The Government Plans To Use The ONDC Network To Outperform E-Commerce Giants: Flipkart And Amazon

The Government Plans To Use The ONDC Network To Outperform E-Commerce Giants: Flipkart And Amazon

The Center will launch from the trial phase of the Open Network for Digital Commerce (ONDC), a free internet system for merchants and consumers, in five locations. The available technology network, which will encourage an open system for purchasing and selling products and services, aims to challenge Amazon and Walmart-owned Flipkart’s dominance in the online retail industry.

ONDC evolved from a mere government program to maybe the most lethal weapon the ruling regime has ever launched against India’s e-commerce partnership. CDC’s goal is to rebuild and re-architect India’s digital commerce sector fully. But unfortunately, a revolution is on the horizon, and revolutionaries, by nature, are destructive.

According to news agency PTI, the government would initially begin the project in Delhi NCR, Bengaluru, Bhopal, Shillong, and Coimbatore. ONDC is a world-first program that intends to democratize digital commerce by transitioning it from a marketplace paradigm to an open network. It will allow buyers and sellers to be digitally visible and transact over an available network.”Whatever platform or program they utilize.

An open technology channel for small traders, where merchants and customers may buy and sell anything, is being developed. Nandan Nilekani, India’s high-profile tycoon, is the guy behind this publicly available internet system. The network can compete with Amazon and Walmart-owned Flipkart, which controls 80% of the country’s online retail sector.

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How Does Open Network For Digital Commerce Operate?

Short Form	ONCE
Platform	E-Commerce
Retail Services	Banking, Grocery, Travel, and so on.
Mobile Commerce	Payment, Ticketing
Marketing Services	Advertising, Social Commerce, Wallet, etc.
Authority Involved	Platform With Government Backing

All market participants, including consumers, will have equal access to the ONDC. It’s a neutral platform that, like the Unified Payments Interface, will establish open-source protocols for cataloging, vendor matching, and pricing discovery (UPI).

This implies that consumers and sellers can transact on ONDC regardless of whether they are affiliated with any particular e-commerce platform. So, for example, even if a seller ABC is registered on platform M, and a consumer is registered on platform N, the consumer can purchase items from seller ABC straight through the ONDC network without enrolling on platform M.

The platform intends to expand prospects for micro, small, and medium businesses, and small merchants by assisting them in gaining access to internet platforms. It is a Ministry of Commerce and Industry’s Department for Promotion of Industry and Internal Trade (DPI) project. Its goal is to promote open networks built utilizing open-source techniques, open standards, and open network protocols. In addition, it is planned to digitize the whole value chain, standardize processes, boost supplier involvement, improve logistical efficiency, and increase customer value.

E-commerce Reformation: ONDC

This revolution has the potential to make life challenging for e-commerce businesses. They currently work on their proprietary system, frequently utilizing their software. While algorithms are adjusted and customized based on their conclusions, the information provided by analytics is kept to themselves. Recalling how Amazon India used to advertise its affiliate firms like Cloudtail and Appario Retail by depicting them at the top of the search engines presented to a shopper. 

Now, ONDC requires all internet enterprises to follow the same ‘open source’ rules that the committee, and perhaps a regulatory body, later on notify. Under a global market approach, a buyer first chooses a platform and then looks for a product on that network; in the production concept, the customer will first search for the development and then select the best seller selling that item.

The seller’s platform is no longer primary. Corporations and consumers will be able to use any compatible application to conduct transactions over ONDC. Marketplaces like Amazon, Flipkart, BigBasket, Grofers, and Zomato will be required to register on the DPIIT and QCI platforms. Customers will be able to choose any vendor, product, or service by utilizing any compatible app or platform.

What Role Does India’s Open Network For Digital Commerce Play?

ONDC is projected to digitize the whole value chain, standardize processes, encourage supplier involvement, improve logistical efficiency, and enhance customer value. When the ONDC is fully implemented and evaluated, planned in August 2022, all e-commerce enterprises in India, regardless of brand, will be required to follow the same standards as Android-based mobile devices.

Smaller online shops and newcomers would benefit since discoverability, interoperability, and inclusiveness would be improved. It will empower suppliers and customers to drive innovation and change enterprises by breaking the monopoly of large platforms in retail, food, and mobility. Transparent standards, minimal investment, and decreased business acquisition costs will help businesses. It is also planned that time-to-market and time-to-scale would be reduced and would be significantly shortened.

Large e-commerce companies have objected, claiming that they have invested considerably in R&D and implemented their procedures and technologies. Nonetheless, the government is likely to view India’s e-commerce market worth – predicted by Statista to reach US$200 billion by 2027 – as significant enough to attract and involve all sorts of business competitors.

Through aggressive discounts and the promotion of favored vendors, Amazon and Flipkart alone have invested a total of US$24 billion in acquiring 80% of the Indian e-commerce industry. In addition, retail platforms, shopping apps, and super apps have also been established by Indian retail behemoths like Reliance and Tata.

What Chance Does ONDC Have Against Amazon and Flipkart?

The government-backed platform would level the playing field for e-commerce behemoths such as Amazon and Flipkart and tiny offline dealers operating Kirana shops, which are the backbone of India’s retail industry. Small business owners have long complained about Amazon and Flipkart’s exploitative business practices.

The government-backed network’s most significant hurdle would be developing the technology. Because of their proven technology, Amazon and Flipkart have attracted merchants and shoppers to their platforms. Anil Kumar, chief executive officer of Redseer Management Consulting Pvt, told Bloomberg that the commerce ministry has to produce something equivalent, if not better, to compete. If the government succeeds, millions of small enterprises will be able to get online. During the COVID-19 epidemic, they were particularly hard hit.

Conclusion

Once the ONDC is deployed and regulated, which is planned by August 2022, all e-commerce enterprises in India, regardless of brand, will be required to use the same practices as Android-based mobile devices. This would benefit smaller online shops and new entrants by increasing discoverability, interoperability, and inclusion. In addition, it will empower suppliers and customers by breaking the monopoly of large platforms to encourage innovation and alter companies in industries such as retail, food, and mobility.