‘With ONDC Everybody Has A Digital Channel To Sell’

Giant killer or e-commerce enabler? That’s the question which comes to mind when one thinks of the growing murmurs around the Open Network for Digital Commerce (ONDC). While the network was always meant to support small retailers that are losing out on the battle of e-deliveries, it was a huge surprise when a BigTech company like Microsoft announced commencing onboarding efforts with ONDC. The tech behemoth intends to introduce social e-commerce, i.e., group buying experience, in the Indian market via the Government of India's initiative to democratise digital commerce. This could be potentially huge considering that the Indian e-commerce industry is anticipated to reach USD 400 billion by 2030, increasing at a 19 per cent CAGR.

Does ONDC intend to be an enabler more than anything else? Or does it expect to impact the bigger picture of supply chain in India? Can it become the next UPI? BW Businessworld’s Rohit Chintapali caught up with T. Koshy (CEO at ONDC) to know more. Read on for the excerpts.

ONDC is being hyped as the UPI for e-commerce in India. While it's being touted as the messiah for the mom-and-pop shops and small retailers, there are also massive companies like Microsoft coming onboard the ONDC ship. What does ONDC hope to achieve? Is this primarily to help out the MSMEs and small businesses, or is it open for everybody?

ONDC is an open network, which means it is inclusive and open for everybody. We are not trying to create an exclusive platform for MSMEs but a network of diverse platforms, as that would fully tap into the universe of users, which is what ultimately determines the network's success. We are creating an e-commerce space where sellers will have an equal opportunity to market their products or services, and buyers will be able to discover all the products in the network. In an open market, everybody can coexist with equal opportunity and not controlled by few large entities

What kind of effect do you see ONDC having on the supply chain of the country?

Today, the penetration of digital commerce is about 1 per cent on the seller-side and 5-6 per cent on the buyer-side. With ONDC, anybody who has products or services to market will have a digital channel to sell. This will lead to significant increase in digital transactions that are digitally verifiable with digitally signed contracts, giving these sellers a fantastic opportunity to access credit on this flow, instead of relying on base assets. 

For example, with ONDC in the picture, digital transactions, the account aggregator, Open Credit Enablement Network (OCEN) and the banking system will be able to enable unbundling of credit and product flow. This will mean that the retailer and wholesaler have more options. Moreover, since credit is being handled by entities such as fintech’s, bankers or NBFCs, who specialise in this area, they will be able to enhance efficiency and enable better costs. 

These kinds of structural changes can significantly impact the way the whole supply chain works with broader participation from the sellers and buyers. 

What’s next for ONDC? When can we see it in full force?

While we will soon have a beta launch in Delhi as a next step to the Bangalore beta, with logistics providers enabling intercity movement of goods, we will be able to have buyers across the country faster. For instance, if a company like Shiprocket can facilitate delivery across India then consumers from Chennai will be able to buy from for example Lucknow. We are also expecting Snapdeal to go live soon, which will offer products to a wider consumer base. It’s not just adding cities, transaction growth will be exponential through the network. We are also working with companies like Unilever, ITC etc. to broaden the consumer goods offerings, SpiceMoney to broaden rural access and CSC to extend that reach to the village level. We are working with a multitude of enterprises to bring different kinds of merchants on the network.

Data privacy is important in e-commerce. How do you plan to address this issue? 

When any network participant integrates with ONDC, they will have to abide by compliance requirements around how they are handling the data of their clients as per the rules prevailing and evolving in the country, which will then have periodic third-party audits. 

As a country we have rules which are evolving for how an entity can use and / or share information they have on customers. Furthermore, ONDC is ensuring that buyer data is available only to relevant entities to service the order who in turn are participants who have contractual obligations with ONDC. With ONDC, data is completely disaggregated and available only with the entities who are servicing the customers.

What do you expect to achieve in the next year?

In the upcoming year, we will be onboarding more merchants and merchant aggregators across a variety of product categories in a convenient and inexpensive manner for them. In fact, every week about 10 to 15 entities commence the ONDC onboarding process - our current participant base is ~500 with several prospective participants in ongoing discussions. These merchant aggregators are expected to onboard thousands of merchants in the near future.

Eventually anybody with a product or service to sell will have ONDC as a channel to sell it through at their terms and not as determined by a few large platforms. Our approach is to work with early adopters and evangelize the idea for a build a threshold level of activities in the network to encourage active participation. In parallel we are also working with MSMEs, Ministries of State and Centre, NABARD, SIDBI etc., to bring about awareness on ONDC across the broader section of merchants and MSMEs, and also provide handholding support

In the next few years, we expect exponential growth in digital commerce and its penetration from both the seller and the buyer side.

Also Read: 'Difficult To Predict Widespread Rollout Of 5G In Rural Areas'