Is ONDC a game changer? An article about whether ONDC is a game changer or not.

The ONDC is a big deal for India's e-commerce landscape. If you're not familiar with it, you're missing out on a lot of what's going on in the country. The vision for the ONDC is to improve digital commerce in India, which many people are excited about.?

The digital commerce market in India is expected to grow at an alarming rate of USD 350 billion in the next few years. To ensure that this market can reach its potential, the government of India wants to make it a level playing field for all businesses by democratizing e-commerce in India. By doing so, they hope to create an environment in which all businesses can have an equal chance to succeed.

Last year in December, the Government of India announced their new idea called the ONDC, which they promised would be a game changer in digital commerce.

The idea for ONDC was seeded by Nandan M. Nilekani and other leading technocrats of India, including the heads of different government institutions like Shri R.S. Sharma, the CEO of the National Health Authority. ONDC is a private company established as a non-profit, and T Khosy is MD CEO. They are currently running a pilot in around ten cities, with invitation-based onboarding.

What is ONDC??

Since the launch of Open Network for Digital Commerce?(ONDC), there has been much confusion in the media due to the patriotic rhetoric used to promote it. Many headlines have claimed that it would wipe out Amazon and Flipcart from India, but this may be part of a larger political agenda and not something we're interested in!

Let us use the example of Trivago to understand how it works. Trivago allows us to compare hotel pricing across providers to choose the best option.

ONDC is a broad-scope concept that encompasses both listing and operations. We can select the best product from various options and the delivery partner based on rates and reviews. This way, it provides more choices and flexibility to consumers.

The proposed platform would allow sellers to list their products without worrying about predatory commission fees, a common issue with popular platforms. This would give sellers more opportunities to make a profit, which is not always the case with other platforms.

Are you not convinced by its appearance? Sure, it may not look great, but many challenges and potential problems come with it, too - keep reading to find out more!

What are the benefits to the consumer??

ONDC's platform is designed to provide consumers with a variety of unbiased search results and listings without any biased results or listing in favor of certain products. The company claims that many leading platforms promote products based on deals with sellers, which may not always be what the consumer is looking for. ONDC believes that promotions and marketing often influence consumers, but the platform will provide them with honest and transparent options.

Some claim that the app products you see are those that are close to you in proximity, which not only saves you the cost and time of delivery but also means that if you order a phone, for example, a store near you may deliver it on the same day or even within the hour instead of making you wait a few days!

The media is telling us that these deals are great for customers, but they're not telling us that there's more to the story. If we take a closer look at the fine print, we'll see that some catches could make these deals less desirable.

What are the benefits to the sellers??

One of the most significant benefits of using ONDC is that there are no commissions, unlike other powerful platforms that charge high fees. ONDC promises to optimize sales profits so sellers can keep more of their hard-earned money.

The ONDC platform would allow sellers to reach a larger audience online without worrying about logistics and packaging. For example, a seller in Kashmir could sell their walnuts to a customer in Kerala. This would open up new opportunities for businesses of all sizes, anywhere in India.

What are the benefits to platforms or apps if they join ONDC?

The benefit to the platform and app developers is that they can offer more options to the customers. Let's say Mr. Rajendra is in the garment business and would like to develop an app based on ONDC that will sell garments from different sellers across India. He can do this with the help of the platform.

For example, Paytm (considered the first ONDC adapter) also wants airline booking or hotel booking on their app. They don't need to implement the tech or contact vendors; they can just integrate ONDC and start offering additional services to their customers!

So all looks good and quite promising, right??

All the media hype and campaign rhetoric around this new initiative make it sound like a game changer, but only time will tell if it lives up to the hype. Many challenges lie ahead, and it may not be as successful as other similar initiatives, at least in the short term.

Why do we not compare it with UPI??

For obvious reasons, comparing oranges with apples is like comparing UPI with ONDC.?

1. UPI, when launched, only had a few takers initially; I guess it was again PayTM
2. Demonetization and the outbreak of the coronavirus have pushed digital payments into the mainstream, which is something that ONDC can't do?
3. UPI's developers and adaptors are giant enterprises that can handle other business operations.?
4. The user journey in UPI is more straightforward than in the case of ONDC. The buying cycle is different; in UPI, it is just one part of the user story, whereas ONDC is the entire buying cycle.
5. RBI is managing UPI with strict compliance, whereas ONDC is an open platform, it would have some checks and verification but still not like UPI?

Will ondc destroy large so-called ‘predatory’ giants??

