ONDC to regulate ecom biz

Open Network for Digital Commerce (ONDC), a government-backed project which is aimed at enabling small merchants and mom-and-pop stores in parts of the country to access processes and technologies that are typically deployed by large e-commerce platforms such as Amazon and Flipkart. ONDC is expected to roll out soon in 100+ towns and cities across India in September 2022.

ONDC, is a private non-profit Section 8 company established by the Department for Promotion of Industry and Internal Trade (DPIIT) of Government of India to develop open e-commerce.

It was incorporated on 31 December 2021 with initial investment from Quality Council of India and Protean eGov Technologies Limited, formerly NSDL e-Governance Infrastructure Limited. ONDC is a set of specifications designed to foster open interchange and connections between shoppers, technology platforms, and retailers.

ONDC will unbundle delivery services so that customers can choose their own logistics provider. As many as 20 organisations of national repute have confirmed investments of Rs 255 crore into ONDC. Lenders such as the State Bank of India, UCO Bank, HDFC Bank, ICICI Bank and Bank of Baroda have already committed investments.

The initiative is aimed at suppressing the dominance of Amazon and Flipkart, which control more than half of the country’s e-commerce trading, limit access to the market, and give preferential treatment to certain sellers and squeeze supplier margins. ONDC is a set of standards for voluntary adoption by sellers or logistics providers or payment gateways.

For example, if both Amazon and Flipkart integrate their platforms with ONDC, a user searching for a Bluetooth headset on Amazon would also see results from Flipkart on the Amazon app. ONDC aims to go beyond retail ecommerce, however, and similarly connect companies in areas such as mobility, food delivery, hotel booking and travel, among others.

On ONDC, there will be several other backend partners such as logistics service providers, enterprise resource planners, e-commerce store hosting service providers, etc.

Paytm has joined the ONDC platform as a buyer, and Reliance-backed Dunzo is offering logistics services for hyperlocal deliveries. According to the ONDC website, companies like Kotak, PhonePe, Zoho and Snapdeal are in the “advanced stage of development”.

Let’s wait and watch how ONDC will transform the marketplace ecosystem from an operator-driven platform-centric model to a facilitator-driven interoperable decentralised network.

Dr. Deepak Kumar Sahu, President & CEO, VARINDIA