What is ONDC
Open network for Digital Commerce (ONDC) is a network, which will enable commerce
across almost all segments (from food, electronic..grocery, agriculture, construction
material, hotel & travel booking).
This is the vision of ONDC.
“
An open network for digital commerce that will establish open, inclusive, and
competitive marketplaces online, creating choice and opportunity for everyone, by
everyone
“
The best part about ONDC is that it will open doors for everyone including the smallest
of the sellers located in the remotest parts of the country to ride the e-commerce wave.
What is different with ONDC.
Till now, as a buyer, you may have used various online platforms like Amazon, Flipkart or ordered food from Swiggy, Zomato etc.
ONDC is not a platform but is an open network, which is built with beckN protocol
(Open standard).
In any commerce transaction, there are multiple players like
1. Buyer
2. Seller
3. Logistic team to deliver to the physical good.
4. Insurance team, in case of high value purchase item
5. Financial group, which facilitate the payment & wherever applicable, provide
loans to buyer or seller (say farmer to purchase seeds/pesticides).
6. Rating agencies, which can independently rate a product and overall service
delivery quality.
7. Grievance & Redressal group, which comes into picture in case of dispute.
Till now, when you were purchasing an item from a platform, it handles all these tasks.
Though at first glance, it looks good for a consumer but over a period, these platforms
had started certain practices, which may not be good for many players.
(A) Like, today, for a small seller, it’s very difficult to get listed on a platform. In many
cases, that seller has to give lot of money as commission to the platform owner.
Also, in many cases, when buyer searches for a product on that platform, that small
seller is not sure, whether his product will be shown on first/second page of the result.
So, in many cases, small seller or sellers from small towns are at disadvantageous position.
Apart from that, in case, a seller decides to list his product than he has to list his product
on each platform separately. That incur cost to the seller.
Also, a review/rating for product, remain with that platform only. If a product is good &
got many positive reviews/ratings, it will be visible only on that platform. On another
platform, seller has to again start from scratch.
(B) As a buyer, you need to adhere to/pay to the delivery person, associated with
that platform. So, even if delivery/logistic service is not good, you still have to
depend on that.
My experience
Personally, I had also experienced these issues (though that were at global level).
For my first book. ‘Driving Digital Transformation’, my publisher had to tie up with various
online platforms to list my book as I wanted to sell across the globe.
Though my book has been sold in 20+ countries but it was a herculean task, making sure
that my book is listed/available on online platforms, applicable in those countries.
Similarly, my book has got good rating on various platforms (Amazon.com, Amazon.in,
Amazon.co.us, Amazon.nl, Flipkart etc.).
This is how, it shows on amazon.in 👇
This how it shows on flipkart 👇
This is how it shows on amazon.co,uk 👇
This is how it shows on amazon.nl 👇
This is how, it shows on amazon.com 👇
If you click on those link & see, you will realize that for my same book, each platform shows different rating (different ‘total number of ratings’ and ‘review comments’).
On one site, only 3 reviews/ratings are there while in another one 118 reviews/rating are there. Other sites have 107 or 111 reviews/ratings.
As a Seller (Author), once I started adding up all distinct reviews/rating across the platforms than I realized that my book has got total 123 reviews/ratings but none of the platform is showing that Total review/ratings.
Also, one person ordered in Singapore, ordered the physical copy of my book. Book
was delivered from USA.
Needless to say, that delivery charges were more than the cost of the physical book.
What ONDC will do
An open network like ONDC, will unbundles a series of services that would otherwise be
unified on a single platform.
This means that each discrete service like buyer, seller, logistics agency, financial.
service provider ….can innovate and provide best service at a much lower cost. A win-
win for all.
ONDC will enable, buyers and sellers to be digitally visible to each other. They will be
able to transact through an open network.
It will empower merchants and consumers by breaking silos to form a single network.
This will drive both innovation and scale.
Now any seller—big or small, digitally savvy or not—could participate in an open
network without needing to build the entire ecosystem on their own.
ONDC will spur innovation in all the segments, across all the players. So, we may see
innovation in logistic and delivery agencies (1 day delivery, delivery along with insurance, delivery of multiple order combined together for you and offering a lower service charge).
As all these services are getting unbundled, each player can operate from a position of
strength, innovation, and uniqueness.
