Learn all about the ONDC, what it is, and how it works. Discover how this innovation can benefit you and your daily life. Read on to find out more.
The country’s e-commerce market has grown rapidly in recent years. It has drastically altered both the business dynamics and the average consumer’s consumption pattern. Amazon and Flipkart are undoubtedly the market leaders in this space. However, the government has been attempting to break its duopoly for quite some time. This has given birth to the novel concept of ONDC, which is hailed as India’s next UPI moment.
What is ONDC? Is ONDC a government-owned business? Stakeholders in ONDC include who?
Open Network for Digital Commerce, also known as ONDC, is a section 8 incorporated non-profit organization in India. It is a project of the Ministry of Commerce and Industry’s Department of Promotion of Industry and Internal Trade. It aims to give everyone who participates in the e-commerce industry a level playing field. It will act as a common platform for standardizing the logistics, operations, and supply value chain, encompassing suppliers from all regions of the nation. Establishing an open network for them, will significantly boost the nation’s e-commerce industry and assist in integrating customers and suppliers from all over the country.
How Does It Work?
The need for a common platform became apparent when small-scale direct-to-consumer businesses were largely excluded from the e-commerce space, despite the fact that this industry is expected to grow at a rate of 20% annually. Small Kirana stores and other small businesses make up 80% of the nation’s retail space but are unable to take advantage of the e-commerce boom due to a lack of knowledge, resources, or scale.
The ONDC will operate as an open network where it won’t be a single platform like Amazon or Flipkart but rather a gateway that allows buyers and sellers from various platforms to connect. The ONDC buyer app and ONDC seller-side app with a gateway between the two that connects them will be the central components of this interface. The gateway will serve as a connecting thread to enable price discovery as well as the matching of buyers and sellers based on factors such as accessibility, location, customer preferences, and availability.
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An organization that wants to participate in ONDC must fulfill one or more of the following roles in addition to being buyers and sellers:
- Bringing customers into the network: Creating websites or applications that users can access to browse and search for products being sold on the ONDC network. Only Paytm has a buyer-side interface at the moment.
- Connecting sellers to the network: This entails developing applications that will enable sellers to gain access to the ONDC network, list their goods for sale, and accept orders. These facilitators are also responsible for promoting ONDC to retailers.
- Technology services: Giving the other three roles software and technical augmentations.
- Gateway: Programmes that, in response to search criteria, broadcast the search request from buyer-side apps to seller-side apps registered with the ONDC registry.
This strategy will give buyers and sellers the freedom to select which apps they want to use to access a single network rather than consolidating power with a small number of players. Additionally, it will minimize the involvement of the government.
The ONDC is not only for the retail industry. Any digital transaction between a buyer and a seller for goods or services, including wholesale, mobility, food delivery, logistics, travel, and urban services, is intended to be made easier by this. Additionally, business-to-business transactions will be covered.
Key Features of ONDC
An open and dependable cross-industry platform for digital commerce is what the ONDC (open Network for Digital Commerce) aims to create. The platform’s key characteristics are as follows:
- On-demand decision-making – Establishes a system where needs, rather than those of a single person or organization, determine what decisions are made. Having everyone’s input heard during the decision-making process is made possible by this.
- Partnership incentives – Enables partners to work together on projects, leverage one another’s strengths, and create superior solutions.
- Payment processing made easier – Checkout procedures are made simpler by removing the need for multiple bank accounts, credit cards, and e-wallets with a single open payment standard.
- Quick feedback – Built-in reporting tools give marketers immediate knowledge of consumer behavior so they can modify their campaigns.
- Wider reach – Users are connected to more suppliers and retailers than ever before thanks to a user-friendly interface that lowers entry barriers for both vendors and customers.
With these cutting-edge features, ONDC is ready to revolutionize the retail sector by expanding market access and lowering customer acquisition costs. Additionally, as new members join this Network, they automatically have access to all of its benefits, so you never have to worry about missing out!
Is ONDC a government-owned business? Stakeholders in ONDC include who?
