ONDC, which stands for Open Network for Digital Commerce, is being built by the Department for Promotion of Industry and Internal Trade (DPIIT) to democratize the e-commerce market in India. This initiative will help the central government to curb digital monopolies by the e-commerce giants Amazon and Flipkart.
The ONDC seeks to achieve similar results that UPI (Unified Payment Interface) achieved a few years ago. When UPI was launched, it disrupted the digital payment domain, and it allowed people to send or receive money from any payment platform. Similarly, ONDC will help buyers and sellers to do transactions regardless of the platform they are registered to. This will democratize digital commerce and move it away from the platform-centric models like Flipkart and Amazon to an open platform.
According to experts and think tanks, once the ONDC is implemented, it will boost smaller and new retailers by making them more visible in the online marketplace. Also, it will empower both suppliers and consumers and break the monopoly of ecommerce big platforms.
Recently, trader bodies have criticized Flipkart and Amazon for violating fair competition practices by providing heavy discounts and preferentially listing the sellers. To speed up the process, the central government has allocated a budget of ₹10 crores, and Union Minister of Commerce and Industry, Mr. Piyush Goyal, reviewed the complete progress of the project.
The government has also set up a council of nine members, including Nandan Nilekani from Infosys; R.S. Sharma, CEO of the NHA (National Health Authority); Anjali Bansal, founder of Avaana Capital; Arvind Gupta, head of Digital India Foundation; and many others. This council will oversee and propose the necessary steps that should be taken to design and accelerate the adoption of ONDC.
According to the official statement from the government, these steps will provide a start-up mindset among people, and the system will be managed by a team with a futuristic vision and a deep understanding of commerce. As ONDC will operate as a non-profit organization, it will remove incentives and focus on ethical and responsible behavior alongside providing trust, accountability, and transparency.
Previously, Som Prakash, Minister of State for Commerce, while addressing the MPs in the Lok Sabha, also stated that ONDC would allow consumers to match their demands with the nearest available supply and provide freedom to consumers to choose their local businesses.
As of now, if we take a look at the current ecommerce market situation in India, during the festive season of 2020, Walmart-owned Flipkart captured a 66% share of total Gross Merchandise Value (GMV) worth $8.3 billion, and Amazon has to satisfy with 34% share. According to some reports, the e-commerce market in India is expected to grow at an exponential rate of 84% and reach $111 billion by 2024.
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