News Highlights:
The Department for Promotion of Industry and Internal Trade (DPIIT) Secretary has said the government’s open e-commerce initiative Open Network for Digital Commerce (ONDC) would democratise e-commerce and enable millions of small traders to take advantage of opportunities thrown up by e-commerce.
Open Network for Digital Commerce (ONDC):
- About:
- It is an open e-commerce protocol set up by the Ministry of Commerce’s Department of Promotion of Industry and Internal Trade (DPIIT).
- The ONDC is an open technology network based on an open protocol.
- It is a not-for-profit organisation offering a network to enable local digital commerce stores across industries to be discovered and engaged by any network-enabled applications.
- It is neither an aggregator application nor a hosting platform, and all existing digital commerce applications and platforms can voluntarily choose to adopt and be a part of the ONDC network.
- Objectives:
- To enable consumers to buy products from all participating e-commerce platforms through a single platform.
- Under ONDC, it is envisaged that a buyer registered on one participating e-commerce site (for example, Amazon) may purchase goods from a seller on another participating e-commerce site (for example, Flipkart).
- The platform will allow buyers and sellers to connect and transact with each other online, regardless of what other applications they use.
How ONDC works:
- The ONDC platform lies in the middle of the interfaces hosting the buyers and the sellers.
- So far, the buyer-side interface is hosted by Paytm, whereas the seller-side interface is hosted by other players like GoFrugal, etc.
- When a buyer searches for an item on the Paytm app, from where ONDC has gone live, the app will connect to the ONDC platform, which will connect it to seller-side interfaces.
- On ONDC, there will be several other backend partners such as logistics service providers, enterprise resource planners, e-commerce store hosting service providers, etc.
Significance of ONDC:
- Standardisation of operation:
- ONDC protocols would standardise operations like cataloguing, inventory management, order management and order fulfilment in e-commerce.
- Providers and consumers’ Choice:
- Providers and consumers could use any compatible application of their choice to exchange information and carry out transactions over ONDC.
- Beyond the traditional system:
- ONDC goes beyond the current platform-centric digital commerce model where the buyer and seller have to use the same platform or application to be digitally visible and do a business transaction.
- Digitalisation:
- It would also encourage easy adoption of digital means by those currently not on digital commerce networks.
- Inclusive:
- ONDC is expected to make e-Commerce more inclusive and accessible for consumers.
- Demand supply match:
- It will enable the consumers to match demand with the nearest available supply.
- Decentralised e-commerce:
- It aims to accelerate the e-commerce industry by enabling buyers and sellers to leverage the digitisation of commerce through its network, as it is based on decentralisation, openness, and user utility.
- Level Playing Field:
- ONDC is keen to level the playing field for e-commerce operators and widen the digital market access for Micro, Small and Medium Enterprises (MSMEs) and small traders in the country.
Issues with ONDC:
- ONDC is a complex ecosystem to implement, unlike UPI.
- Switching customers from the incumbents, which are offering a satisfactory service, will be difficult.
- Network participants may not make significant market development investments initially.
- Growth in the seller base will not necessarily improve buyer experience on the network.
- Monetisation on the network is not very clear.
- Attaining critical mass will be difficult as the buyer and seller sides are disconnected.
- Lack of clarity on accountability, especially in addressing customer complaints and returns.
Pic Courtesy: Freepik
Content Source: The Indian Express