Open Network for Digital Commerce (ONDC) : Opportunities and Shortfalls

ONDC will create a two-way street - one for the seller, where a vendor who is onboarded on the ONDC seller platform can sell on multiple customer-facing apps without the hassle of registering on each one of them separately. It is similar to the UPI mechanism - we create a user name on the BHIM app and use third-party apps (PhonePay, Google Pay, etc.) to make UPI payments without the need to create accounts on each one of these apps separately and without an obligation to open savings account/wallets.?

On the other hand, customers can search, and access products/services listed on all customer-facing apps (Dunzo, JioMart, PhonePay, etc.) enabled on ONDC. E.g., a person using the PhonePay app can search for products sold by Reliance JioMart app on the payment app itself and directly buy from here (assumption) or using Dunzo services on PhonePay.?

Yes, the platform will support multi-app features of both product and service-based customer-facing apps.?

Opportunities-?

1. Scope for new local delivery companies to offset increased demand through the multi-channel/app system and offer customized services to specific sectors.?

2. As per reports, cataloging to inventory management will be standardized, which will create a level playing field for different companies to enable the system and nurture new start-ups.?

In my knowledge, it is still too early to select the type of service providers which will massively benefit from this model.?

Grey Areas -?

Before sharing my opinion, I want to highlight that the products sold on any e-commerce platform fall under the discovery-based category (jewelry, furniture, apparel) or search-based type (Tata Salt, Surf Excel, iPhone, etc). Also, a good number of the search-based items fall under the essential category.?

1. For search-based products, the user will be able to discover all the vendors selling in that area (assumption as of now) for a particular product. What is the probability that there will be a jump in the conversation rate or increase in the digital footfall??

1.a. This is so because the grocery and essential category is already tapped by big players like Big Basket and Blinkit in the online space who are always planning to retain and add new customers with their marketing strategies supported by massive piles of cash. The question to be raised is how will small retailers come up to a level playing field from this model that does not have excess money to burn, unlike the hotshot start-ups??

1.b. With Reliance as one of the stakeholders in the consumer-facing app to enable the ONDC system, will the open network succeed in pushing, promoting, and advancing in nurturing the digital retail movement among the small players with the big and reputed players onboard to kickstart the ecosystem initially??

2. Since the platform will enable standardized inventory management and centralized cataloging for the local vendors to increase discoverability, will it hold for sellers in discovery-based categories like jewelry or home décor, where each brand/store has its unique and customized catalog? Although on the consumer app front, the brands can increase their digital footfall for their products on the supporting ecosystem apps, the digital enablement will still have to be self-managed by the sellers, which is the biggest challenge for the small scale discovery-based sellers and retailers because most of them don't keep a record of their inventory through any software in the first place.?

In summary, ONDC will empower local delivery companies and nurture startups, lowering the bar of entry and leveling the playing field. However, post discovery, there are grey areas like conversion rate, competition with big players, and non-digitalized catalogues (esp. for discovery products) are the concerns we have for now.?

This article was originally published on my Substack profile: https://amanahmed.substack.com/publish/post/54040891

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