If we assume that ONDC will sink all significant, especially foreign-based platforms like Amazon or Flipkart, and India will become 'Atmanirbhar' before the next election, you are reading too much from a political, not from a business standpoint.?

ONDC is designed so everyone can coexist; of course, it may create new customer segmentation, like Amazon will serve only prime members willing to pay a little higher to receive premium services.

This is similar to what we have in train bookings - you have premium and passenger trains. In my view, the same will happen in the digital commerce world, and as a matter of fact, it is already there. Many small and medium e-commerce platforms in India are doing well in their targeted market.

What are the challenges?

There are many challenges that ONDC will have to solve, and some of them are critical.?

Data Privacy?

We still have yet to see a data privacy bill, and with it being extended again, this puts a giant question mark on the safety of our data. How much data is the ONDC willing to share with different platforms? I am sure this ecosystem will not work correctly without sharing customers' data with platforms, but how will they address security and other challenges without any law in place?

Challenges? to sellers?

Although it may seem promising to sellers that they will not have to pay commission, this is not entirely true. ONDC is not the government; it is a government-funded privately held startup registered as a non-profit. This means that they will also have expenses and charge for their services. Of course, they will not charge as much as a leading platform would.

We must never forget that businesses need to make a profit; otherwise, it would be charity. And in business, when you improve the quality of your service or product, it always comes with a cost. Quality customer service and products always come at a price!

The larger e-commerce platforms charge more and provide value-added features like customer management, vendor management, delivery, and returns.

Selling online is more than just putting your product out there - it's about creating a good impression with high-quality photos, well-written descriptions, and effective marketing. Platforms like Amazon provide all of this and more, so you can focus on selling your product and leaving the rest to them.

Although it is still unknown who will manage customer complaints, returns, and other activities, Amazon will inevitably continue to be the most popular marketplace in the world. The reason for this is that they have always been a leader when it comes to being customer-centric and using cutting-edge technology. Amazon's most powerful tool is its AI-based search and recommendations engine.

The developer of ONDC will need to focus on customer support and technical aspects to compete with other companies. This means that having products and sellers available on the platform is not enough.

Challenges to the customers?

As a customer, you may wonder why you prefer to buy from a popular platform like Amazon or Flipkart over other less well-known websites. The answer is simple: because of the price, deals, and, most importantly, trust. We are still not sure how this platform will establish trust, but we hope that it will be able to do so soon!

If you're unhappy with your purchase or don't receive your parcel on time, most platforms make it easy to get in touch with the delivery partner and ask about the latest status. In some cases, you may even be able to receive a refund or have the item replaced.

ONDC still needs to clarify how this is going to work. Who would be the main point of contact for customers?

In an interview, Mr. Khosy, the ONDC Charimain, stated there would be a contractual agreement with the seller, but he didn't clarify much beyond that.

JM Financials recently analyzed ONDC and found that, overall, take rates of ONDC will be 20-30% lower than other e-commerce platforms. Even the average order value for food tech on ONDC is on par or even higher than other apps.

The authenticity of the items being sold on the platform is of utmost importance; we are aware that all major e-commerce platforms have a screening process for both the sellers and the items that the sellers want to sell.?

They also make sure that no fake, first-copy or second-copy items are being sold. However, it is still unclear how this will be verified on the ONDC platform. Thousands of websites in India sell duplicate, fake or inferior items. As a result, it is difficult to ascertain the legitimacy of these products.?

We hope to have a more defined process in place soon so our customers can be assured they receive authentic products when shopping on our site.

Conclusion?

When UPI was first discussed in Parilaimanet, there was a lot of confusion, and Mr. Chidmbarm was very critical of that. He even mocked, and you can watch the video here.?

People will always be skeptical of change, especially regarding new technology. However, that doesn't mean that the change will necessarily fail. Having said that, having promising tech and a great team does not guarantee the success of any technological solution - even giants like Google and Microsoft have had their fair share of failed projects.

We should not assume that Amazon and Flipkart will just surrender to ONDC, and it would be the end of the story; no, we should see more challenging fights, especially on retaining customers! If anything, this could begin a new era of eCommerce in India!

ONDC may hold a lot of promise for the future, but I don't think it's pretty as game-changing as the media makes it out to be. ONDC is more about need, user experience, and cost-effectiveness than anything else. It's going to have to go through a lot of testing before it can be genuinely successful, and Remember, it's always the customers who decide whether or not a piece of technology is booming - not the sellers!