Empowering Local Shops & Simplifying Transactions: Thampy Koshy, ONDC

In this exclusive interview with Thampy Koshy, the MD and CEO of Open Network for Digital Commerce (ONDC), we dive into his role in revolutionising India's online shopping scene. We'll uncover how ONDC is changing the game for traditional stores and simplifying the way people shop online. Created by the Indian Government's Department for Promotion of Industry and Internal Trade, ONDC is a collective of merchants and brands forming an interconnected digital commerce platform. This platform fosters open e-commerce, where members, through standardised payment processing, effortlessly link their online stores within the network. Excerpts from the interview:
 
What are the future prospects and potential sectors ONDC aims to explore beyond B2C?

ONDC isn't limited to just B2C transactions; we recently launched B2B transactions as well, with approximately 20,000 transactions in the last month. Looking ahead, there's potential to expand ONDC into various sectors beyond apparel, mobility and groceries, including areas like hotel bookings or any catalog-based services that cater to a broad customer base. Essentially, if a product or service can be cataloged and is relevant to a wide range of customers, it could become part of the ONDC ecosystem.
 
How do you see traditional retail businesses navigating the shift toward digital commerce?

Kirana shops will emerge, offering deals without the need for delivery services like bike riders. This reduces reliance on platforms like Paytm and it streamlines transactions. These shops may even create their QR codes for convenience. No permissions are required and the model shifts buyers towards local shops. For instance, consider groceries. Imagine scanning a QR code, connecting you directly to a nearby shop without any intermediary fees or permissions. Even smaller brands like Aazol are adopting this approach.

Today's e-commerce model relies on permissions and fees from large platforms like Amazon. However, the ONDC could revolutionise this model, allowing for more direct and cost-effective transactions. As these network-based transactions increase, the local shops will play a pivotal role in the evolving landscape.
 
How do you envision the growing importance of digital footprints and transaction data in changing the way individuals and businesses access credit in the future?

As transactions increasingly go digital, your digital trail becomes more extensive, serving as a powerful tool for obtaining credit based on transaction flow rather than assets. In the past, credit assessment relied heavily on assets, but today, people are examining your bank statements, primarily when money enters your account. However, the digital shift allows for a more comprehensive analysis of demand and digital footprints, potentially increasing one's ability to secure credit from independent agencies.
 
How do you perceive the evolving relationship between wholesalers and retailers in the digital commerce environment?

In this relationship, traditionally, a wholesaler provides products while retailers require credit to make purchases. However, retailers often face challenges in obtaining credit because they lack tangible assets for collateral. Currently, banks typically extend credit based on the presence of fixed assets, which retailers often lack.

In the future, if retailers can find a way to collateralise their transactions effectively, it would decouple credit from the product, offering greater flexibility. Retailers would have more options and even new wholesalers could enter the market without needing retailers to establish creditworthiness first. This transformation won't happen overnight but is indicative of a changing landscape.