Open network for Digital Commerce(ONDC)

Open network for Digital Commerce(ONDC)

News: The ONDC has been causing quite a stir in the food delivery ecosystem over the past week, so much so that analysts have highlighted it as one of the factors behind the recent slide in the share prices of the popular delivery app, Zomato.

What is ONDC?
 An Indian government-backed non-profit digital commerce initiative, ONDC offers an open source network for all to exchange goods and services on the internet, and is independent of any specific platform.

How does it work?
 ONDC aims to “democratise” e-commerce and make it more accessible.
 For example, someone wanting to buy a smartphone online will currently need to search on individual e-commerce platforms such as Amazon and Flipkart to find the best deal. However, with ONDC, the buyer can open any participating platform, say Amazon, and get seller options not only from Amazon but also other participating platforms such as Flipkart and other stores.
 Unlike e-commerce websites, it does not have its own delivery ecosystem, but has logistics service partners such as Dunzo, eKart, Grab, LoadShare, Shiprocket and Shadowfax. Sellers can choose to work with them for last-mile delivery to the end consumer.

Significance of ONDC:
 It will keep a check on dominance of ecommerce platforms by a few large players. As is observed Flipkart, Amazon are accused of anticompetitive practices, discriminating among sellers and promoting only certain entities where such giants hold indirect stakes.
 It will provide a level playing field to both large and small merchants in the country.
 Better discoverability of small merchants (especially kirana stores). It will lower cost of doing business, better prices and profitability.
 Consumers will have options to buy from. Ecommerce will be more inclusive and accessible. Consumers will have preference to choose from local businesses as well.
 It will uplift several sectors – E-commerce, logistics, operations, digitization of entire value chain.
 It will increase competition in the sector, as customers will be able to search across platforms and that would likely drive prices down.

 It lacks a proper mechanism to deal with customer grievances, something the established platforms in the food delivery sector offer.
 Ground level issues that ONDC shall have to face i.e. whether product delivered by the seller is genuine or fake, whether customer actually received it or not.
 Competing against the established businesses will be a challenge. In terms of service delivery, smooth returns policy, incentives, software experience etc.
 Operating costs for ONDC will only go up as they start scaling across different segments. 

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