What is ONDC?
Open Network for Digital Commerce (ONDC) is a government-backed initiative to develop an open and transparent framework for e-commerce in India. ONDC is not a specific platform, but rather a set of open standards and protocols that will allow different e-commerce platforms to interoperate with each other. This will create a more competitive and efficient e-commerce market, benefiting both consumers and businesses.
When Was ONDC Launched ?
ONDC was launched in 2021 by the Department for Promotion of Industry and Internal Trade (DPIIT) of the Government of India. The project is being led by the National E-Commerce Development Authority of India (NEDA).
Why Was ONDC Created ?
ONDC was launched to curb “potential rent seeking” behaviour from top e-commerce platforms in retail, food delivery and cab aggregation, and leave each part of the value chain, from cataloguing orders to actually delivering them, to different players.
ONDC is based on the principles of open and transparent competition. This means that any company can participate in ONDC, and that all participants will be subject to the same rules and regulations. ONDC will also provide a level playing field for small and medium businesses, which have often been disadvantaged by the dominance of a few large e-commerce platforms.
Impact of ONDC
ONDC is based on the principles of open and transparent competition. This means that any company can participate in ONDC, and that all participants will be subject to the same rules and regulations. ONDC will also provide a level playing field for small and medium businesses, which have often been disadvantaged by the dominance of a few large e-commerce platforms.
ONDC is expected to have a significant impact on the Indian e-commerce market. It is estimated that ONDC could create up to 10 million new jobs and add $1 trillion to the Indian economy by 2025. ONDC is also expected to benefit consumers by providing them with more choice, lower prices, and better quality products and services.
The launch of ONDC is a major step forward for the Indian e-commerce market. It is a bold initiative that has the potential to transform the way e-commerce is done in India. ONDC is expected to create a more competitive and efficient e-commerce market, benefiting both consumers and businesses.
Benefits of ONDC
There are many potential benefits of ONDC for consumers, businesses, and the Indian economy as a whole. Some of the key benefits include:
- Lower prices: ONDC is expected to lead to lower prices for consumers, as businesses will be able to compete more effectively.
- More choice: ONDC will provide consumers with more choice, as there will be more e-commerce platforms to choose from.
- Better quality products and services: ONDC will encourage businesses to offer better quality products and services, as they will need to compete more effectively.
- Increased job creation: ONDC is expected to create millions of new jobs in India, as businesses expand their operations to meet the growing demand for e-commerce.
- Increased economic growth: ONDC is expected to boost economic growth in India, as businesses invest and expand their operations.
ONDC Incentives
Just like with the Unified Payments Interface (UPI), the payment technology with which ONDC is frequently compared, new participants in the network are receiving financial incentives — which some have passed on to customers in the form of significant discounts — to provide “handholding support”. The incentives are funded with financing that ONDC raised from banks.
The incentives are leading to ONDC growing at a pace comparable to the large food and e-commerce retail giants it is up against. On Wednesday, Minister of State for Communications Devusinh Chauhan announced that India Post would join ONDC, gradually shaping it as one of the government’s most closely supported pieces of Digital Public Infrastructure (DPI).
Pressure on Food Delivery Partners like Swingy and Zomato amid Rising Inflation and Food Costs
While ONDC’s architecture allows “network participants” to focus on whittling down the economics of their individual part of the e-commerce process, there is also the larger goal of reducing the power of the large players in the market, with food delivery players like Swiggy and Zomato most under threat. As the honeymoon period of financing rapid expansion and acquiring customers with well-subsidized discounts plays out this year, these players find themselves under pressure to cut costs themselves.
“Restaurants have also been pressurized in the sense that thirty to 35% of the commission stays with Zomato and Swiggy and only some of the rest is transferred to the restaurant,” Ritu Chhikara, who heads the Centre for Sustainability and Social Responsibility at BML Munjal University said. “The restaurant also has to make profits. So, they eventually increase the price of various items on the menu.”
ONDC to Integrate META Commerce Platform Pay NearBy Mall
Pay Nearby Aims to upgrade every retailers on its active network of millions of Users to benefit from ongoing eCommerce Revolution. It will enable easy availability of Goods and Services in an assisted mode at the last mile .
ONDC Reduces Seller Incentives for Delivery as Daily Transactions Via ONDC Goes UP
This may hurt ONDC as the incentives is one of the factors why the ONDC transactions are going up and if at this juncture the seller incentives are reduced , then the transaction count may go down. This may bring the Transaction of Food Delivery Companies like Swiggy and Zomato go up.
Future Opportunities of ONDC
According to a press statement issued by ONDC, its main aim is to dramatically increase e-commerce penetration in the country by enabling population-scale inclusion of all types and sizes of sellers. “By facilitating scalable and cost-effective e-commerce through the open protocol, ONDC will empower startups to grow collaboratively,” ONDC stated. The platform has already gained popularity with transactions clocking at 10,000 orders a day. According to Nandan Nilekani, Infosys cofounder and now a member of ONDC advisory counsel as ONDC onboards more and more customers, it has the potential to disrupt not just food delivery but also all kinds of e-commerce in India.
There is palpable excitement on the restaurant front, too. “ONDC will change the entire ball game. Since it’s a direct link between businesses and consumers, restaurants such as ours will be much relieved from the high commissions that were being charged so far. It will also be super convenient for both restaurants and consumer in terms of dealing with any food complaints and delivery issue since the direct link will manifest a quicker response that was otherwise going through a big loop of intermediary chains. It will mainly benefit restaurants like us who are running a self-owned fleet as we will be able to make a good use of our fleet to serve customers over the ONDC platform,” says Debaditya Choudhary, managing director, Chowman chain of restaurants. The group which owns 29 Chowman outlets across Kolkata, Bengaluru and Delhi NCR is all set to onboard the platform.
