We
are covering a topic that is very relevant today -- Open Network for Digital
Commerce (ONDC). ONDC is an initiative aimed at promoting open networks for all
aspects of the exchange of goods and services over digital or electronic
networks. It is to be based on open-sourced methodology, using open
specifications and open network protocols independent of any specific platform.
It is being developed as a counter to the current duopoly in the Indian
e-commerce market which is largely dictated by Amazon and Walmart-owned
Flipkart.
Let's
dive a bit deeper and understand more about this initiative.
How
does ONDC work?
The
ONDC platform lies in the middle of the interfaces hosting the buyers and the
sellers. So far, the buyer-side interface is being hosted by Paytm, whereas the
seller-side interface is being hosted by other players like GoFrugal, etc.
When
a buyer searches for an item on the Paytm app, for where ONDC has gone live,
the app will connect to the ONDC platform, which will connect it to seller-side
interfaces that will list all the sellers that have listed that item. On the
ONDC, there will be several other backend partners such as logistics service
providers, enterprise resource planners, e-commerce store hosting service
providers, etc.
Axis Bank, HDFC Bank and Airtel have already initiated integration with
the network. According to some media reports, e-commerce giants Flipkart and
Amazon are also considering joining the network.
The
biggest challenge for the government-backed network would be establishing the
technology. Giants like Amazon and Flipkart have been able to attract merchants
and buyers to their platforms due to their tested technology. The commerce
ministry needs to build something comparable, if not better.
ONDC is expected to make e-Commerce more inclusive and accessible for
consumers. Consumers can potentially discover any seller, product or service by
using any compatible application or platform, thus increasing freedom of choice
for consumers. It will enable the consumers to match demand with the nearest
available supply. This would also give consumers the liberty to choose their
preferred local businesses. Thus, ONDC would standardize operations, promote
inclusion of local suppliers, drive efficiencies in logistics and lead to
enhancement of value for consumers