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6 Months After It Became Fully Operational, A Reality Check On ONDC, The World’s First Interoperable

Last week, Kudumbashree, Kerala’s acclaimed self-help group for women, announced that it had joined the Open Network for Digital Commerce (ONDC).

The ONDC is the world’s first decentralized and interoperable e-commerce platform, bringing together multiple buyer apps and seller apps.

Honey from the Idukki hills, mango pickles and organic pepper, coconut oil for hair care and cooking — suddenly products which had no retail outlets outside Kerala were available for delivery India-wide through buyer apps linked to the new platform.

ONDC is a non-profit entity created by the Indian government in December 2021 to address the domination of the online commerce business by a few players, enabling small players from neighbourhood kirana (grocery) shops to rural cooperatives to micro and small industries to find new — hopefully all-India — markets for their products and services.

In a global environment — replicated in India — platforms like Amazon and Flipkart have a near monopoly, with 60 per cent of all e-commerce business and between them, some 15 lakh sellers on board.

The result? The platform is bigger than the partners — and buyers have their choice limited to what each platform wants to push.

What if one could search for a product across multiple competing online seller sites and find the best deal?

That already happens with travel sites, where aggregators crawl across a number of airline ticketing or hotel booking sites and highlight the best offers.

ONDC aims to do just that — and more.

With all their dominance, the e-commerce players in India still penetrate just 5-7 per cent of all retail commerce in India according to a November 2022 report from the India Brand Equity Foundation (IBEF), a trust established by the Union Ministry of Commerce and Industry.

There remains a vast untapped and unserviced sector of commerce and IBEF suggests that the Indian e-commerce market that was worth $75 billion last year, could be $111 billion next year and $200 billion by 2026.

With multiple banks providing seed money, ONDC had a low-key pilot in end-April 2022, in a few cities including Bengaluru, Bhopal, Coimbatore, New Delhi and Shillong, with the first transaction taking place in the Karnataka capital.

It was aimed equally at buyers and sellers and it worked like this:

  • Buyers had a choice of a small number of participating apps. As of this month they are: Craftsvilla, IDFC, Kotak, Meesho, Mystore, Paytm, Phonepe, Spicemoney. Once you revealed your location, the app told you what ONDC sellers were around you. You could also search for a specific product

  • Sellers could register themselves on a few sites like SellerApp or MyStore and they are guided through processes like Catalogue Management, Inventory, Order Management and Settlement

  • Logistics players like Delhivery, ShipRocket and Dunzo are already on the ONDC platform so that sellers who don’t have a delivery network of their own can sign up with one of these

Since September 2022 when ONDC was fully operational, a number of technology players have joined and offer their expertise especially to potential MSME sellers.

They include Magicpin which links shopping to buyer savings for local retailers; Zoho which offers its e-commerce platform to help businesses create online stores and DBS Bank which in partnership with e-Samudaay, a Software as a Service (SaaS) player, helps MSMEs get onboard ONDC.


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