The government’s ambitious neutral, open source, not-for-profit, e-commerce platform, Open Network for Digital Commerce (ONDC), which aims to empower mom-and-pop shops and kirana stores, rolled out on a pilot basis on Friday. However, experts said several challenges lie ahead, which if not addressed properly, may derail the project.
Industry sources lauded the government’s initiative, which in many ways challenges the dominance of bigger e-commerce players like Amazon and Flipkart.
The positive side of ONDC is that it provides a level-playing field to the sellers as well as buyers. All kind of sellers – big and small – can list and sell their products on this platform. The same applies to buyers who would have a wider array of choices. With the unified payment system, the issue of payment gateways is also solved.
However, many say all this may look good only on paper. On the practical front, several loose ends need to be tied up before the platform really takes off.
For instance, there’s no clarity yet on where the liability rests. Industry executives said that on platforms like Amazon or Flipkart, the liability lies with the platform and not the sellers. If a consumer orders, the timing of delivery, cancellation and return of products are governed by rules of the platform.
However, with regard to ONDC, no such mechanism has been worked out yet. “Suppose a consumer buys a product from a small kirana store on ONDC and the store delivers the product late, what happens? Who takes the responsibility?” asked an industry executive.
Similarly, if product purchases are to be cancelled or returned, would there be a uniform refund or cancellation guidelines which would be applicable to all the sellers?
Answers to these critical issues have still not been communicated to the industry players.
Industry sources said that in the absence of uniform guidelines on such issues, consumers may not be attracted to ONDC and even if they are, they may never buy products from small sellers.
Another area where there’s no clarity is whether small kirana stores may be able to match the discounts offered by bigger sellers. According to industry data, the average order size on B2C platforms is in the range of `150-300 and logistics and supply cost is around 15-20%. Platforms like Amazon and Flipkart are able to offer discounts and bear losses but would smaller sellers be able to do the same? If they do not, how would they be able to compete with bigger players?
The pilot projects were launched on Friday in Delhi, Bengaluru, Bhopal, Coimbatore and Shillong. The 150 (targeted) retailers/sellers will get to showcase their products on sellers’ apps such as Gofrugal, GrowthFalcons, Digiit and eSamudaay that are connected to the ONDC network. They can deliver products through Goodbox, the only logistics provider that has been onboarded so far. Buyers can use Phonepe and Paytm to get into the network and buy goods from the sellers.
From just about 150 sellers during the rollout of pilot projects in five cities, ONDC is aiming to onboard about 30 million sellers spread across 100 cities in six months.
“Through the pilot projects, we want to learn how it works out in real-life atmosphere where goods delivery, payments and other aspects play out. Once the lessons are learnt, we want to create a playbook, which is like a set of standard operating procedures. We will make that public, so that new comers (who want to join the network) will learn from it and act accordingly,” Anil Agarwal, additional secretary in the department for the promotion of industry and internal trade, told FE.
So far, about 20 entities have contributed a total of Rs 255 crore into the ONDC equity, Agarwal said. These include NPCI and Punjab National Bank (Rs 25 crore each); Kotak Mahindra Bank (Rs 20 crore); Bank of Baroda, NSDL eGovernance and National Stock Exchange (Rs 15 crore each); and BSE, State Bank of India, HDFC Bank and ICICI Bank (Rs 10 crore each).
Agarwal said: “We are creating a robust mechanism for refund, cancellation, public grievance redressal and online dispute resolution. These are very important things on the basis of which stakeholders’ trust will be developed. This is also going to be the biggest challenge for us and we are going to do it.”