“We are not saying that we are perfect, but we are getting better with each passing day,” says Shireesh Joshi, Chief Business Officer of ONDC.
ONDC, the Open Network for Digital Commerce entity has been sparking everyone’s curiosity and interest.
It became a sensation on social media, when users posted their incredible bargains, showing how ONDC outperformed other apps like Swiggy, Zomato, Flipkart, and Amazon in cost and convenience.
While other apps charge up to 25% commission, ONDC charges only three percent, making it the cheapest and easiest way to order online.
“ONDC is not just about price competitiveness. I think everyone should recognize that a lot of the pricing behavior is the outcome of the ‘platform way’ of doing E-commerce. Once you connect the buyers and sellers to each other, the need for pricing as leverage of action will diminish in its importance and other factors will come into play,” says Shireesh Joshi, Chief Business Officer at ONDC while speaking with ET Edge Insights.
After witnessing an around 500-fold rise in transactions since January this year, ONDC decided that the incentives for subsidizing delivery costs for buyers will now be capped.
“Let’s assume that we take cost out of the system and allow existing trusted relationships to migrate on the network. This will create a level-playing field for all. It will change the dynamics and economics of e-commerce,” says Joshi.
Decoding ONDC: Empowering people
ONDC sees great potential to tap into the digital commerce market that remains underutilized at only five percent, despite the increased availability of digital technologies. Backed by the government, the vision is to make digital commerce open and accessible for everyone.
According to Bain & Company, India’s E-retail market is estimated to increase to $150–$170 billion by 2027, while the online shopper base is estimated to increase to 400–450 million during the same period.
ONDC protocol is the glue that connects different apps and domains, allowing them to communicate and exchange data seamlessly. It is created and updated by the Open-Source Community, which designs the standards and rules for Retail, Logistics and more.
“ONDC is not an app. What QR code is for Unified Payments Interface (UPI), ONDC is for E-commerce. We want to achieve population scale, and penetration of E-commerce,” Shireesh says.
ONDC provides a protocol for interaction between a buyer and a seller and enables them to discover and confirm an order and eventually fulfill the order.
Lack of awareness, a deterrent
It is unfair to compare the successful UPI and ONDC as they have different goals.
UPI is mainly a payment platform, while ONDC is a holistic solution that will help small to medium merchants thrive online.
ONDC has succeeded in using technology to create a more inclusive, competitive, and interconnected E-commerce ecosystem to access online demand.
More than 40,000 sellers from over 240 cities across the country are part of ONDC. Out of these, over 18,000 sellers are from the five cities where the Beta phase was recently launched. (See ONDC’s Journey So Far)
However, there are some immediate challenges that ONDC faces.
“The challenges are at many levels. The first is in terms of onboarding customers or lack of awareness among business owners to join and benefit from the network. Many people understand the offering, while some struggle to understand it. And it is not their fault. It will take time for them to figure out how this works and why it will benefit them. The whole idea of ONDC is different from the way E-commerce was done,” Shireesh says.
Another issue is managing the operations. Some sellers may not be used to monitoring their inventory regularly. They may only do it occasionally or rely on a salesperson to replenish it. But now they must update their inventory constantly. They need to be prepared to fulfill the order, check if they have enough stock, pack it properly, etc.
“The other concern is the time gap that comes along with the learning curve. In short, there are new behaviors and new practices to learn. But once these concerns are mitigated, the overall experience is a happy one. I am not saying that we are perfect, but we are getting better with each passing day,” Shireesh says.
