Open Network for Digital Commerce (ONDC): What is it and how will it’s impact ecommerce in India?

Indian E – commerce Industry

Digitization of economy with the help of UPI, internet speed and digital literacy has shaped India’s e – commerce industry.

Study shows that India’s e-commerce industry is expected to reach 200 billion dollars by 2027 from 22 billion dollars in 2018.

ONDC

To make the distribution of e – commerce cycle even in the economy a private sector led, non – profit company ONDC was formalized on 31st December 2021.

Basically ONDC is stands for Open Network for Digital Commerce. It is a platform centric or open network means only one single platform for seller and buyer.

ONDC logo

Open Network for Digital Commerce or ONDC will provide a level playing field to all big and small players in the e – commerce sector, because it’s not a regulatory body for managing it’s an open source technology.

With ONDC, India will be able to show a new path to the entire world in the e – commerce sector.

Like UPI, ONDC will be the world’s 1st platform to plug in small merchants and retailers and provide them reach on the scale of e – commerce giants.

To achieve this goal India launches Pilot Phase of Open Network for Digital Commerce

The pilot phase of the centre’s ambitious ONDC kicked off on Friday (April 29), under the trial run, the platform went in 5 cities – Delhi, Bengaluru, Bhopal, Shillong and Coimbatore.

The department for Promotion of Industry and Internal Trade (DPIIT) issued orders appointing an advisory committee for Open Network for Digital Commerce (ONDC) project that is aimed to control or limit the “Digital monopolies”.

This is a step in the direction of making e – commerce platform open source, thus creating a medium which can be utilized by all retailers.

How to work:-

If a small retailer wants to showcase his products to multiple platforms for which he has to currently work with individual platforms or use various methods to showcase products.

With ONDC, it is possible you can list your products on various platforms at the same time.

If someone is searching let’s say a white shirt, the network can show you multiple sellers with the same products because everybody is using an easily understandable protocol of ONDC.

So, with the help of ONDC platform retailers and Buyers would get benefit from each other.

ONDC provide the consumer real freedom of choice by providing access to any producer and seller of other applications and platforms.

ONDC will allow transactions between consumer and seller without the need to get attached to any specific e – commerce platform.

ONDC is expected to be assigned by August 2022, after which all the e – commerce companies will operate on the same process.

Understanding, this approach of the government, more than 20 government and private organizations have confirmed investment in ONDC model worth Rs 2.55 billion.

Benefits

  • With the help of ONDC small retailers and villages shops could publish their products and achieve their goals at larger scale.
  • Seller can create their own terms and conditions.
  • It is easy to understand and free platform for everyone.
  • In the upcoming time ONDC would introduced Unified Ratings System, Customer Ratings System and Developer Partner Ratings.

Challenges

  • Maintaining Product Quality
  • Bringing all the small shops on one platform
  • Protocol related challenge and many more

AIM

  • The aim of ONDC is to curb the monopoly of Amazon, Flipkart etc which are making small and local merchants vulnerable.
  • Only Amazon and Flipkart have captured 80% of India’s retail market with aggressive discount and promotion of preferred sellers.
  • To cover 100 cities

If implemented

If the ONDC gets implemented and mandated, it would mean that all e – commerce companies will have to operate using the same process. This could give a huge booster to smaller retailers and new entrants.

An executive of e – commerce company has said that if mandated, this could be problematic for larger e – commerce companies, which has proprietary processes and technology developed for these segments of operations.

This will be more beneficial for MSMEs and small traders who wants to list their products and scale their operations through the digital commerce space.

This is a first kind of initiative in the world to create symmetry for digital commerce at the scale of a country like India.

ONDC will help in Digitizing entire value chain, promoting inclusion of suppliers, understanding operations, deriving efficiencies in logistics and enhancing value for consumers.

Members of this advisory council

Infosys non executive chairman Nandan Nilekani and National Health Authority CEO and former TRAI chairman RS Sharma are on this council.

In addition to these two, Quality Council of India(QCI) chairman Adil Zainulbhai, Avaana Capital Founder Anjali Bansal, Digital India Foundation Co – Founder Arvind Gupta, National Payments Corporation India CEO Dilip Asbe, NSDL e – governance MD & CEO Suresh Sethi, CAIT Secretary General Praveen Khandelwal and Retailers Association of India CEO Rajagopalan are also members on the council.

The move is the latest in a series of changes announced or being planned to be implemented by the Government for the e – commerce sector.

commerce and industry minister Piyush Goyal said that the government could issues a clarification on its Forign Direct Investment (FDI) policy for e – commerce.

About Author

WhatsApp Image 2022 06 01 at 3.41.10 PM

Hello all, Myself Vipul Purohit and I’m a B.Tech graduate student.
I love reading Books, magazines, sketching listening music, exploring new places and playing badminton and table tennis 🏓
This blog is only for informational purpose.

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