With IDFC First Bank signing up for the Open Network for Digital Commerce (ONDC) joining Microsoft’s shopping app, the platform is gearing up for its launch in Bengaluru. The pilot is now running in more than 50 cities and towns. Right now, ten banks are in various stages of preparedness for joining the protocol.
As was anticipated, banks are expected to run apps for both buyers and sellers on the platform. IDFC First has enabled a platform for buyers to help them discover sellers and has also started onboarding small merchants, who are its current account customers. “By leveraging ONDC, we can enable merchants to mobilise the network effect and unlock value at scale,” B Madhivanan, chief operating officer, IDFC First Bank said.
So, banks could also expose their business consumers to the platform, make them visible and help them sell more. These transactions could become the foundation for flow-based lending since banks will have access to the client’s daily sales — product-wise — which would help them assess the working capital requirements. It could become a powerful tool.
Food delivery, groceries and apparel are among the early categories that would be launched on the network. Girish Pai, founder and CEO, GrowthFalcons, believes the commissions that restaurants pay to seller apps would be far lower than they currently fork out to Zomato and Swiggy. “Right now, they pay about 30-35%, but in general smaller merchants, vendors and restaurants would save anywhere between 15% and 20%,” Pai told FE.
Abey Zachariah, VP at logistics player LoadShare Network, feels smaller sellers are likely to get volumes they’re looking for. The technology is fairly simple, Zachariah said, adding the hyperlocal APIs can be used by multiple players to push orders to the logistics players. Loadshare is the first on-demand logistics player on ONDC. Zachariah expects ONDC could take three-four years to achieve its potential and doesn’t expect it to move the needle for Loadshare immediately. “We are in it for the incremental business but you never know how the network effect kicks in.
Siddarth Pai, Founding Partner, 3one4 Capital, believes ONDC will empower consumers giving them a choice of service providers, transaction closure, payments and logistics. “They will have more bargaining power,” Pai said. He points out the ONDC would pull down the walled gardens of incumbents and allow for easy and equal access to the seller pool for all participants.
Kumar Vembu, GoFrugal Technologies believes small sellers would onboard ONDC because they would be more visible and their margins too would be bigger. “Sellers will receive all feedback relating to pricing, delivery or quality would be given to the sellers and they can fix this. Currently, Amazon and Flipkart do not pass on the information so clearly,” Vembu said.