What is ONDC Project on e-commerce ? | To Expand into Smaller Cities

What is ONDC Project on e-commerce?

• ONDC Project on e-commerce is a government of India initiative launched in a bid to promote open networks for all aspects of the exchange of goods and services adhering to an open-network methodology which will be unconstrained to a specific platform.
• The rationale behind this decision is to empower small merchants and put an end to the duopoly of global e-commerce giants which jointly account for over 50% of the industry.
• This revolutionary move by the Government aims at shifting electronic commerce from a platform-centric model to an open-source one.
• ONDC was announced in April 2022 by Indian government as a prospective alternative to dominant global giants Amazon.com and Walmart in its fast-growing e-commerce market.
• ONDC went live with its beta launch in Bengaluru in the month of September 2022.
• ONDC aims to raise e-commerce penetration in the next two years to 25% of India’s consumer purchases, from nearly 8% now, in a country of 1.35 billion people.

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Integration of One District One Product (ODOP) initiative with Open Network for Digital Commerce (ONDC)

Why ONDC in news?

• After beta launch of Open Network for Digital Commerce (ONDC) in Bengaluru in September 2022.
• Now, a similar launch of ONDC is expected in smaller cities.
• The aim is to show the network works in a country as diverse as India.

What is ONDC?

• ONDC is a non-profit company whose network will enable the display of products and services from all participating e-commerce platforms in search results across all apps on the network.
• For example, if both Amazon and Walmart’s Flipkart integrate their platforms with ONDC, a user searching for a Bluetooth headset on Amazon would also see results from Flipkart on the Amazon app.

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Parliamentary Panel Report on Promotion and Regulation of E-commerce in India

How will ONDC make e-Commerce more inclusive and accessible?

• The ONDC would enable the government to regulate the e-commerce segment in a much more systematic manner, given that all transactions between the buyer and the seller would take place on one independent portal.
• ONDC is expected to make e-Commerce more inclusive and accessible for consumers.
• Consumers can potentially discover any seller, product or service by using any compatible application or platform, thus increasing freedom of choice for consumers.
• It will enable the consumers to match demand with the nearest available supply. This would also give consumers the liberty to choose their preferred local businesses.
• Thus, ONDC would standardize operations, promote inclusion of local suppliers, drive efficiencies in logistics and lead to enhancement of value for consumers.
• The platform would empower offline retailers and allow them to compete with major online sellers on a single platform.
• The entire framework of Digitisation, which is widely advocated and implemented by the government at all levels possible, is the underpinning of this move. 

What are ONDC’s Targets?

• ONDC aims to raise e-commerce penetration in the next two years to 25% of India’s consumer purchases, from nearly 8% now, in a country of 1.35 billion people.
• The government also hopes to sign up 900 million buyers and 1.2 million sellers on the shared network within the next five years, while achieving gross merchandise value of $48 billion.
• The government estimates that India’s e-commerce market was worth more than $55 billion in gross merchandise value in 2021 and will grow to $350 billion by the end of this decade. Currently, Amazon and Walmart’s Flipkart control more than 60% of the mark.

What are the challenges?

• While there is a lot of excitement, there are some apprehensions too. About 73% of the marketers said they’re watching the space of goals and responsibility and how customer service gets addressed via ONDC.
• Also, because it sees itself as a facilitator rather than a regulator, ONDC does not specify how to handle returns, refunds and cancellations.
• But it has suggested a number of measures to build trust in returns, refunds, and cancellations through transparency and contracts between the buyer and the seller.
• ONDC aims mainly to tap millions of small businesses that often lack technological expertise, so the government will have to run a massive awareness campaign to get them on board, said the Confederation of All India Traders, a group that represents 80 million such businesses.

Conclusion

India will have 500 million online users by 2030, securing its spot as the third-largest global market. So, democratization of e-commerce infrastructure in the country will play an important role.

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