ONDC: The Digital Equaliser
There is an old saying, ‘customer is king’. The government of India pays homage to this age-old custom with its new platform, that is, the Open Network Digital network (ONDC). This platform has been in talks with retailers and banks to join the platform. It has recently gone live in Bengaluru as a pilot project, following which it is all set to open in Delhi next month. Its other pilot cities include Coimbatore, Bhopal, and Shillong. Given the festive atmosphere, now is a good time to launch.
What is ONDC?
ONDC is an initiative launched by the union government, more specifically the Department for Promotion of Industry and Industrial Trade (DPIIT) under Ministry Of Commerce and Industry, in April 2022. It is an open network that has the potential to revolutionise e-commerce and online shopping for everyone. One can say it is the government of India's most ambitious project after UPI (Unified Payment Interface). In fact, ONDC can do to online shopping what UPI did to digital payments, that is, work as a single point meta store for the consumer's shopping needs. This is how UPI works as a single platform for payments. This will include food, fashion, payment, and travel, among others. Any buyer can connect with any seller who signs up on the platform.
It is not just the ease of purchase, but the idea is to provide the best deal at the best price. This is simply because more choices mean more power for the consumer, who can now make more informed choices. The prices can be compared on a single page for all applications, for example, you can compare Flipkart to Amazon, Uber to Ola, or Zomato to Swiggy. It will bring forth healthy competition among these companies to offer the best products and best prices, which in turn will help curb hidden charges and inflated delivery rates. ONDC aims to democratise the digital Indian commerce space. The mastermind behind this initiative is Nandan Nilekani, the Infosys co-founder and the backbone of Aadhar.
Why is it a good idea?
While there are thousands of e-commerce websites in India, two of them, Amazon and Flipkart control 60 percent of it. This is a market expected to grow to 350 billion USD at the end of the decade. This is a problem because they and other leading e-commerce websites keep out small players, and subsequently a large portion of the economy. These include your local micro small and medium enterprises (MSMEs), and kirana stores, which essentially are the backbone of India's retail system.
In fact, last year India's Restaurant Owner's body filed a complaint against food aggregator Zomato and Swiggy along similar lines. They were accused of monopolising the market and putting their price terms on partner restaurants. This is especially true for inventory-driven models (those models in which they purchase in bulk and reprice the product to make a profit margin), as against market-driven (where e-commerce acts as a connecting link between buyer and seller). Since FDI is allowed only in market-driven models, this is what international e-commerce platform use to make profits.
Additionally, some of them limit their search results to brands that tie up with them. This is usually in favour of those brands that can provide a good margin. The e-commerce players also control the price of logistics, that is, delivery. This is where ONDC comes in. One can discover a local store nearby which will be faster and cheaper. It will give smaller sellers and retailers a level playing field. Further, in case a seller app cannot deliver to your address, or if they are charging too much, you can choose another delivery partner from the ONDC pool. However, there is a catch, how many companies sign up for ONDC is yet to be finalised. At the same time, the customer will have to be cautious about the quality of the product they order given that who's who will be on the platform. The customer will assume center stage from now on.
