By Kunal Jhunjhunwala
India is staring at the face of next-generation e-commerce; set to lead the world in building digital public infrastructure. Powering this up is not an app or a platform but a network, a set of protocols that is enabling the exchange of products and services in an inclusive playing field. The Government of India’s ambitious Open Network for Digital Commerce (ONDC) is bringing about an unprecedented digital transformation in the e-commerce space that the country has been waiting to witness for a long time. To provide new opportunities, ONDC is poised to reinvent and democratise the online marketplace for millions of small and medium-sized businesses by enabling buyers and sellers to a facilitator-driven decentralised network.
Thanks to the rapid expansion of India’s customer base, e-commerce has catapulted itself into a massive industry, significantly picked up on account of COVID-19. According to a joint report by FICCI-Anarock, the eCommerce business is projected to grow by more than three times to $170 billion by 2026 from $38 billion in 2021. According to a report by Bain and Company, India has the third-largest online shopper base, with 14 crore e-retail shoppers in 2020, only behind China and the US. This number is projected to increase significantly with the addition of 37 crore tech-savvy consumers by 2030.
Besides, ONDC has set its eyes on expanding the e-commerce reach to 25% of consumer purchases in India in the coming years from the present 8 per cent. Within the next five years, the network projects to register 900 million buyers and onboard 1.2 million sellers, with a gross merchandise value of 48 billion dollars. With ONDC now having established a footprint in 85 Indian cities and onboarded 800 merchants as well as 26 participants, let’s look at the ways how ONDC is poised to democratise the e-commerce space in 2023.
Ease of Doing Business
The open network aims to address digital monopolies by providing a level-playing field to the MSMEs. The idea is to make them hyper-local by getting them online. This springs from the simple fact that the diversity of products available in the country is much larger than what is available online.
This network will enable the buyer, the seller as well as the logistics provider to talk to each other through a single network across multiple platforms. Any seller can make available the product or service in the open network that any smart buying platform can access. It is not restricted to B2C and will include B2B, with which the impact could be even higher.
Broad Spectrum of Participation
The open network is enabling broader participation in the digital economy for players from diverse sectors including but not limited to banking, telecom, logistics, etc. In simple terms, there is an open opportunity for industries that have a large base of consumers but cannot tap into digital platforms, the network will become a welcoming field to offer more services. Moreover, the protocols standardise the entire chain of operations such as order management, cataloging, and inventory management, among others. This will also simplify operations for a seller and bring in parity in pricing across the portals, thus benefiting the buyers/sellers in general.
The network will provide buyers with more purchasing options through price comparison. Currently, if a buyer wants to buy products online, they must first create a profile with a specific platform, which limits the buyer to the products listed on that platform. ONDC, on the other hand, will allow the display of products and services from all participating e-commerce platforms (including local retailers) in search results across all network apps.
(Kunal Jhunjhunwala, Founder & MD of airpay. The views expressed in the article are of the author and do not reflect the official position or policy of FinancialExpress.com.)