Which technology is used in ONDC.
ONDC is built over beckn protocol.
As per their website, https://becknprotocol.io
“
beckn protocol is a set of specifications consisting of APIs, data models, reference
architecture, transaction mechanisms, and global standards that when adopted by
digital platforms, enable the creation of decentralized network.
Such network allows consumers and providers to discover, identify each other and
perform transactions with each other without the need for a central intermediary.
It can be thought of as a common set of rules of communication mutually agreed upon
by several platforms to allow their users to perform discovery, ordering, fulfillment, and
post-fulfillment activities between each other in a standard way.
It is a sector-agnostic protocol, meaning, any industry-specific taxonomy or knowledge
model can be represented using the data model of beckn protocol.
“
Some Interesting facts related to Indian Economy
1. Online Commerce in India is less than 10% (7-9%) of over commerce. In other
developed/developing countries that figure is above 10%.
2. India has around 850 Mn Internet Users, 625Mn Smart phone users. Out of that
around 400 Mn users consume content on social media. Only around 170 Mn
users do online shopping.
3. Share of commerce in the Indian grocery industry is around 2%.
4. Only around 8% of internet users order food online.
5. In India, around 40% of farm produce get wasted. This is due to variety of
reasons like, too many intermediaries between farmer to customer, lack of cold
storage, lack of good logistic system etc.
6. Less than 5 Mn of MSME (out of total 100 Mn) are registered to sell online.
7. More than 50% of MSME are unable to get formal credit due to variety of reasons
like lack of documents, time required to go bank for loan approval etc.
8. India has around 200 Mn unorganized labor. But we are dependent on word of
mouth/reference to discover them in case of need.
Only around 10 Mn can be found out/registered on some online website.
Which new things ONDC can provide
1.Seller from any town can get registered via ONDC. They need not start from scratch
or be digital savvy to start their business online.
2. Once listed on a Seller platform, which is part of ONDC eco-system, they/their
product will be visible to all the buyers.
3. Various other service person like carpenters, home-chefs, plumbers, tailors etc. get
listed on any seller platform & be visible to all the buyers.
4. Various financial system will innovate & can come out various type of loans as per
the requirement.
One example here is, that a group which organizes marriage, family function can get listed.
They can help prospective couple to get ‘Marriage now, Pay
Later’ type of loans.
5. Farmers can get loans personalized to their requirements. As bank can track the
activities/behavior of a farmer or group of farmers from a village, they will be more
willing to offer loans as per their need.
6. Alongside this, insurance companies can offer suitable insurance for crop based on
the digital footprint of the farmer.
7. In nutshell, access to consumer data could allow banks and NBFCs to design new
financial products and expand their portfolio.
8. If all players (seller etc.) are uploading their data online on GSTN, government can
gauge GST as well as GDP data, almost on real time basis.
No more waiting for day/months.
This will help government and other groups to take meaningful action. That is, based on the purchase/sale of a product across India, company can figure out, whether the new product is really successful or not, in which geography/state demand is high etc.
9. New type of work for technology providers will be needed. It can be ‘Search Product
as a Service’, ‘Inventory/Catalogue as a service for small time sellers.
10. Various agencies can participate who can help in comparison of all products across
India. (say best price for a formal shirt for person with shirt size of ‘Large fit’).
11. Rating agencies can come who can provide certificate/badges to various
service/product providers based on earlier product delivered.
12.Decrease in inventory holding cost and reduced losses due to damages and expiry
due to better visibility on the digitized inventory
13. Better discovery & enhanced availability could boost community group buying,
particularly from smaller towns, which could result in the consolidation of orders served
at a potentially lower cost with a more efficient supply chain
14. Today, if you order 4 items from 4 platforms, delivery person associated with
each platform, delivers you separately. Now, based on the customer requirement, these orders can be clubbed together and delivered at one shot.
This will save money for customer as well as sellers. Better utilization of delivery
fleet.
15. ONDC can unleash the power of the informal economy by accelerating the
digitalization of small sellers, (e.g., home chefs) and enabling low-cost marketing
(e.g., via WhatsApp) and delivery models
16. ONDC could spur innovative financing structures—including operations based
funding, credit issued against transaction history on the network, and credit
based on nonconventional markers.
