E-commerceplatform snap dealmade its debut on the government-run Open networkfor digital commerce ( ONDC) on July 19.
- An initiative of the Department for Promotion of Industry and Internal Trade (DPIIT),
ONDC strivesto support micro, small and medium-sized enterprises (SMEs) and small traders and help them access online platforms.
- ONDC is an e-commerce UPI that aims to democratize virtual commerce and shift from a platform-centric model to an open network.
With the launch of Unified Payments Interface (UPI), the Indian government brought all virtual banking and payments under one roof. The government is now doing a similar feat in yet another walled garden, the e-commerce category, with the launch of Open Network for Digital Commerce (ONDC).
ONDC aims to democratize virtual trading by bringing all platforms under one open network. It would create a new level playing field for the e-commerce landscape, which is currently dominated by the international players Amazon and Flipkart.
Open Network goes beyond the current platform-centric model where the buyer and seller must be part of the same platform/application to enable transactions between them.
By moving from platform-oriented models to an open network, ONDC aims to end digital monopolies.
Currently, Amazon and Flipkart have end-to-end control over the entire e-commerce ecosystem, including merchant onboarding, customer acquisition, order fulfillment, payment, returns, and complaint recovery.
Imagine a platform that not only showcases products from Amazon, Flipkart, and Meesho under one umbrella, but also all your local
kirana stores. That’s exactly what the open network wants to do. You could compare prices of Amazon finds and product specifications of Flipkart finds through one application.
Thanks to: ONDC, Ministry of Commerce
It will unbundle the supply chain and shift power from companies like Amazon and Flipkart to consumers, merchants and support service providers.
With an open network, smaller players can also access Amazon or Flipkart controlled data. ONDC therefore wants to support SMEs and small traders and help them access online platforms.
Snapdeal is the first ecommerce platform to hit the open network. E-comm platforms Dunzo and Ekart also partner with ONDC.
How does ONDC work?
The open network will not only provide smoother transactions and online buying experiences for consumers, it would also digitize the entire value chain and improve logistics efficiency for sellers.
Small traders can skip separate lists of mandates and commissions for each platform they join.
With ONDC, retailers gain access to processes and technologies deployed by e-commerce giants such as Amazon and Flipkart. It would also mean better findability for all retailers and increase price transparency.
Silos are broken down and an open list of delivery partners, aggregators, customers, restaurants and logistics providers is compiled.
According to the government, “ONDC will ensure the confidentiality and privacy of data in the network. ONDC will not require transaction-level data sharing by participants with ONDC. Will work with its participants to publish anonymized aggregated network performance statistics without compromising confidentiality and privacy.”
When was ONDC announced?
An initiative of the Department for Promotion of Industry and Internal Trade (DPIIT), ONDC, would enable both sellers and buyers to be digitally visible and transact over an open network, regardless of what platform or application they use.
The initiative was announced by a nine-member advisory board including Infosys co-founder and chairman Nandan Nilekani, National Health Authority CEO RS Sharma, QCI chairman Adil Zainulbhai, National Payments Corporation of India CEO Dilip Asbe and others.
According to DPIIT, ONDC “… strives to promote open networks developed on the basis of open source methodology, using open specifications and open network protocols, independent of a specific platform. ONDC is expected to digitize the entire value chain, standardize operations, promote supplier inclusion, achieve efficiencies in logistics and increase value for consumers.”
The open network isn’t just for retail transactions, it’s for food, delivery, travel, hotel bookings and more, which could challenge the dominance of all the major e-commerce players.
As more small merchants and retailers adopt the online world, ONDC plans to increase e-commerce
penetration up to 25% of all consumer purchases in the next two years, compared to about 8% currently.
Within the next five years, it expects 900 million buyers and 1.2 million sellers on the shared network, with a gross trade value of $48 billion.
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