fair competition, grievance redressal, network policies and data privacy. It is essential to implement checks and balances to prevent any player from gaining an unfair advantage, thereby promoting innovation and preventing network effect-based barriers that have given a few players dominant market shares.
To conclude, ONDC holds the potential to transform India’s e-commerce landscape by promoting inclusive growth and equitable opportunities for businesses, both big and small. It has some limitations which can be solved through collaboration and stakeholder awareness to create a dynamic and innovative digital commerce ecosystem in India.