Despite the significant growth of India’s e-commerce industry, its share in the overall retail landscape remains relatively small compared to the thriving physical commerce sector. This disparity is even more pronounced in smaller towns and rural areas.
The primary obstacle lies in the current structure of the e-commerce value chain, which is heavily reliant on specific platforms. Buyers and sellers can only transact through the platforms they are registered on, limiting their options.
To illustrate this point, let’s consider an example. When a buyer wants to purchase something, they log in to their preferred app and search for the item. However, they often encounter limited choices and need to switch between multiple apps to find more options. Additionally, there are numerous sellers not available on the buyer’s apps, potentially offering better prices, quality, and delivery options. Unfortunately, the buyer has no way to discover these alternative sellers.
Challenges in Connecting Buyers to Sellers
On the other hand, sellers typically list themselves on a limited number of apps. Consequently, there are other apps where buyers are ordering the same items, but the seller is not registered. This represents a missed opportunity for the seller, and they are also bound by the terms and conditions imposed by the apps they sell from.
Moreover, building their own platforms is generally impractical for most sellers due to the complexity and high costs involved in setting up the entire e-commerce value chain. As a result, millions of buyers and sellers are unable to participate in the existing e-commerce model. To address these challenges, the Indian government has introduced the Open Network for Digital Commerce (ONDC).
What is ONDC (Open Network for Digital Commerce)?
Open Network for Digital Commerce (ONDC) is an initiative that aims to transform the e-commerce landscape. ONDC is a network-based open protocol backed by the government. Its objective is to connect all buyers and sellers on the network, enabling transactions between different apps. It functions similarly to the Unified Payments Interface (UPI) for digital payments, allowing transactions between different banks and apps. With ONDC, a buyer and a seller can be on different apps but still engage in transactions as long as both apps are part of the ONDC network.
ONDC offers significant benefits to buyers. They can connect to the network through various applications, such as chat widgets, apps, IVR solutions, or websites, and search for items. The ONDC Gateway utilizes a multi-domain registry to broadcast the search to a wide range of sellers within the relevant item category. Sellers can be listed on any app within the network. The search results display multiple options for the buyer to choose from, and they can also explore various delivery options.
The Gateway broadcasts location details to all logistics providers serving both the buyer and seller’s locations. This enables the buyer to select the best delivery option, either through the seller or other delivery service providers. The checkout process is seamless, and the buyer can complete the transaction using their preferred payment method, ensuring a smooth experience.
Important Points Light Box
Advantages of ONDC
Let’s consider another scenario to highlight the advantages of ONDC. Raj needs to purchase suitcases, flight tickets, a basic Malayalam course, and book a homestay as he relocates to Kerala for work. Without ONDC, he would have to use at least four different apps to make these purchases. However, with ONDC, he can log in to any app of his choice and complete all these transactions in a single checkout experience, saving time and effort.
Sellers also benefit from ONDC. They gain cost-effective access to the entire value chain by registering once through any app on the network. This broadens their reach to the entire buyer universe across all applications on the network. Sellers on ONDC can determine their preferred terms and conditions. These advantages contribute to increased profitability.
ONDC vs AMAZON/FLIPKART
Unlike in the platform-centric model, where sellers face the risk of being replaced by alternatives offered by platforms, ONDC eliminates this risk. Sellers can easily transition to different seller apps without losing visibility to any buyer. Additionally, sellers can maintain a network-wide reputation, ensuring their reputation remains intact even when joining through a different seller app. ONDC also provides sellers with comprehensive business enhancement analytics, enabling them to derive actionable insights for their business.
Furthermore, ONDC offers opportunities for technology companies to participate as technology providers on the network. By listing their technology solutions with ONDC, they become discoverable to a large number of apps within the network. For example, an image processing-based catalog creation tool can be listed as a technology solution on ONDC.
Seller apps on the network can leverage this technology to simplify catalog creation. With a click of a picture, products can be automatically identified in multiple languages, pricing details can be added, and catalogs can be quickly generated. This opens up monetization opportunities for technology providers through different engagement models, facilitating rapid business growth.
To become part of the ONDC network, e-commerce players can adopt various roles and leverage its expanding reach. They can join as buyer applications, encouraging their user base to use their app for purchases across the entire ONDC network. Alternatively, they can join as seller applications, providing their merchants and sellers access to a wide buyer base already present on the network.
Joining as a Gateway allows them to broadcast search queries from buyer apps to seller apps within a specific domain or location. Technology providers can also join the network, making their technology instantly accessible to numerous e-commerce players who can benefit from their solutions.
The Bottom Line
The ONDC network is managed by a not-for-profit company backed by reputable national institutions. The initiative is guided by an Advisory Council consisting of experienced individuals. ONDC represents a truly Made in India digital revolution and offers a powerful way to boost go-to-market strategies and scale businesses efficiently. For more information about ONDC, you can visit their website or reach out to them via email.
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Sunil Kumar Sah @DigitalSunilSah
Sunil is an E-commerce Seller, Blogger, YouTuber and Digital Marketer. He is a digital enthusiast and passionate about Online Selling. He loves sharing his knowledge and experiences on eCommerce in this blog and on his Hindi YouTube Channel “Ecommerce with Sunil” and the English Channel “Ecomsprint“