When Rosbin PB, a 32-year-old shopkeeper, joined hands with the owner of a 450 square-foot local convenience store in Bengaluru’s Indiranagar, it had a small but dependable customer base. IT workers who lived in the neighbourhood bought their groceries and daily supplies from the shop. But Rosbin wanted more. He borrowed money, expanded the shop, and registered on Dunzo. Orders routed through the hyperlocal delivery service shot up to 700 per day in a matter of months. Then, Dunzo decided to open its own dark store in the neighbourhood. Rosbin says the number of orders slashed to 80 per day. “They give preference to their own store, naturally,” he says. “We have to accept whatever these companies decide. We have no choice.”
That’s changing now. Rosbin has registered on the Open Network for Digital Commerce or ONDC—a network that enables his little shop to be visible to online buyers shopping on any app, so long as that app is aligned with ONDC.
So when a customer opens his favourite shopping app—Paytm, for example, which is part of the network—and clicks on the ONDC icon, he will be able to find products from all sellers who are part of the network, not just sellers registered with Paytm. So far, 36,000 sellers across 236 cities have registered on ONDC including large ones like HUL and ITC, as well as smaller setups like Rosbin’s Green Mart.
“It’s only been a few weeks since we registered but we already get 40-50 orders per day from ONDC from Monday to Thursday. On weekends we get 100+ orders per day,” says Rosbin. “We don’t have to depend on Dunzo anymore. We now have other options to grow online.”
And that is the point of ONDC: To give offline retailers like Rosbin, who have been left out by the ecommerce wave sweeping through the country, a chance at levelling up.
“We’re not trying to be a Swiggy or Zomato-killer or an Amazon or Flipkart-killer,” says Shireesh Joshi, chief business officer of ONDC, a government-backed, not-for-profit entity, whose funders include Quality Council of India, Small Industries Development Bank of India (SIDBI), National Bank for Agriculture and Rural Development (NABARD) and a number of financial institutions including State Bank of India, ICICI Bank and Kotak Bank.
“Our aim is not to take away 10 or 15 percent market share from Swiggy or Zomato,” Joshi continues, referring to the buzz on social media in the recent past on the price differences between these giants of food delivery and ONDC. A cold coffee from McDonalds, for example, was available for Rs208 on Swiggy, Rs226 on Zomato, and Rs108 on ONDC on May 8.
Customers are currently being offered discounts of up to Rs50 per order if they shop through ONDC. While restaurants are being charged commissions of two to five percent versus the 25 to 30 percent charged by Swiggy and Zomato. “The incentives are just triggers to jumpstart the network,” says T Koshy, the chief executive of ONDC who previously set up and ran the National Security Deposit Council (NSDL) for over a decade. ”We don’t believe that the network will scale based on such incentives - it isn’t a long term strategy,” he clarifies.
Instead, the long-term strategy is to bring into the digital fold people like Rosbin and still others who have never sold anything online. After all, ecommerce penetration in India is a mere five to seven percent. The remaining 93 to 95 percent of India has never purchased anything online even as Amazon and Walmart-owned Flipkart have ploughed through the country, investing billions to bring people into the ecommerce fold.
“It’s this undigitised population we are going after,” says Joshi, which will result in ecommerce penetration rising to 25 percent in two years. The logic being that ONDC will create a vastly larger pool of sellers and consumers and result in lower costs. This in turn will turbocharge ecommerce growth. Besides, while India is home to the third-largest online shopper base of 140 million, behind only China and the US, according to McKinsey, the market is still largely untapped given India’s Internet-user base of about 750 million.
Read More at https://www.forbesindia.com/amp/article/take-one-big-story-of-the-day/ondc-is-indias-next-big-bet-after-upi/85073/1