The government-backed Open Network for Digital Commerce (ONDC), which aims to give small businesses and mom-and-pop shops access to procedures and technologies typically used by major e-commerce platforms like Amazon and Flipkart, has welcomed US company Microsoft as the first major tech company to join.
The software giant plans to introduce social e-commerce, often known as group buying, to the Indian market. This will involve a shopping app for Indian consumers and their social network, which will use the ONDC network to find the best prices among sellers and retailers.
An initiative called Open Network for Digital Commerce (ONDC) aims to advance open networks for all facets of the exchange of goods and services over digital or electronic networks. Open specifications and open network protocols will be used by ONDC, which will be independent of any particular platform. It is being created as a rival to the dominant duopoly that Amazon and Walmart-owned Flipkart now control in the Indian e-commerce market.
With Microsoft joining the ONDC team, the project gains its first well-known international brand name before its Bengaluru launch. The Department for Promotion of Industry and Internal Trade (DPIIT) launched a test of ONDC in May of this year, with hopes to onboard 150 dealers in locations like Delhi-NCR, Bengaluru, Coimbatore, Bhopal, and Shillong.
The interfaces hosting the buyers and sellers are separated by the ONDC platform. Currently, Paytm hosts the buyer side interface, while GoFrugal and other competitors host the selling side interface. E-commerce behemoths Flipkart and Amazon are reportedly thinking about joining the network, according to various media sources.
The growing dominance of international players in India’s e-commerce ecosystem was noted in an ONDC strategy paper released earlier this year. It also noted that the high investment required to create alternatives to the integrated solutions provided by the big players has turned into a barrier to entry for digital marketplaces.
Given that the value these small players create is stored with the larger platforms, it also raised the issue of marketplace vendors’ incapacity to leave the platform ecosystem. In light of this, ONDC seeks to change the marketplace ecosystem from an operator-driven platform-centric model to an interoperable, decentralised network that is driven by facilitators.
A number of sellers can offer their goods and services on the network which could be accessed from different platforms, with the delivery and payments infrastructure being handled by different companies. ONDC is being seen as the UPI-moment for the e-commerce market, and its whole claimed value proposition lies in “democratising” digital commerce, taking it away from the clutches of a handful of deep-pocketed companies, as is the case currently.
Theoretically, ONDC may make more sellers digitally visible, which would enhance the options available to online customers at a range of price points.
