ONDC’s success depends upon e-com companies

The recent competitive marketplace for ecommerce bought by the government, which is open and inclusive is said to usher in the next era of retail in India. Onboarding some of the larger players like Flipkart and Amazon might actually provide ONDC the much-needed scale as well as credibility with buyers and sellers, it said.

By “unbundling” the transaction into separate micro-services, different entities are able to pick up and carry out different services. If successful, it will help weaken the monopolistic hold of Amazon and Flipkart – which dominate 63% of ecommerce in India, increase competition and accelerate growth. Nandan Nilekani, the architect of the India Stack and part of ONDC’s advisory council, calls it the “most exciting business transformation happening in the world”.

To begin with, it would require the participation of all players. Buyers and buyer applications, sellers and seller applications; logistics players; and payment partners. ONDC was initially projected as a platform to take on Amazon’s and Flipkart’s of the world to reduce their dominance and democratise e-commerce in India.

At the moment, Paytm is the only buyer application from where buyers can log into the ONDC network to make a purchase, that is part of the network. Amazon, Flipkart and Meesho are in talks with ONDC, but they are still not part of the network.

Snapdeal has been in the news for becoming the “first e-commerce marketplace to debut on ONDC” but they have joined from the seller side, not the buyer side. This means that sellers on Snapdeal can also sell on ONDC to customers browsing from other platforms like Paytm. However, buyers on Snapdeal cannot enter the ONDC network through the company’s platform.

The aim of ONDC is to increase the gross merchandise value (GMV) of digital transactions from Rs 4.5 trillion annually to over Rs 7.5 trillion. It is also to expand coverage of retailers using digital commerce from 15,000 to more than 2 million in the next five years. It wants to expand the number of Indians using e-commerce from 90 million users to over 250 million.

But a question remains unanswered - on ONDC’s financial viability: Will ONDC also take the path that UPI took of 0% merchant discount rate?

So far there is no commission or charge that ONDC is taking, but it will do so in future and how much would it be and will it then derail the entire initiative, the time will say….

S Mohini Ratna, Editor, VARINDIA