India recently launched the pilot phase of Open Network for Digital Commerce (ONDC) and very few people know about it. This ambitious project launched in India might bring a new age digital reform and completely transform the face of ecommerce in India. UPI is considered as the game changer and biggest success in Indian digital space, and now India might be ready with its another revolutionary and game changing idea in the e-com sector.
The recent research and listing by the World Economic Forum’s (WEF) Global Competitiveness Index shows that India has achieved a high macroeconomic stability ranking of 41 out of 141 economies and a whooping score of 90 out of 100. India has massive consumer market compared to western markets. Indeed, we are one of the largest markets for the manufactured goods and services proudly taking the 3rd place. Still, it is always said that doing business in India is struggle when it comes to setting up a new one. We lag far behind in number of steps and days for new businesses, almost double the high-income OECD (Organisation for Economic Co-operation and Development- an international organisation of 38 countries committed to democracy and the market economy) nations. Despite business reforms and other gestures from the Indian government we are far from the freetrade ideology. Also, there are indications of a rise in protectionist policies. And this is clear from the fact that only 23 of the Indian 100 unicorn start-ups are profitable.
Keeping all the above in mind, there lies another big fat fact that 80% Indian retail space is still dominated by big players like Amazon, Flipkart (No more Indian company after acquisition by Walmart). The small retailers, general stores and corner shops are facing toughest of the times and fighting for survival. ONDC might be a ray of hope for them. This UPI type protocol aims to democratise fast growing e-commerce industry, help small retailers, and reduce dominance of online retail giants. This initiative is very crucial in curbing the dominance of Amazon and Flipkart, who controls most of the country’s online trades, which in turn limits the market access and favours certain sellers and squeezes out the supplier’s or manufacturer’s margins.
ONDC is being seen as an initiative in the direction of making e-commerce processes open source and creating a platform that can be utilised by all online retailers and vendors. ONDC will enable the small merchants and retailers to access and incorporate the processes and technologies that are typically deployed by successful e-commerce giants. E-commerce’s several operational aspects such as onboarding of sellers, vendor discovery, price discovery and transparency, product cataloguing could be made open source on the lines of the Unified Payments Interface (UPI). The platform is mainly working on two ends, Buyers, and Sellers. Around 80 firms are currently working on the ONDC project and are at different stages of integration. These companies will work together in making a apps for everyone, sellers, buyers, logistics and payment gateways. Enterprise resource planning company GoFrugal, and digital business platform Digiit are involved in building the seller side framework. While Paytm is focused on building the buyer side interface.
The ONDC will have many implications for the digital ecosystem and its data flow.
Are you still wondering how it works? When you search for an item on let us say Paytm app, for where ONDC has gone live, the app will itself connect and link the searched object to the seller side interface that will list all the sellers that have listed that item.
The ONDC project was commissioned by the DPIIT through the Quality Council of India (QCI). The building blocks of the project were designed by a nine-member advisory council that included Infosys Co-founder and Chairman Nandan Nilekani, National Health Authority CEO R S Sharma, QCI Chairman Adil Zainulbhai, National Payments Corporation of India CEO Dilip Asbe, and others.
The DPIIT expects that the ONDC will help promoting open networks developed on open-sourced methodology, using open specifications and open network protocols, independent on any specific platform. ONDC is expected to digitise the entire value chain, standardise operations, promote inclusion of suppliers, derive efficiency in logistics, and enhance value for consumers.
During its test run, the platform is expected to onboard 150 sellers from the 5 pilot run cities, Delhi-NCR, Bengaluru, Coimbatore, Bhopal, and Shillong. There are many obstacles and challenges down the path, but Can ONDC repeat the UPI’s success story and become another game changer in the industry? Will ONDC be a giant killer, beating big players at their own game? is yet to be seen.
IIMP MBA Batch 2017 – 2019