February 20, 2023
Open Network for Digital Commerce (ONDC) is a network based on open protocol and will enable local commerce across segments, such as mobility, grocery, food order and delivery, hotel booking and travel, among others.
ONDC was supposed to change the face of Indian E-commerce and deny likes of Amazon and Flipkart monopoly over Indian market.
As a seller, if your Web site is ONDC enabled- ANY shopping site can discover you and offer your products to customers. This would reduce power of platforms on Sellers - who in a way decide who gets to sell and also take a chunk of their revenue as share.
Good idea- but then where is it? Why is every seller not on ONDC and what sites use ONDC to help them discover? Paytm did some pilots with a lot of fanfare but has gone quiet now.
There are some fundamental issues with ONDC:
If answer to all of above is "platform" then you know WHY Amazon and Flipkart dominate India- they take "OWNERSHIP". They have set up massive systems, processes and people to handle logistics, onboard sellers, answer customers, select products, and take losses for returns, product damage etc.
In case of ONDC, there is no central force governing multiple stakeholders- each is on his own and expected to work in good faith and provide perfect service. Anyone who knows India knows that is a stretch.
But the key issue of ONDC is its philosophy- that a cooperative tech driven approach can beat those scary, monstrous, margin killing e-commerce giants. ONDC assumes that putting a few technology protocols and APIs will automatically tilt balance of power in favor of humble sellers and give a great deal to consumers.
Private enterprises exists for profits and they play hard. (Though both Flipkart and Amazon still make losses!!) Larger sellers play even harder with their national distribution capabilities giving them leverage. Online and offline retailers and omnichannel players, D2C players, hyperlocal companies- all of them fight it out everyday in marketplace to win consumers. Some fall by wayside, some win for some time (Future), then get eclipsed by others (Reliance retail).
In its current form, ONDC is like a 15th player waiting to be selected- let alone being in playing 11. Thus, ONDC is unlikely to see much traction and will remain a curiosity.