We Are Hoping To Create Democratic Place For Providing Flexible Opportunities To Sellers: T. Koshy

T. Koshy, CEO, Open Network for Digital Commerce (ONDC), in interaction with BW Businessworld, talks about his organisation and its workings, the growth of e-commerce and the pandemic, among other things. Excerpts:

Open Network for Digital Commerce is an initiative that came in the last two years, and it hopes to build on the immense growth that India has seen in e-commerce. There are a lot of technical parts to it, but can you explain in simple terms what ONDC really is and how it will benefit customers and businesses? 

The Internet started as a very democratic place, but over a period of time as it grew it started translating into walled gardens. Walled gardens have their benefits – giving a complete integrated service, come with fantastic efficiency coming out of scale. However, finally it is a walled garden, and the network impact is inside the garden. Therefore, if one has the resources to scale up fast, then the winner takes it all. 

With ONDC, we want to restore the original thought of the Internet for e-commerce, to make it democratic and interoperable. What it will mean for the consumer is that they will have more sellers across platforms to choose from. In a similar fashion, the seller will have many avenues to make his product visible to a larger cross-section of customers. Therefore, the whole place is becoming more open and inclusive, providing the right kind of service to the right type of parties.  

During the pandemic, we saw ecommerce grow rapidly, especially in Tier 2, Tier 3 and Tier 4 cities. What is your perspective on how sustainable is that growth and how does ONDC really address not just the Tier 1 market but Tier 2, Tier 3 and Tier 4 markets as well? 

We saw the pandemic giving a push to ecommerce due to accessibility challenges in retail. But in spite of this growth, the overall penetration of ecommerce is still in single digit when it comes to buyers or sellers. 

What we are hoping with ONDC is to create a democratic place for providing more flexible opportunities to sellers, SMEs, and customers. Today for example, a small seller has to be a part of one or two of the large marketplaces because those are the best options. However, these organisations have their own certain process to meet the satisfaction of their customers, and ‘terms’ under which everybody should come. 

However, in a true market unit, every kind of buyer and seller can offer their products on their terms of trade, and the power is more or less with the buyer and seller and not just with the intermediary. Therefore, when you create an option which empowers sellers and buyers with flexibility and interoperability, then growth is expected to come in a big way. 

Somewhere there was a concern that e-commerce should not become platform-centric, and which is what ONDC is aiming to address. For large e-commerce platforms, is ONDC an opportunity or a disrupter?

For an existing large player, the focus is on scaling up fast to achieve a considerable share of the market. Therefore, anything that is disruptive is inconvenient. Because although the disruption will allow the market to grow, but in a way it reduces my opportunity. 

With ONDC we expect the e-commerce market to explode 10x in a short period of time. Considering the potential that ONDC will bring, the big players will eventually have to become a part of it – even without a legal mandate – because it will be the most attractive option left. They will have to play by the new rules of interoperable marketplaces. 

Many have compared ONDC with what UPI did to for the digital payments. How true is that assertion?

What UPI did was to show how efficiently one can transfer money from one place to another. Similarly, what ONDC is trying to do is to show how streamlined you can make the movement of goods and services between buyers, sellers, logistics providers, etc. However, when you are trying to do that, there are going to be a lot of changes that are needed in various processes to adapt to the new scenario. 

Any such adoption comes with sincere enablement. Years back when we were trying to introduce electricity in this country, factories had to completely rewire their layout; similarly, many of these small medium enterprises will have to rewire their business processes to leverage ONDC. 

What is your strategy of outreach and communication for ONDC with participants and those sellers and customers which are not a part of digital commerce at present?

What we need to do is to inform and bring together as many interested parties as possible to integrate into the ONDC network. Since ONDC is allowing enterprises to find more business opportunities in various parts of online commerce – be it for warehousing, logistics, developing a digital platform for retail, etc. – we expect a lot of people to be bubbling with energy while selling their ideas. 

Our focus at present is to bring together the potential MSMEs and business houses so we can act as a catalyst and development forum. We are also undertaking an active outreach with state governments, making them aware of the potential of ONDC for digitising MSMEs from their region.