By Lagna Panda and Trisha Shreyashi
Open Network for Digital Commerce is the latest buzz in the town. ONDC is essentially a set of interoperable protocols that aim to make e-commerce markets more competitive by unbundling various components of an e-commerce transaction. ONDC will allow buyers to design e-commerce transactions by enabling buyers to access products and services of various sellers, and choose from payment gateways and logistics providers available.
While ONDC is being hailed as the next game changer like UPI, will it see the same success that UPI did is the big question?
Unlike UPI which was a pure technology play, ONDC’s success will largely depend on network effects. End-consumers will be incentivised to use ONDC if the choices available are better than the options on other platforms, or if the prices on ONDC are lower than prices on other platforms.
What ONDC means for the food delivery space?
Swift order fulfillment and customer satisfaction form the bedrock of online food delivery businesses. Customer satisfaction depends on several variables – price, food quality, service quality, promotions, and privacy. Of these, the most important determinant remains the ‘pricing’ which has a direct impact on the value perception of products and services and then on customer satisfaction. Consumers tend to emphasize buying the product at the right price and make sure of it by comparing it with other competitors.
A few weeks back, there was a lot of clamour about low prices for food delivery on ONDC compared to Zomato and Swiggy. This was possible because consumers could multi-home. Tweets comparing prices on ONDC with prices on Zomato and Swiggy went viral. While a huge volume of food ordering on ONDC did take place within a short span of time, the recent revision to ONDC’s incentives and discounts policy is likely to lower the pull towards ONDC. ONDC has recently revised its incentive policy and has capped incentives at INR 100 per order in contrast to INR 125 per order earlier.
Also read: Delivery disruptors: Issues that are bothering food delivery business
While price comparison was possible for food delivery, multi-homing may not be possible for apparel and other wearables given the high volume of SKUs available on various platforms. This apart, hyperlocal delivery may raise fewer issues than inter-city deliveries will, mainly where consumers wish to return products and claim full refunds. In the case of non-hyperlocal deliveries, implementation of the legal relationships among the network participants remains a high-risk area.
There are several other issues and concerns with the ONDC’s policies that are likely to come up once ONDC marches past its teething phase, especially for the consumers.
Ironing out the creases
First, the ONDC Network Policy requires buyer-side and seller-side apps to put in place “adequate” grievance redressal system. Presumably, network participants can design their own grievance redressal policies for transactions where there are payment failures, but orders are processed. This discretion is likely to result in the adoption of non-uniform policies by network participants which may lead to a logjam where policies will conflict.
Second, the IGM Policy requires resolution of an issue raised by a buyer or a seller by the concerned buyer side app or seller side app (depending on the stage of the grievance redressal process) within 24 hours. The 24-hour timeframe is extremely onerous, considering there will be teething issues in the initial stages of implementation. Notably, the Consumer Protection (E-commerce) Rules, 2020 mandates e-commerce entities to resolve complaints within one month of receipt.
Also read: How e-commerce brands can leverage power of personalization for better customer experience
Third, while the IGM Policy provides for an “online dispute resolution” (ODR) mechanism that aims to resolve disputes expeditiously, it is voluntary in nature. Where ODR is initiated by one network participant, other network participants will have the option to refuse to resolve issues through ODR. In such cases, the entity / individual may choose to initiate proceedings before the consumer forum or courts, as may be applicable. In fact, the IGM Policy states that ODR mechanisms will not bar remedies available to consumers under the Consumer Protection Act, 2019.
Lastly, the ONDC Network Policy requires network participants to notify cybersecurity incidents to ONDC within six hours of becoming aware of whether the breaches “may have an impact on the ONDC Network”. This 6-hour timeframe is not sufficient to allow network participants to assess whether a cybersecurity incident or breach may impact the ONDC Network.
ONDC policies must include robust measures to protect consumers’ rights and interests. If the policy lacks watertight provisions for dispute resolution, consumer redressal mechanisms, or fails to address issues like refund policy, counterfeiting, fraudulent practices, or misleading advertising, it could leave consumers vulnerable to exploitation.
At the same time, it is pivotal to ensure seamless integration by taking into consideration the challenges faced by independent restaurants that manage the logistics themselves. While larger network participants may still be able to comply with such requirements, smaller restaurants and retailers may not be in a position to comply with such hard and fast requirements.
(The authors: Lagna Panda is a Delhi-based advocate, and Trisha Shreyashi is an advocate and columnist. Views expressed are personal.)