Remember ONDC, the e-commerce disruptor that made headlines in late 2022? Well, the project may have fallen off the news radar, but it's still very much alive and kicking. In case you're not familiar, ONDC is a non-profit initiative that aims to revolutionize the Indian e-commerce industry by creating a UPI-like infrastructure.
Currently, the e-commerce market in India is dominated by a few giants, and the lack of competition is a growing concern. ONDC hopes to address this by making it easier for new players to enter the market, and by breaking down the network effects enjoyed by the big players. Additionally, it aims to bring the benefits of digital commerce to a country that is still largely offline.
India is a country of over 1.3 billion people and is projected to become the world's second-largest e-commerce market by 2034. However, the growth of e-commerce in India has been hindered by challenges such as poor infrastructure, lack of standardization, and high logistics costs. In an effort to overcome these challenges and unleash the potential of e-commerce in India, the Indian government launched the Open Network for Digital Commerce (ONDC) initiative.
So how will ONDC work?
It will consist of multiple buyer and seller apps, with buyers able to browse and purchase products from a wide range of sellers. The unique thing about ONDC is that products from all seller apps will be visible on any buyer app, making it easier for consumers to discover new products and for sellers to reach a wider audience.
In this article, we will explore the potential of ONDC and how it can transform the e-commerce landscape in India.
1) Standardization of Processes: The Key to Success
One of the main challenges facing the ece-commerce industry in India is the lack of standardization in processes. Each e-commerce player has its own set of processes, making it difficult for small businesses to enter the market. With the ONDC initiative, the Indian government aims to create a common digital infrastructure for all e-commerce players, including small and medium-sized businesses. This will not only help in reducing costs but also make it easier for small businesses to enter the market and compete with larger players.
2) Enabling Seamless Integration: The Power of APIs
The ONDC is built on a set of Application Programming Interfaces (APIs) that enable e-commerce players to integrate and share data seamlessly. This means that e-commerce players can now access a vast pool of information on customers, products, and pricing, allowing them to make informed decisions and provide better services to their customers. APIs can also facilitate the development of new products and services, enabling innovation in the e-commerce industry.
3) Building Trust: Ensuring Transparency and Security
One of the biggest challenges facing the e-commerce industry is the lack of trust among consumers. With the ONDC initiative, the Indian government aims to ensure transparency and security in e-commerce transactions. The initiative will create a centralized registry of all e-commerce players, making it easier for consumers to verify the authenticity of the seller. The ONDC will also enable secure and transparent payments, ensuring that consumers' financial information is safe.
4) Enhancing Customer Experience: Personalization is Key
Personalization is becoming increasingly important in the ece-commercendustry. With the ONDC initiative, e-commerce players can access a vast pool of data on customer preferences and behavior. This data can be used to create personalized shopping experiences, enabling e-commerce players to build a loyal customer base.
5) Unlocking the Potential of Rural India: Reaching the Untapped Market
Rural India represents a huge untapped market for ece-commercelayers. However, the lack of infrastructure and internet connectivity in rural areas has made it difficult for e-commerce players to reach this market. With the ONDC initiative, the Indian government aims to bridge this gap by providing digital infrastructure and internet connectivity to rural areas. This will enable e-commerce players to reach a wider audience and unlock the potential of rural India.
Current Status of ONDC
While the project was announced in 2020, it picked up pace in 2022. ONDC aims to break the dominance of a handful of e-commerce players by reducing barriers to entry and breaking down network effects enjoyed by the incumbents. It also aims to accelerate the digitization of commerce in India, which is still largely offline.
According to the ONDC website, the network is active in 85 cities, with 83 cities in the alpha phase and 2 cities (Bangalore and Meerut) in the beta phase. This suggests that, at least in the number of cities, there hasn’t been much progress made in the last few months. However, compared to August 2022, ONDC has expanded to over 60 new cities.
While there is no official statistic for the number of sellers onboarded, ONDC has onboarded over 5000 sellers pan-India according to the sources. However, ONDC was lagging behind its target of onboarded sellers from two months ago.
According to the website, there are 26 network participants who have gone live. Network participants include buyer apps, seller apps, and logistics providers. There appears to not have been much progress on this front either as ONDC had expected over 30 participants to go live back in September 2022.
In addition to the above, there are over 100 entities that have initiated integration with ONDC and at least 15 are in an advanced stage of integration, according to the ONDC website.
The ONDC initiative has the potential to revolutionize the e-commerce industry in India. By creating a common digital infrastructure and enabling seamless integration, the initiative can reduce costs and make it easier for small businesses to enter the market. The ONDC can also enhance customer experience by providing personalized shopping experiences and ensuring transparency and security in e-commerce transactions. With the ONDC initiative, the Indian government aims to unleash the potential of e-commerce in India and make it a key driver of economic growth.