With numerous names already joining this initiative, the ONDC platform has already generated a lot of buzz. 20 government and private organizations have confirmed investments totaling Rs. 2.55 billion through the platform.
The ONDC initiative includes many well-known figures from the banking industry. These companies have significant stakes in ONDC, including HDFC, Kotak Mahindra, Axis Bank, State Bank of India (SBI), and Punjab National Bank (PNB). This stake, which consists of 10 lakh equity shares with a face value of Rs. 100 each and an individual investment of roughly Rs. 100 million (US$1.3 million), was reportedly acquired by these private sector banks as well as SBI. PNB also disclosed its intentions to purchase a 9.5% stake in ONDC in November 2021.
Existing e-commerce behemoth Flipkart has joined forces with its logistics division eKart Logistics in response to the increased push towards the homegrown ONDC platform. Dunzo is another well-known brand in the logistics industry.
As a payment gateway or payment service provider, PhonePe is a part of ONDC. The platform also has a large number of partners who provide buyer and seller interfaces. The sellers’ side includes companies like eSamudaay, ERP player Gofrugal, a digital business platform for enterprise business Digiit, and digital marketing outfit Growth Falcon, whereas PayTM is from the buyers’ side interface.
What sets ONDC apart from companies like Amazon, Flipkart, etc.?
The ONDC platform differs in a number of ways from large marketplaces like Amazon and Flipkart. Let’s take a quick look at them:
- Assists in reaching a large customer base without the need to make additional online efforts.
- Enables quick access to the top service and technology providers.
- Compared to large marketplaces, only a small percentage of commission is charged to sell online.
- Enables conducting business in an inclusive environment.
- Helps you maintain the portable reputation you develop on the ONDC platform as you switch between seller apps.
- Offers equal treatment without any preference based on paid advertisements.
For all sellers who believed that selling on monopolistic, massive marketplaces were the only way to break into the Indian e-commerce market, ONDC has unquestionably changed the rules of the game.
How can I sell on the ONDC platform?
With a powerful ONDC seller app like Mystore, you can quickly begin selling on the platform. The Mystore Seller app is made to support companies in all sectors. Sellers must adhere to the following 5 easy steps:
- Make an account.
- Describe your products
- Get commands
- Select an affordable shipping partner.
- Get your money.
Any seller can sell on ONDC and expand his business to new heights in just these 5 easy steps.
The ONDC move is an effort to break up Amazon and Flipkart’s duopoly and revolutionize the e-commerce industry. Due to their significant capital and R&D investments in this industry, along with those of other retail e-commerce giants like Reliance and Tata Group, it is understandable that they did not support this initiative. However, according to the government, the e-commerce industry must be open, transparent, and fully compliant with all of the rules established by the Competition Commission of India. By the end of 2027, the industry is anticipated to reach a value of $200 billion USD, making India one of the world’s largest markets. Therefore, this initiative is designed to support the expanding industry while upholding far market norms.
- What does the ONDC’s open-source network look like?
An unprejudiced platform or portal, similar to UPI, will serve as the ONDC open-source network. To ensure maximum participation and integration, it will make sure that the process or the code for its development will be freely available.
- In India, when will ONDC begin?
On April 29, 2022, the ONDC pilot program was introduced in India, with five key cities serving as showcases for the nation’s various regions. These cities include Bhopal, Bengaluru, Shillong, and Coimbatore in addition to the Delhi National Capital Region.
- What would the buyer apps’ brief function be on the ONDC network?
Customer registration on the ONDC network, product searches, price discovery, order confirmation, cart management, payments, and special offers will all be handled by the buyer apps.
- Who will be in charge of handling complaints on the ONDC network?
Work is still being done on the platforms for resolving complaints and the associated rules and regulations. However, the first step of the process places the burden of complaint redressal for returns and refunds on the buyer apps.
- In what ways will ONDC support sellers?
Along with the advantages of lower operational costs, improved product and service visibility, access to cost-effective logistics options, etc., ONDC will help the sellers access wider markets than their current ones.