Do you like shopping online, or do you like visiting your favorite local shop more?
Over the past few years, e-commerce has spread its wings across the globe. In India, the e-commerce sector is expected to grow from $46.2 billion in 2020 to $188 billion in 2025. It is expected to grow by 21.5% in 2022 alone.
Smaller retailers today face the challenge of competing with big e-commerce giants such as Amazon and Flipkart, which own almost 60% of the Indian market. Tata and Reliance introduced Tata Neu and Jio Mart to join the race. But all the big players together dominate the smaller players in the market. To compete with other businesses in the market and reach your audience effectively, you need to build a strong e-commerce platform.
To address this issue, the Indian government is coming up with an ONDC (Open Network for Digital Commerce).
What is the Open Network for Digital Commerce (ONDC)?
The Open Network for Digital Commerce (ONDC) is a project whose goal is to encourage the use of open networks throughout the entire process of trading goods and services. This makes it possible for network-enabled applications to find and use services in different areas, such as mobility, grocery, food and grocery delivery, hotel booking, and travel.
ONDC will provide equal opportunities to all big and small players in the e-commerce sector. By having access to all manufacturers and sellers of other apps and platforms, consumers have a lot of freedom of choice. The network will make it possible for buyers and sellers to do business without being tied to a single e-commerce platform. Experts predict that ONDC will bring a revolution in the digital space. This will also bring local, small vendors into competition with big e-commerce giants. ONDC will transform the entire retail business in India.
The ONDC was established with the following objectives:
- To create an open, inclusive, and competitive marketplace by promoting interoperability
- Building and scaling with minimal public digital infrastructure
- Scalable for population-scale adoption
- Ease of access to small businesses
ONDC is based on the following three core principles:
- Open Network
1. Scaling and innovating on an open protocol called Beckn protocol
2. Using Open-source APIs and a decentralized model for open collaboration and interoperability
- Public Digital Infrastructure
1. Low-cost digital infrastructure which is scalable for billions
- Open Ecosystem
1. Voluntary adoption of community-led development and innovation.
How will the Open Network for Digital Commerce (ONDC) work?
Consider that you want to buy a laptop. In this scenario, you will go to different e-commerce platforms to check laptops, compare them, and then buy them. In ONDC, buyers and sellers can see each other, no matter what platform they’re using, to do business. So, when you start searching for a laptop on one of the ONDC platforms, you will also see details about the same product from other ONDC integrated platforms, making your shopping experience richer, easier, and quicker. With ONDC, India’s retail lifeline, “The Kirana Shops” will get visibility on e-commerce platforms.
ONDC is based on the idea of an “Open Network,” in which platforms and applications can work with each other and buyers and sellers can do business no matter what platform or application they use.
What is the implementation strategy of ONDC?
The ONDC Registry and Gateway have been made so that the ONDC initiatives can be put into action. For the network participants to join the network faster, technology tools like adapter interfaces and other building blocks are being made. In addition, ONDC will focus on ecosystem expansion to make this a market-led community initiative.
At the same time, the Open Network for Digital Commerce entity will learn how to implement ONDC and take steps to make it a project for the whole population.
ONDC aspires to significantly strengthen its roles in development, network discipline, and service delivery. ONDC will work with the network community and the start-up ecosystem to come up with new solutions. It will look at network rules and try to make them better. It will also set up strong compliance with automated network policies, making sure that basic services related to registration, authentication, gateways, and grievance redress are expanded and improved to keep up with the exponential growth.
What is the goal of ONDC?
ONDC aims to go beyond e-commerce for retail and connect businesses in areas like mobility, food delivery, hotel booking, travel, and many more. In a country of 1.35 billion people, ONDC plans to increase e-commerce penetration to 25% of all consumer purchases in the next two years, which is about 8% currently. Within the next few years, it expects to sign up 900 million buyers and 1.2 million sellers on the shared network, with a gross merchandise value of $48.5 billion.
In the first phase of trial, ONDC has been rolled out in five cities – Delhi NCR, Bengaluru, Bhopal, Shillong, and Coimbatore. While operations are presently focused on retail and restaurants, and on facilitating real-time transactions, the open network will extend to other categories like travel and mobility. Based on the trial run and after the network is stable, ONDC will be expanded to 100 cities and towns in India by October–November 2022. The objective is to accommodate 30 million sellers and 10 million merchants online.
Some large players in logistics and retail chains have already joined the ONDC platform. The biggest challenge is reaching and integrating with the nearly 80 million SMBs that don’t exist on a digital platform and lack the technical know-how. ONDC will be a prime example for other developed countries to follow India’s model. Let’s wait for this revolution to unfold in the near future.