ONDC : A game changer in e-commerce industry of Zomato, Swiggy, Amazon, Flipkart and others

The government of India launched in April 2023 its own Open Network for Digital Commerce (ONDC) based on open-sourced methodology, using open specifications and open network protocols independent of any specific platform. ONDC is open network for all aspects of the exchange or sale of goods and services over digital or electronic networks. In other words, we can say it is a cluster of all services provided by Zomato, Swiggy, Flipkart, Amazon, Magicpan etc. In this article let’s check how ONDC works, whether it’s a game changer or a threat by the already existing giants.

🔸What is ONDC?

The ONDC network goes beyond the current platform-centric model of digital commerce, which requires that both the buyer and the seller will use the same platform or application in order to be visible online and do business.

Rather than being constrained by certain platform-centric restrictions, small firms would be free to employ any ONDC-compliant software. This will give small enterprises numerous options for how to conduct business and be found on the network. Additionally, it would facilitate the easy adoption of digital tools by individuals who are not currently using digital commerce networks.

ONDC is anticipated to increase consumer accessibility and inclusivity in e-Commerce. By using any compatible application or platform, consumers might potentially find any seller, product, or service, boosting their freedom of choice.

The consumers will be able to match demand with the nearest supplier. Additionally, this would allow customers to select the neighbourhood shops they want. This will encourage local suppliers, increase logistics efficiency, and improve value for customers.

🔸Launch of ONDC

In June 2021, an advisory council was established by DPIIT for ONDC and the leadership team was onboarded to execute the plan. Then in August 2021, the National rollout plan was endorsed by HCIM to proceed with the plan. Integration and Testing of the first end-to-end transaction by the first cohort executed and ONDC as a section 8 company got registered in December 2021.

ONDC Network went Live with the first cohort participants in March 2022 and made its first order delivered in April 2022 in the city of Bangalore. Then soon after, alpha test transactions begin and the expansion of ONDC in other cities and domains started. In September 2022, ONDC launched its Beta Version. Now, in April 2023, ONDC launched in a full-fledged manner. 🔸How to use ONDC Application?

"Tasty, wholesome treats from Wonderland Foods are now available on the ONDC network. Indulge in a range of premium nuts and dry fruits," tweets ONDC recently. As of now there is no dedicated app of ONDC available all over India, one can access the platform through ONDC network www.ondc.org. There are several partners like Paytm, Meesho, Mystore, Craftsvilla, magicpan, and Spicemoney. The ONDC platform is currently in its early stages but is expected to improve over the next few days. Five Indian cities—Bengaluru, New Delhi, Coimbatore, Bhopal, and Shillong—are already participating in the ONDC's trial programme. By the end of August, it hopes to reach around 100 cities and expand to the present five cities.

🔸Benefits of ONDC to Consumers

Due to these following benefits of ONDC, it can be said as a game changer for the industry:

• By using any suitable application or platform, consumers may be able to find any seller, item, or service, potentially expanding their range of options.

• The consumers will be able to match demand with the nearest supplier. Additionally, this would allow customers to select the neighborhood shops they want.

• As a result, the ONDC would standardize operations, encourage the use of local suppliers, increase logistics efficiency, and improve value for customers.

• To accommodate more Micro, Small, and Medium-Sized Enterprises (MSMEs) and small traders in the nation, the digital market will be expanded.

• Large e-commerce corporations' monopolies will be shattered, improving access, innovation, and variety of businesses.

• It is found that ONDC offers good products at a cheaper rate as compared to other e-commerce operators.
  

🔸Threats of ONDC to other E-commerce operators

• No doubt, where there is a discount there the customers are. Since ONDC being a non-profit organization will keep its commission less as compared to another E-commerce giant, this can increase the customer base of ONDC.

• ONDC being a government entity will have more databases of customers and sellers which can benefit the ONDC to a large extent.

• According to the government, ONDC would assist in putting an end to "predatory pricing, especially in high-margin, high-value products." Amazon and Flipkart deny using exploitative pricing practices.

🔸How ONDC is a boon for the Indian?

According to the government, the closely regulated nature of the current platforms excludes many smaller firms. It anticipates that ONDC would boost competition and encourage start-up innovation. Additionally, it wants to attract logistics companies and other parties who can work with vendors to deliver goods to clients. With apps in Indian languages, the emphasis would be on small business owners and rural consumers. Officials at ONDC compare the network to a mall with 1,000 gates rather than just 2, which reduces the potential for certain sellers to enjoy preferential treatment, a charge frequently levelled against major e-commerce firms. On the ONDC, users will be able to give services a rating that will be relevant and observable by everyone on the network.

DISCLAIMER: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor prior to making any actual investment decisions, based on information published here. Any reader taking decisions based on any information published here does so entirely at their own risk. Investors should bear in mind that any investment in stock markets is subject to unpredictable market-related risks. The author has no plans to invest in this offer and also the author does not recommend investing in any offer published on this website.