The article focuses on the Open Network for Digital Commerce (ONDC), an initiative launched by the Indian government to democratize the fast-growing digital e-commerce sector in the country, currently dominated by two U.S-based firms, Amazon and Walmart. The ONDC pilot phase recently kicked off with an aim to foster competition and inclusivity in the online marketplace.
A closer look at ONDC
ONDC is a not-for-profit, government-backed platform that strives to democratize e-commerce by transitioning from a platform-centric method to an open network for purchasing and selling goods and services. It permits one registered buyer on a participating ecommerce site (Amazon, for example) to procure items from a seller on any other participating e-commerce platform (Flipkart, for instance).
This is a significant shift from the present system where buyers and sellers must be on the same application for a transaction to occur on the same platform – a buyer would typically need to be on Amazon to procure goods from an Amazon seller. Additionally, the open network conception encompasses more than just retail, it also includes a host of digital commerce domains such as wholesale, mobility, food service, logistics, travel, urban services etc.
Key characteristics of ONDC
ONDC is neither an aggregator application nor a hosting platform. Instead, it offers a network that allows local digital commerce stores across sectors to be discovered and engaged by all network-enabled applications. The ONDC advocates open networks based on open-sourced methodology, utilizing open specifications and protocols independent of any specific platform. It’s expected that ONDC implementation will resemble that of the Unified Payments Interface (UPI), standardizing various operational processes established by e-commerce platforms.
The role of Open Source and Quality Council of India
The project to integrate e-commerce platforms through an open-source technology network has been assigned to the Quality Council of India. Typically, open source refers to a software program or platform whose source code is readily available and can be altered or enhanced by anyone. Open source access permits users of an application to mend broken links, advance the design, or improve the original code.
The benefits of ONDC
ONDC standardizes operations like cataloguing, inventory management, order management and order fulfillment. This simplification makes it easier for small businesses to be discoverable on the network and conduct business effectively.
Potential issues with ONDC
Experts have foreseen potential challenges such as enticing a sufficient number of e-commerce platforms to register, as well as customer service and payment integration issues.
The significance of ONDC
ONDC enables buyers and sellers to transact regardless of their affiliation with a specific e-commerce portal, providing a significant boost to smaller online retailers and new entrants. Moreover, if mandated, this could disrupt larger e-commerce companies with pre-established processes and technologies for these segments. ONDC aims to digitize the entire value chain, standardize operations, foster supplier inclusion, increase logistical efficiency and enhance consumer value.
In the upcoming five years, ONDC expects to incorporate 90 crore users and 12 lakh sellers into its network, enabling an additional 730 crore purchases.
Quality Council of India (QCI)
The QCI was co-founded by the Government of India and the Indian Industry. It was established to create and operate a national accreditation structure and promote quality through a National Quality Campaign. The Council plays a crucial role at the national level in propagating, adopting, and adhering to quality standards in all key spheres of activities that significantly improve the life-quality and wellbeing of Indian citizens. The Chairman of QCI is appointed by the Prime Minister on the industry’s recommendation to the government.