ONDC INDIA: E-COMMERCE ASSEMBLE
In the grand calculus of the ONDCverse, does the sacrifice of the big giants mean far more than their inevitable deaths?
The Infinity Marketplace
Let's give it up for a virtual junction that brings together global giants and hometown favourites to avail a mela of goods at your fingertips. This unique platform, known as the Open Network for Digital Commerce (ONDC), provides access to a vast array of products, from the latest fashion and high-tech gadgets to handcrafted artisanal delights, all in one convenient destination. Bridging the gap between imagination and possibilities, this blockchain-based platform aims at revolutionizing E-Commerce in India. So, what precisely is ONDC, and what impact will it have on Indian marketplaces? Moreover, how do the kings of e-commerce respond to this new development?
Hotel? Trivago! :: E- shopping? ONDC!
Remember those iconic Trivago advertisements? Trivago offered a single platform to compare hotel prices from various websites, making comparisons a breeze. Similarly, ONDC offers a similar interface for everything available for online purchase, allowing you to effortlessly compare prices from multiple platforms. ONDC creates a multiverse where renowned e-commerce giants such as Amazon, Flipkart, and Nykaa coexist with local gems like Chai Point, Urban Ladder, and Behrouz Biryani, converge on one app. Therefore, it provides the convenience of purchasing both Apple, the fruit, and Apple, the phone, at a single destination.
The initiative aims to revolutionise e-commerce just like UPI reshaped online payments. Under the guidance of Nandan Nilekani, the man responsible for Aadhaar, ONDC is considered the government's most ambitious project and will lead to the democratisation of e-commerce in India. ONDC goes beyond being just an app, platform, aggregator, or competitor. It is a dynamic network that connects buyers, sellers, logistics providers, and payment gateways to facilitate business transactions and revolutionize digital commerce in India.
The one app for all your apps helps connect any buyer to any seller registered on the platform while ensuring the best deals at the best prices. More choices lead to more power for consumers, thereby hampering the price-curbing powers of sellers. If one could compare the price of the air conditioning unit from sellers Voltas, Samsung, and Blue Star, then this would force the brands to compete for the best prices. Therefore, bid farewell to inflated prices and high delivery charges.
Empowering the "MSME-gnificent"
ONDC is a dynamic network empowering sellers and consumers alike and has a profound impact on micro, small, and medium enterprises in India. Let’s delve into the hypothetical story of “The Spice Emporium”, a family-owned business of handcrafted spice blends in the village of Gujrat. They need to reach a broader audience beyond their hometown. This is where ONDC, the formidable superhero of connectivity, enters. With its remarkable powers, ONDC seamlessly bridges the gap, allowing customers from vibrant cities like Mumbai, Delhi, and Bangalore to savour the exquisite flavours of The Spice Emporium, delivered right to their doorsteps.
The implementation of ONDC will have two significant benefits for The Spice Emporium. Firstly, it will eliminate entry barriers and foster competition and allow the business to thrive in the digital marketplace. The platform will provide unparalleled exposure and freedom and will enable the company to expand its reach and compete with larger players. Secondly, ONDC's standardized protocols will enhance the efficiency of operations, including cataloguing, inventory management, and order fulfilment. This will optimize performance, deliver a seamless customer experience, and help build trust and credibility.
The Blackhole in the ONDCverse
In the vast landscape of digital commerce, ONDC emerges as both a gateway and a battleground. For small businesses, it's like navigating through a maze without a guiding light, as the lack of tech support casts shadows on their digital ambitions. Meanwhile, the giants of e-commerce loom large. It may lead a consumer to stand at a crossroads, facing a dilemma between the convenience of various payment options and concerns about their security and reliability. And even after the transaction is completed, a lingering question remains: Who takes responsibility when there are issues with the purchase or if the product/service falls short of expectations?
These challenges, exemplified by a local artisan seeking tech assistance, a boutique competing with established brands, and customers facing payment and liability uncertainties to buy the latest smartphone, underscore the need for comprehensive solutions to ensure a fair and trustworthy ONDC ecosystem for all participants.
The Dual Duel
The proclaimed prodigy of UPI is still in its beta version, yet it has managed to create significant tremors in the realm of Indian e-commerce, challenging the existing duopolies. But the question arises as to why companies like Amazon-Flipkart, and Swiggy-Zomato should be concerned by a seemingly gimmicky game changer whose total orders in a day are not even 1% of the orders processed by these not-so-gentle giants. But there is a reason that even after bringing in 36,000+ sellers across 236 cities, the biggest players in the Indian e-commerce market are mum about joining ONDC via their main apps, and their silence echoes the weight that rests upon their shoulders. Joining ONDC will be a double-edged sword for the Juggernauts; If they join the network, they will not be able to play their dirty dual game, because of which they are under the inspection of CCI, which is also the reason for their superficial growth.
The Imitation Game
A thought arises: What is this dual game, and why do the Titans hold it so dearly, unwilling to loosen their grasp on it? It is a seemingly simple process of collecting priceless consumer data through their platforms, which they selfishly withhold from the sellers. However, Amazon takes it a step further, using this goldmine of data to strategically place its products on the platform based on the market insights gained and aggressively promoting them, ultimately encroaching upon the market share of unsuspecting sellers who remain oblivious to this trickery. If implemented correctly, ONDC has the potential to become a beacon of hope for these sellers and countless other small-scale merchants, bridging the gap and dismantling the e-commerce monopoly.
A Superhero in the making
After comparing it with everything in this world, let's make one last analogy with our beloved ONDC. Picture the emergence of a new "superhero," and ONDC is stepping onto the stage with a similar sway over the stock market, just as a new superhero brings about a set of challenges and opportunities. As with the superhero journey, which would bring fiery highs and icy lows, ONDC is going to impact the stock market similarly. Some stocks are benefiting from ONDC, and some are losing their touch. While stocks like RIL, Delhivery, and PayTM expect growth and prosperity because of the glory of their logistics fleets, stocks like Indiamart will be negatively impacted due to their direct competition with ONDC. One thing is certain: whether ONDC grows or fails, it will cause lots of seismic tremors in the stock market’s very foundation.
14,000,605 Possible Outcomes
Through ONDC, India has the potential to become a role model for other nations. While governments in the US and Europe are grappling with tech giants through laws and regulations, India has embraced a tech-based solution backed by market forces and enabling regulations. With visionaries like Nandan Nilekani and organisations like Ispirit leading the way, India has provided ONDC with the best possible chance to walk the talk. Now, it is time for them to take action and for us to contemplate whether the manifested UPI of e-commerce will succumb to the pressures imposed by the industry behemoths or if it will gently shorten the stature of these not-so-gentle giants.
The Economic Times
CNBC TV 18
Authors: Hardik Jain and Sehaz Nagpal
Illustration: Prateek Verma