ONDC will transform the e-commerce landscape in India | Understanding ONDC - Big faction

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ONDC is short for Open Network for Digital Commerce, it is an initiative by the government of India to promote an open network for exchange of goods and services over the Internet. This basically means that the government is trying to create a level playing field for all the small business owners in India. ONDC is promising same power and features to these small owners that big e-commerce companies like Flipkart and Amazon have.

Today if you want to sell products online, you just have two options; either to start your own website and sell it there or register on platforms like Amazon and Flipkart and sell it there. The issue with first option is, it requires knowledge of tech - to build a website, inventory management, hiring a delivery partner, payment partner etc. This is a big hassle.

If you register on Amazon or Flipkart, you will have to pay hefty fees to them every time you sell something. This commission is generally in the range of 20-30%. Many people are still paying this commission because these platforms provide all these facilities to them, like storing their products, managing the inventory, delivery of the products, payment etc. But the issue with this is, this is limiting the growth of these small players. These Foreign brands have monopoly over Indian e-commerce and this is one of the important reasons for introducing ONDC.

ONDC is trying to become UPI for India's commerce sector. ONDC could be a revolution for Indian D2C brands and it will solve two of the major problems D2C brands face in India. Keeping customer-acquisition-cost (CAC) low and efficient inventory management and customer experience, which includes order tracking, post order issues like return, replacement, grievances, or feedback that can make or break their trust in your brand.

ONDC can be a game changer for these small businesses as now you won’t have to pay anything to reach all these customers. All you have to do is list yourself with ONDC and customers across the country can find you from any application of their choice. The government has compared this with ‘hypertext transfer protocol for information exchange over the internet’ where you could reach millions of customers without spending anything. Next big issue right now for D2C brands is efficient inventory management. ONDC promises to solve this by standardizing operations like cataloging, inventory management, order management and order fulfillment. This would mean that as a small seller, you could use any ONDC compatible application and you don’t have to worry about managing everything on your own.

There are many challenges with ONDC as well, which needs to be addressed. Firstly, data-privacy concerns. Now this is a concern involved with every of the government's massive projects; something we recently witnessed in the case of Aadhar, where the government itself warned people that their Aadhar data could be misused. In case of open commerce, the data could be even more sensitive in nature; your bank accounts, credit card number, addresses, if gone into wrong hands could pose a big threat. Next major challenge would be to maintain quality or the product. Currently, the quality control is the responsibility of these platforms like Amazon and Flipkart, wherein if you receive a fake product, you could return it and ask for replacement or even refund. In the case of ONDC, there has been no addressal of this issue; will there be inbuilt technology to deal with this or will these companies who plan to work with ONDC, make sure of the quality control.

It will be interesting to see how ONDC unfolds in India. An open network for doing business will certainly give confidence to millions of retailers and small brand owners to come online and do business and we could see thousands of unicorns in the future just from taking this direct-to-customer approach. However, we as buyers have become very comfortable and spoiled with the services provided by these e-commerce giants, from order tracking to return and refund, we tend to get aggrieved with every small issue we face. And this would be a challenge for ONDC to solve.
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