For example, for farmers, it can look at PM Kisan credit, subsidy flows,
crop insurance debit & arrive at new personalized loans for the farmer.
Also, here integrations with existing solutions (such as
Agristack) can also leverage farmer data to inform credit decisioning.
In nutshell, as all players on this digital network, they will be creating digital footprints,
which can be used to
(A) Arrive at various finance options to the players
(B) Based on historical data, relevant help to MSME, farmer or service person
(Plumber, home-chefs etc.) can be provided.
Challenges for ONDC
1.One of the biggest challenges is making common taxonomy for various product
across sectors.
Without a common taxonomy, buyer will not be able to discover/identify the product,
which they are searching for.
For example, one type of pulse is called ‘Arhar Dal’ in north India. But in south India, that is called as ‘Toor Dal’. Now, if someone is searching for ‘Arhar Dal’, results of ‘Toor Dal’ may not get shown though both are same.
2. Buyer App need to be transparent in, why some products were listed on first
page of the result. No hidden algorithm.
3. Each player needs to digitize their inventory & catalogue data.
4. On similar line, logistic, Supply Chain & delivery data need to be digitized for
transparency as well for creating digital footprint for future use.
5. Here, series of services will be unbundled. No one player controls the end-to end
value chain. This means standard APIs & policies, which everyone should
adhere to.
A customer journey goes from search, discovery, order placement, fulfilment to
payments, returns, and grievances.
ONDC, need to address the concerns with a mix of clear network policies,
enhanced and optimized API definitions, and innovations in third-party tools and
solutions.
6. Big investment will be needed in digitalization of all data across the value chain. As mentioned earlier, I see a big role/opportunity for technology providers here.
If some cost-effective solution comes, which can scan the products kept in shop and upload on Seller App, it will be in big demand. That technology solution also has to keep on updating the Seller App, whenever, some other products come in that shop or earlier item get sold of.
Shop owner can maintain product data (details about the product, quantity available, price etc.) on Seller App only. Based on this data, the manufacturer of that product or the wholesale person/company can decide, when & how to replenish the stock at that shop.
7. Help in vernacular languages should be offered to all players across the
segments.
Many players many are not comfortable with English. May be a chat-
bot, which can answer the queries in the native language will be required.
For example, farmers should get help on seed, pesticide buying, loans &
insurance for the farming as well as mechanism to better price discovery while
selling their crops.
8. Creation of cold-storages, provision to make sure that damage free delivery is
done for fragile items and facility to return/refund with proper redressal system.
9. Provision for after sales service, ongoing maintenance and reseller market
should also be created here. That will instill trust in buyer’s mind.
10. Certification agencies: Provide QC certificate to resellers based on product
testing, to boost seller’s reliability on the network.
11. Product pricing partners: Engage with resellers to price their products using
robust algorithms, helping resellers earn consumer’s trust.
12. Video interactions among sellers, logistics providers, and consumers could
enhance this effort, improving communication and transparency throughout the
delivery process
13. Create an enhanced user interface and user experience. This means that buyer
apps will need to have very good user interface and experience (UI/UX).
14. Good support system for all stakeholders in the initial days till everyone (majority
of players) come on board.
15. Apart from various product across sectors, we have diversity of culture across
the nation.
Various festivals, family functions are celebrated as per the religion & culture.
Players can device new products by taking into account that part (that new
product around religious festival, national day, marriage season, ..some months
are not regarded as auspicious for new purchase and some days/months
are considered good for buying new things).
India is rich….and one need to participate in Indian economy by understanding these diverse culture..the unity in its diversity.
Conclusion
ONDC is a step beyond the current platform-centric e-commerce system where both the buyer and seller have to use the same platform or application to conduct a business transaction.
Small traders have for long been crying foul at the unfair trade practices of current e-tailers.
Now ONDC could emerge as a network of networks.
It will bring decentralization, unbundling of various discrete services, provide interoperability & bring transparency.
ONDC will be key to enhance digital adoption & inclusion of all sectors, increase visibility, utilization, and efficiency across the commerce sector.
If your product is good, ONDC will give you the power to sell your product to anyone across the country. Also, you need not worry about learning various digital technology or worry about whether your product will be shown or no.
Rest assured, ONDC is a win-win for all stakeholders.
