ONDC or Open Network for Digital Commerce is a government-backed electronic platform for India’s mom-and-pop stores or kiranas who have, so far, weathered the Amazon and Flipkart storm with innovations such as home deliveries and discounts for regular customers.
The government is unveiling a network to bring on the Davids against the Goliaths, give a chance to the kiranas to sell online and weather the storm created by sophisticated retail giants such as Amazon and Walmart.
The clincher in the whole deal will be the technology – will it be able to build a seamless system of e-commerce and give India another success story along the lines of UPI.
1.ONDC or Open Network for Digital Commerce is a government-backed electronic platform for India’s mom-and-pop stores or kiranas who have, so far, weathered the Amazon and Flipkart storm with innovations such as home deliveries and discounts for regular customers.
The electronic platform, if it functions without glitches, will enable kiranas to sell online, and take on Amazon and Flipkart’s might digitally.
2.The government hopes to replicate the success of UPI, its country-wide digital payments platform which brought banks on a single platform and allowed seamless person-to-merchant payments in 2016. UPI worked well as it does not charge merchants. Customers attach their bank accounts to UPI and there is no requirement of credit assessment. A large part of India does not have credit history. Consequently, UPI dominates, at least in small-ticket transactions.
3.India has a fast-growing $1 trillion retail market, but the market is fragmented. Online commerce or e-commerce accounts for just about 6% of the overall retail market, but kirana stores have long feared they will eventually be snuffed out by Amazon and Walmart-owned Flipkart, meeting a fate similar to many family-owned businesses in the U.S. and elsewhere.
4.The two global giants poured a combined $24 billion into India and captured 80% of the online retail market with aggressive discounts and promotion of preferred sellers.
5.ONDC is a not-for-profit system, and has not been attempted anywhere else. It aims to allow small merchants and retailers to plug in and gain the reach and economies of scale of giants. Essentially, the government is creating its own e-commerce ecosystem for everyone, designed to loosen the stranglehold of companies like Amazon that dictate which brands get access to prime consumers and on what terms.
6.The idea is to get kirana stores, FMCG companies, as well as local paanwallahs and chaat and chole-bhature sellers online so that consumers can order on the platform. The challenge has been to get IT processes completed for these tiny merchants.
7.ONDC has Infosys co-founder Nandan Nilekani, former McKinsey India head Adil Zainulbhai and National Health Authority CEO R S Sharma as advisors.
“It’s an idea whose time has come,” Nilekani told Bloomberg recently. “We owe it to the millions of small sellers to show an easy way to participate in the new high-growth area of digital commerce.”
8.The pilot phase of the open network will be rolled out in 5 cities today to see how it works. The places are Delhi, Bengaluru, Coimbatore, Bhopal and Shillong.
9.The quality of the network is what will woo consumers. Amazon’s technology runs worldwide without glitches.
“The government needs to build something comparable — or better — if it wants to outdo the dominant e-commerce platforms” Anil Kumar, chief executive officer of Redseer Management Consulting told Bloomberg. “Everything hinges on the network bringing on the widest set of buyers, sellers, payments logistics and warehousing providers, and so on,” said Bangalore-based Kumar. “The challenge is to standardize and smoothen the experience such as returns and refunds for buyers and sellers and to create an open network where everybody wins.”
10.ONDC can also end up giving a run for its money to Indian retail giants such as Reliance and Tatas who have their own retail arms, apps and super apps.
Source : https://economictimes.indiatimes.com/industry/services/retail/is-ondc-the-slingshot-thatll-bring-down-retail-goliaths-10-things/articleshow/91175819.cms