When you have to buy something online what first comes to your mind – Flipkart or Amazon, right? So basically, in India, there is a monopoly or duopoly of some giant tech companies which encompass the consumer around them and small retailers have to suffer it. So, on 8 May 2022, the Indian government launched a pilot phase of something called the open network for digital commerce (ONDC).

Therefore, ONDC is a digital platform that allows all merchants and consumers to sell and buy goods using a B2C, or direct-to-consumer, business model. Let’s use Trivago as an example to demonstrate this. Trivago compiles a list of all nearby hotels and online hotel services and compares their prices in one location. The Indian government does the same thing to assist small merchants in switching from their existing centered approach to an open network.

“When the ondc comes in there is a possibility that even a small retailer would be able to be visible immediately on multiple platforms”

Now firstly, trying to understand what major problems in the market, force the government to take this step i.e. Why there is a need for ONDC. 1.”Aggregator superpower misused” The businesses operate in India using two significant e-commerce models: the inventory model (where they purchased goods in large quantities at a discount) and the marketplace model (seller independently sell their products to consumers by e-commerce platform). The inventory model allows e-commerce companies to make enormous profits. So, the government of India issued a regulation requiring e-commerce companies to only use the marketplace model in 2016, but they still find a way to increase their profit. Therefore, it is very important to take action to support small and micro-businesses. 2.”Deep Discounting”, These giant companies use the best time for discounting to attract the consumers and this directly hurts the small retailers who are not able to match these deep discounting i.e. This clearly hurts the offline commerce economy. 3.” Copying the small sellers”, These big companies have all the respective user data by which they can trace the maximum selling product and copy it, manufacture it and sell it at a lower price. These are some of the main reasons why the government is actually launching the ONDC.

Now let’s understand how the Department for Promotion of Industry and Internal Trade (DPIIT) manages the ONDC System to help smaller sellers. ONDC basically works on three-point rules: Discoverability, Interoperability, and price comparison. Discoverability means finding the need some product at dirt cheap cost delivered in a few hours i.e. You will have a unified search feature wherein you can get the products from all e-commerce sites without having to download them, without having to switch between them, and without having registered on them. Interoperability means the system in which different vendors operate together in a coordinated way. And ONDC uses Beckn Protocol to handle interoperability. Just like how UPI enables users to send money from App A to a merchant who is using App B. The third point of work is price comparison, which provides a list of single products on different platforms on a single site.

This is the govt intention to empower merchants and consumers by breaking the walls to form a single network to drive both innovation and skill.

Presently, ONDC is in its pilot stage and the government has set up a nine-member advisory council, including Nandan Nilekani from Infosys and National Health Authority CEO R.S. Sharma, Anjali Bansal founder of Avaana Capital,  Arvind Gupta Co-founder and Head of Digital India Foundation, etc to work on this and set up in five cities – Delhi NCR, Bengaluru, Bhopal, Shillong, and Coimbatore. Based on the pilot exercise and after the network stabilizes, ONDC will be expanded to 100 cities and towns across India by October 2022. The goal is to accommodate 30 million sellers and 10 million merchants online.

We are all indebted to Nandan sir for his contribution to India in his initiatives Aadhaar, UPI, Fastag, and Diksha are all had massive success and many more are in the pipeline. His vision of India is truly remarkable. No other countries come close to India when we talk about societal platforms and digital public goods.

I can’t predict whether ONDC will work or not…(Tons Of factors to be considered such as Supply chain management, corporate work culture, Monopolistic Market of Tech Giant, Political Stability, Geopolitical Equations etc etc ) but there is one thing for sure I will say that this will help in boosting our economy at a higher rate and this will create a huge impact on the e-commerce sector. Actually, this is the most complex problem the govt has ever solved so it would be interesting to see how the govt actually solves the problem to break the monopolies and duopolies of multinational e-commerce companies.

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The White Pigeon

When the thoughts express through pen ✍️✍️