The Open Network for Digital Commerce (ONDC) is set to bring revolutionary changes to the e-commerce landscape in India. The ONDC is expected to impose a small fee on platforms contributing to the maintenance and development of the network. This initiative is aimed at curbing compulsory commissions charged from sellers and logistics partners by private firms like Amazon and Flipkart, which currently dominate the e-commerce sector in the country.
Defining ONDC
The Ministry of Commerce’s Department of Promotion of Industry and Internal Trade (DPIIT) has set up the ONDC as an open e-commerce protocol. The idea behind ONDC is to enable a buyer registered on one e-commerce site to purchase goods from a seller on a different participating site. Currently, buyers and sellers must be registered on the same app to complete a transaction.
The ONDC model’s primary objectives include the democratization and decentralization of eCommerce, inclusivity and access for sellers, especially Small and Medium-sized Enterprises (SMEs), and increased choices and independence for consumers.
Benefits Presented by ONDC
The ONDC aims to level the playing field for e-commerce operators and widen access for Micro, Small and Medium Enterprises (MSMEs) and small traders in India’s digital market. It works towards breaking the monopoly of giant platforms to foster innovation and transformation in sectors such as retail, food, and mobility.
Furthermore, it offers increased choices to consumers by enabling discovery of any seller, product, or service on a common platform. The ONDC endeavors to foster open networks developed using open-sourced methodology, open specifications, and network protocols, independent of any specific platform.
Potential Challenges with ONDC Implementation
Despite its many advantages, implementing the ONDC poses several challenges. It requires a complex ecosystem, unlike the Unified Payments Interface (UPI). The process of switching customers from existing platforms that already provide satisfactory service may prove difficult.
Additionally, there’s a lack of clarity on accountability, particularly when addressing customer complaints and returns. Monetizing the network is another concern, as is attaining critical mass due to the disconnect between buyer and seller sides in the network.
Recommendations for Future Steps
To ensure ONDC’s success and competitiveness with dominant e-commerce platforms, the government must work towards creating a more efficient digital space. A comprehensive digital education policy accommodating various languages and a user-friendly interface will greatly benefit both consumers and sellers.
Moreover, a well-funded adoption campaign needs to roll out to convince tens of millions of ‘kirana’ stores to join the platform. It is also crucial that both the demand and supply sides have access to a secure single window for resolving issues such as information asymmetry, opaque pricing, quality concerns, and buyer-seller disputes.
