Revolutionising the e-market: ONDC's impact on India's e-commerce landscape

In recent years, the digital revolution has changed the way business is done around the world. One of the sectors at the forefront of this transformation is e-commerce. India, with its large population and rapidly growing internet penetration, has seen rapid growth in the e-commerce market. But now with the introduction of the Open Network for Digital Commerce (ONDC), the scenario is about to change dramatically. This ambitious initiative by the Indian government has the potential to reshape the dynamics of the country’s e-commerce market.

ONDC, Open Network for Digital Commerce, is a technology infrastructure supported by the Government of India. It operates on a network-centric model, allowing buyers and users to transact regardless of the platforms or applications they use, as long as those platforms or applications are connected to the open network. This means that users can engage in transactions seamlessly without being limited by the specific platforms or applications they prefer. The ONDC aims to create a more inclusive and interconnected digital commerce ecosystem in India.

To delve deeper into this topic, we had the opportunity to interview Shireesh Joshi, the Chief Business Officer- ONDC. In a conversation with Dataquest, he shed light on various aspects of the initiative.

Could you please give a brief overview of the idea behind the concept of ONDC?

ONDC's goal is to help any buyer or seller anywhere in the country selling any product or any service, whether B2C or B2B, to be able to do that sale or purchase. So connect all buyers, and all sellers across categories to a single network. Today e-commerce takes place platform by platform and different platforms do different things. So you have one set of platforms where you will buy things for the home. You have another set of platforms for ordering food, another set of platforms for ordering medicine, another one for hailing a taxi, another one if you're a government buyer, etc. So for everything, there is a different platform where buyers and sellers both have to come on a single platform and be able to buy what they want to but that gets very complicated because then you have to have multiple applications. You have to remember which one is for which and you don't have universal visibility even within a platform. The seller will have to register in multiple places; the buyer has to register in multiple places. So what ONDC is doing is creating a network where everybody connects only once. It's a common network. Everybody connects only once and everybody can then transact with everybody else. So that makes it easier to participate in commerce,  allows many more people to participate, and allows many more organizations to then bring on board buyers and sellers.

Today, very few people, very few companies can do that because it requires a lot of investment and it requires a lot of scale building.  Whereas here it will be possible without that amount of investment and more importantly through building a much bigger scale through the participation of everyone. 

What market trends and changes do you foresee impacting ONDC shortly?

Market trends are actually for us to make rather than being affected by them, we will be making them because it is a new revolutionary way in how commerce will take place. So a lot of things will happen that could not be imagined before. There is a certain positive momentum toward digital commerce that helps. There is already a very large awareness of what digital commerce is, and what it needs to do well that already exists and that also helps. But more importantly, ONDC will facilitate much greater participation even amongst buyers and sellers who are currently not buying or selling digitally to also become part.

So in much the same way, UPI was able to reach a large volume of people who didn't have digital payment capability.  Now they can.  Similarly, ONDC will enable a large pool of buyers and sellers to transact even though they currently do not.  So that's what's going to change the scale of operation in that sense. 

Is ONDC on track with its ambitious target of 48 billion dollars annual GMB and 1.2 million by 2027? How many sellers are currently on the platform?

Those goals were defined and set actually at a very different point in time when we were still developing the technology.  And I think now the goals will be defined much more by the participants who are there because actually, it's for them to do it. And so I would say the previous one was more an estimate rather than a goal. And every quarter, every month, we're refining where we are headed based on what is ready and what is there to come. So every sector requires certain special arrangements, treatment, and getting participants on because a seller can't sell till there is a buyer for that particular product and there is delivery for that kind of a product. And so you have to build this sector by sector and that takes time.  But eventually, we are sure that we will not only achieve those numbers but even go past them.

Which emerging technology that ONDC plans to leverage?

We are building our protocol. It's not so much technology as it is a protocol. Every open network requires its protocol. So for email, we have the SMTP protocol, for the internet, we have the HTTP protocol, for UPI, we have the QR code.

So every transaction between two parties of any kind, whether it is reading content or making money, payments, or everything, requires a language by which both parties can understand. That's called the protocol.  And so what ONDC is essentially the protocol that connects the buyers and sellers and service providers so that they're able to complete that transaction. 

What are the implications for the consumers and small retailers and how will it differ from incumbents like Amazon and Flipkart?

I think we have to look at incumbents in a much broader sense. So the two names you mentioned are in a certain category of products, but then you have different companies who are doing, e.g., taxi ride-hailing. You have other companies that are doing food ordering. So there are many kinds of digital commerce companies. And Open Network is an open network for everyone. Open Network is an open network for everyone. And it is possible for and it is a good idea even for them to join. But because ONDC has created e-commerce by unbundling, you don't have one party doing everything, you have different entities doing different parts. So it creates the opportunity for mixing and matching.  And many different kinds of use cases are possible on ONDC that are not possible today.

And let me just take the combination. So today, if let's say I was going on a holiday somewhere, I would be probably booking my flight on one application. I'll book my hotel on a different application. I'll book my taxi to the airport on a third application. If I wanted to buy some snacks and some other special clothes like outdoor clothes or something, then I'll be buying them to get another application. So for a single project, I’m going to multiple applications today to buy because each application today is a specialist. If I want to carry some medicine along, then I'll be going to get another application. So we go to different places to buy different things. One of the things that ONDC will enable is through a single application; all of this can be bought. So I'll be adding flight ticket, hotel, room, taxi, medicine,  food,  snacks, and outdoor clothes to a cart,  checkout, and done. Now that is not possible today. So that's just one example of how consumers' life will change once ONDC is present. For sellers, similarly, sellers do not have to go to multiple platforms to sell their products.  They just have to connect once and they'll be able to sell to everyone.

So it's almost like putting a SIM card in your phone. Once I have a SIM card in my phone, anybody can call me. I don't need to go and register in different places to be called. I just need to register once on the network. So just the way my SIM registers on the network or my laptop can register on the internet through an IP address and anybody can send to that IP address, I will receive your information. Similarly, on the network, the seller also needs to register only once and all the buyers on the network can shop from that seller. So for both parties, there’s much greater visibility of the other party.

What is ONDC's overreaching strategic vision for the next three to five years?  How do you see ONDC transforming the e-commerce landscape in India in the future? 

So we expect to transform everything. All forms of products and all forms of services should be available on the network. It will bring a lot of players who currently are not digitized. That's another transformation. The distribution of those sellers will be much wider. The geographical coverage will be much wider. The product and service coverage will be much wider.  So in every aspect, you should see much greater participation in digital commerce because of ONDC in the three to five years to come. 

Conclusion:

In summary, ONDC is making great strides in transforming the e-commerce market in India by creating a unified, transparent, and standardized platform that benefits retailers, consumers, and the entire industry. It aims to level the playing field, encourage competition, and promote efficiency within the e-commerce ecosystem. The transformative impact of ONDC on the e-commerce market is both inspiring and promising, showcasing India's commitment to harnessing technology for the greater good of its citizens and businesses alike.