Explanation: How can ONDC help your local kirana store sell online?
Since the creation of the Unified Payment Interface (UPI) for digital payments, users no longer need to download multiple payment applications. By using a single payment gateway network, money can be easily transferred to different accounts through various gateways, keeping it smooth and hassle-free. Taking this concept further, the Union Government recently introduced the Open Network for Digital Commerce, or ONDC, to encourage digital payments for the purchase of goods and services while making the process convenient, easy and seamless. for buyers and sellers.
It is claimed that the ONDC will be the IPU of electronic commerce and will change the paradigm of electronic markets.
What is the ONDC
According to the ONDC strategy document, it is a one-of-a-kind initiative and is based on an open network developed on open protocols. ONDC is a network that allows local and location-based e-commerce stores from all industries to be discovered and engaged by any network application.
It is neither a super aggregator app nor a hosting platform. All existing e-commerce applications and platforms can voluntarily choose to adopt and become part of the ONDC network. Additionally, responsibility for onboarding sellers and buyers and end-to-end order lifecycle management will also continue to reside with network-enabled applications.
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India is emerging as a fast growing economy which in the next 10 to 15 years is expected to be among the top three economies in the world. Being the second most populous country, India offers a wide scope for market players to increase their consumer database and hence, one of the preferred destinations for doing business.
The COVID pandemic has seen a surge in digital commerce in India, where India has the third largest online shopper base in the world, with 14 crore online retail shoppers in 2020, only behind China and the United States.. But the pandemic has also exposed the gaps India faces, where most players in the hyperlocal market were digitally absent.
During the pandemic, the Directorate for the Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce and Industries, conducted a study to understand the impact of the pandemic on small traders and the operation of supply chains. hyperlocal supply. It was found that there was a huge mismatch between the scale of online demand and the ability of the local retail ecosystem to participate.
ONDC was conceptualized by DPIIT with the primary goal of ending the digital monopoly of a few large e-commerce companies. The Quality Council of India has been tasked with integrating e-commerce platforms with open networks. ONDC has now been launched as a test in six cities including Delhi-NCR, Shillong, Bhopal, Bangalore and Coimbatore.
How the ONDC works
If buyer A wants to buy, for example, headphones, he would search on one of the current e-commerce applications. In search of interesting offers, buyer A surfs on the various applications. But having to switch between apps for better deals or specs can be time consuming. Moreover, to monopolize the market, giants like Flipkart or Amazon, which control 60% of the e-commerce space in India, give huge discounts on expensive products. They also prioritize certain associated brands or a particular brand is made available only on their app.
The ONDC is supposed to break this chain. When a buyer uses ONDC to open app 1, for example Flipkart, and searches for headphones, they will not only receive the sellers options on that particular app, but also the headphones options available with the other apps. and stores nearby. This will allow the consumer to compare prices, qualities, availability, discounts, etc.
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Further away. on the said app, if the buyer opts for headphones which are sold by seller X but for some reason the delivery people of app 1 are not available in the delivery area, the buyer or the seller can opt for delivery services facilitated by other apps like Dunzo, Porter, etc., via app 1.
With ONDC, a single application offers all kinds of services and advantages for sellers and buyers. It is voluntary and open to all sectors of activity. In layman’s language, ONDC plays the role of weekly markets which are a one-stop shopping center, sourcing all kinds of goods and services.
ONDC is neither an e-commerce application nor an intermediary or regulator. It is an open source network, which does not require the buyer and seller to use the same platform/application to conduct a trade transaction. Instead, it is a network-centric model where as long as the platforms/apps are connected to this open network, buyers and sellers can transact independently of the platforms/apps that they use.
Hence, it is also referred to as eCommerce UPI.
The figure above shows a paradigm shift from a monolithic operator-driven platform-centric model to an interoperable decentralized network driven by the facilitator. The use of this new model will allow:
- Encourage broad participation; in particular that of small and medium-sized enterprises including hyper local traders (Kirana) from all over the country
- Enable a flow of value greater than the store of value, i.e. move from “central platforms storing and exchanging value” to a “decentralized network of interconnected ecosystem actors that orchestrate the flow valuable “
- Address discoverability and trust, platform agnostic and across platforms
- Unify siled platforms to overcome the inherent challenges of the platform model instead of pursuing the notion of a universal platform or a platform of platforms
- Empower buyers and sellers
- Align network, platform, and end-user incentives so the collective only succeeds through end-user success
Objectives of the creation of the ONDC:
- Be effective at scale and enable population-wide adoption
- Promote interoperability between participants’ platforms and software applications to create an open, inclusive and competitive marketplace
- Establish a public digital infrastructure on which industry players can develop and implement a variety of services
- Making Digital Commerce Friendly for Small Businesses
- Paving the way for innovation to reinvent digital commerce
- Ensure rapid digitization of MSMEs and adoption of digital trade by rural and urban consumers with equal ease and convenience
Targets ONDC aspires to achieve
ONDC is working to adopt the network at the national level with a set of clearly defined steps:
- Make ONDC network onboard buyers and sellers in every India PIN
- Bring 300 million buyers to the ONDC network through various buy-side platforms by the end of 2024
- Bring 30 million sellers and seller catalogs to the ONDC network via hundreds of sell-side platforms by the end of 2024
- The ONDC must generate an average of 300 million orders per month by the end of 2024
Like any other new initiative, ONDC has been analyzed by experts and some concerns have been expressed. Most importantly, registration with the ONDC is voluntary, its success can only be measured by the number of e-commerce platforms that register. If major e-commerce players fail to register, the main objective of the initiative may not be realized.
Additionally, there is a need to create more awareness and technical support to help local vendors and small businesses register. Payment issues can also arise when a consumer adds other services in one transaction.
Another concern is that if a consumer faces a problem regarding the transaction or the quality of the products or services provided, who will be held responsible? As it remains unclear how the various e-commerce laws will apply to the ONDC and how the ONDC fits into the legal e-commerce landscape in India, the question of the liability of the ONDC remains unanswered. answer.