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Will ONDC boost your Online Retail Market in India?



Introduction


The ONDC (Open Network for Digital Commerce) was incorporated on December 31, 2021 as a private sector non-profit company to democratize digital commerce (e-commerce) in India and provide alternatives to e-commerce sites patented.

The Central government has set up a nine- member advisory council, that includes Nandan Nilekani of Infosys and the CEO of the National Health Authority, RS Sharma, to consider measures needed to design and accelerate the adoption of ONDC. It is an initiative of the Department for Promotion of Industry and Internal Trade (DPIIT) under the Ministry of Commerce and Industry.


What is ONDC?


  • ONDC is an open technology network based on open protocol and will enable local commerce across segments, such as mobility, grocery, food order and delivery, hotel booking and travel, among others, to be discovered and engaged by any network-enabled application.


  • The platform aims to create new opportunities, curb digital monopolies and by supporting micro, small and medium enterprises and small traders and help them get on online platforms.


How will ONDC work?

  • To provide equal opportunities to all market players, including consumers, ONDC is envisioned as a neutral platform that will establish protocols for open-source cataloguing, vendor matching and price discovery in the lines of Unified payments (UPI).


  • This implies that buyers and sellers can transact regardless of whether they are connected to any specific e-commerce portal.


  • For example, even if seller X is registered on Platform A, while the consumer is registered on Platform B, the consumer can directly buy products from Seller X without registering on Platform A, once ONDC is implemented.


Key Stakeholders to ONDC

  • Axis Bank, HDFC, Kotak Mahindra and SBI have acquired 7.84% stake each, individually investing Rs. 10 crore each to purchase 10,00,000 par value shares of Rs. 100 each. PNB has also acquired 5.97% stake.


  • Bombay Stock Exchange (BSE) through its 100 percent subsidiary BSE Investments Limited (BSEIL) has acquired 5.88% in ONDC.


Benefits from ONDC and its Implementation

  • The initiative is promoted as an effort to end the dominance of online platforms like Flipkart and Amazon, which have been accused by the government of exercising a monopoly, against the law.


  • ONDC will provide access to more buyers; better discoverability of products and cost; autonomy on terms because of multiple choices for being digitally visible; lower cost of doing business; and more options for value chain services like logistics and fulfilment.


  • On 29th Friday 2022, the pilot phase of ONDC was launched in 5 cities namely Delhi, NCR, Bhopal, Shillong and Coimbatore and full implementation is expected by August 2022.


  • ONDC is expected to digitize the entire value chain, standardize operations, foster inclusion of suppliers, usher in efficiency in logistics, and augment value for consumers.


  • Businesses are expected to benefit from transparent rules, lightweight investment and lower cost of business acquisition.


  • In conclusion, there are high expectations from ONDC to provide a boost to smaller online retailers as well as new entrants and compete with the E-commerce giants.

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