How will ONDC transform the Indian e-Commerce industry?

In the current scenario, a few giant companies dominate the Indian online shopping industry. These large companies, which control about 60% of the Indian online market, provide a problem for small retailers and sellers. However, as the number of consumers grows, it becomes important to include local businesses to compete in this vast market.

As a retailer, you must establish a solid platform to compete effectively with other giants in the industry. For this, the government of India has developed the Open Network for Digital Commerce (ONDC) platform. ONDC address this issue and encourages more sellers to offer their items online. This is the next big initiative from the government side. Earlier it was the UPI that claimed international recognition and transformed the digital infrastructure of the nation.

Increasing the general discoverability of merchants and vendors, ONDC will lead Indian e-Commerce into a new era. In this article, we are going to see how ONDC is transforming the Indian e-commerce industry.

What is ONDC?

ONDC project aims to promote the use of open networks throughout the whole exchange of products and services. This enables network-enabled applications to locate and use services in various industries. It includes transportation, retail, hotel booking, travel, food, and grocery delivery.

All participants in the e-Commerce industry, large and small, will receive equal possibilities from ONDC. Customers have a great deal of choice due to access to all manufacturers and retailers of various platforms and apps.

According to experts, ONDC will bring about a revolution in the digital sphere. Additionally, it will put substantial e-Commerce giants and small regional suppliers in direct competition. The Indian retail sector as a whole will change due to ONDC.

The goal of ONDC

· To enable interoperability to establish an open, inclusive, and competitive market.

· Developing and scaling with the least amount of public digital infrastructure

· Scalable for adoption at the population level

· Accessibility for small businesses

How does ONDC work? 

Imagine you want to buy a mobile phone. In this case, you would visit various e-Commerce sites to check out mobile phones, compare them, and then purchase them. But ONDC has more leverage here. No matter what platform they use to conduct business- buyers, and sellers can see and connect with one another in ONDC.  

As a result, your buying experience will be more successful, simpler, and quicker. When you start looking for a mobile phone on one of the ONDC platforms and view information on the identical product from other ONDC-linked platforms.   

The basis of ONDC is the concept of an open network, where platforms and apps can communicate with one another, and buyers and sellers can transact business using any platform or application. 

Why is ONDC required? 

In today’s situation, a retailer or merchant looking to expand online now has only two options. 

The initial option is to create a website from scratch. This method is expensive since it necessitates eCommerce app development costs. For this, mobile app developers for the retail industry can help you. You can find the best retail app development company in Bangalore for designing an excellent website for your eCommerce platform. 

The second option is to sell the products on online marketplaces or aggregator platforms. While this technique appears far more practical than building a website through an eCommerce app development company, it still has limitations. 

Giant companies in this segment, on their platform, promote and sell your products in exchange for a sizable portion of the sales revenue. There have also been charges of brand favoritism, claiming that these platforms are biased toward a small number of firms.  These marketplaces also occasionally collect information from the merchants to stay ahead of the competition and develop their products depending on consumer demand. 

Another significant area for improvement with eCommerce is the slow development achieved by MSMEs, small businesses, and smaller merchants. Because eCommerce is less common in rural towns and villages, these small business owners need help to use its benefits.  Most have been unable to begin their online professions on these digital selling platforms due to their lack of technological knowledge and limited opportunities. 

The ONDC was created to deal with these problems and promote digital trade. The goal is to make eCommerce available to small businesses and merchants. Organizations like Juspay, phonepe, etc. are building mobile apps on ONDC protocol with the help of the best ONDC app development companies in Bangalore to help support local kiranas and retailers.

Advantages of ONDC

ONDC has the potential to completely alter the e-Commerce business environment in India by establishing a level playing field where all participants may coexist and gain from one another.

To begin with, ONDC will give buyers, sellers, and logistics service providers the advantage of constant visibility and discovery options. ONDC will decrease the cost of discrete onboarding at individual marketplaces for sellers and e-commerce platforms. ONDC can lower client acquisition expenses by changing the advertising paradigm from impressions to transactions by connecting content and commerce.

Here are some of the main advantages of ONDC

Wider reach

The open network wants to open up new doors for breaking up digital monopolies and helping small businesses, traders, and micro, small, and medium companies go online and become hyper-local. By diving into the walled garden model of platform architecture, which concentrates power in the hands of a select few large entities and domains and encourages anti-large-economy practices, ONDC is projected to reshape the e-Commerce industry as a whole.

The three primary components of the community-led network are logistics providers, ONDC buyer apps, and ONDC seller apps. To elaborate on the network, ONDC is a collection of protocols that permit exchanging products and services rather than a platform. It just enables communication across many platforms; there is no central platform. Anyone who wants to sell a product can do so in the open marketplace that any innovative buying platform can access. It will cover B2B as well, which could have an even more significant impact than B2C.

Transparency of transactions

Given that Distributed Ledger Technology (DLT), which provides immutable records, is the foundation of ONDC, all transactions will be secure and confidential. The thorough description of every transaction on the ONDC platform guarantees transparency in all dealings. The continuous expansion of the e-Commerce industry depends on the confidence and trust that this transparency fosters among buyers and sellers. Additionally, it can help in spotting fraud and preventing the emergence of unexpected difficulties.

Access to digital infrastructure

Accessibility of the digital commerce infrastructure comes next on the list. The framework of digital commerce, which contains a range of services like e-Commerce platforms, shipping, payment gateways, and more, is entirely accessible through ONDC. This access may have more significant advantages for small businesses and individuals without access to traditional financial systems. Small businesses can generate more sales and money, supporting their efforts to achieve financial security.

The direct link with customers

The total absence of intermediaries is one of the key advantages of ONDC. There are no middlemen in the transaction; merchants interact directly with customers. Direct interactions with customers enable companies to form deeper connections with them, which, on the other hand, foster repeat business and client retention. Additionally, it allows merchants to upsell their products and services continuously. Businesses can gather customer input in this way and use it to enhance and improve their products and services.

Lower transaction cost

Digital commerce transactions typically involve numerous intermediaries that charge fees for their services, such as marketplaces, payment processors, logistical providers, etc. These expenditures may pose substantial challenges for fledgling companies and SMEs. Small and medium-sized businesses that cannot afford the high transaction fees imposed by e-Commerce platforms can benefit significantly from ONDC. Due to cheaper transaction costs, it enables SMEs to conduct business with distant clients.

Uniformity in strategy

All participants will come to an agreement on interaction procedures using ONDC. The rules of engagement must be clearly defined, given the broad scope of ONDC and the large number of anticipated participants. Moreover, not all sellers may agree with the current payer circumstances. Because ONDC is not tied to a captive ecosystem and does not use proprietary protocols, system costs are anticipated to be lower. Both buyers and sellers would profit from the cheaper system expenses. Compared to the current marketplaces, ONDC will offer a greater variety of commodities, and its reduced middleman costs for the same visibility make it more attractive

Conclusion

ONDC will bring Indian e-Commerce into a new lifespan by boosting the complete discoverability of merchants and vendors. The ONDC is a cutting-edge concept with a large potential market. At this point, the e-Commerce platforms, which a few large corporations dominate entirely, will undoubtedly get impacted by the ONDC protocol. As the economy will suffer due to many small firms losing clients to a few giant corporations, the government’s decision to implement ONDC will help these small business owners maintain their competitive edge. Furthermore, by expanding the reach of their products, they will have the opportunity to grow their firm to a larger size.

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