How ONDC is Going to Impact the Online Retailers

There is a huge space for growth for more market players to be part of this tectonic shift as in India, the reach of digital commerce within the retail sector is just 4-5 percent.
How ONDC is Going to Impact the Online Retailers

A big revolution is expected to come in the digital commerce landscape in India through the Open Network of Digital Commerce (ONDC). This initiative of the Government of India is aiming to ‘democratize and integrate’ digital commerce by increasing the seller’s digital visibility. This initiative is going to provide benefits to the buyer, of shopping from all possible sellers available at everyday apps and sellers, having a wide buyer audience without investing in digital marketing. 

The Union Minister of Commerce and Industry, Piyush Goel, defined it as a ‘game changer’ and mentioned, “ONDC will create new opportunities and remove monopolistic environments”. 

The pilot run of ONDC - a UPI-type protocol has already expanded from 5 to 12+ cities and is expected to cover 100+ cities by the end of 2022. It aims to tap the flourishing e-commerce market which will provide “a $400 Bn opportunity by 2020” as per a report. 

Understanding ONDC

It is a freely accessible Government backed platform that is transforming e-commerce from a ‘platform-centric model’ to an ‘open network model’. ONDC is going to stand out in standardizing the operations, digitizing the whole value chain, making logistics more efficient, promoting supplier inclusion, as well as increasing consumer value. 

The network protocol for ONDC operates on the strong pillars of inclusiveness, interoperable, accessibility, and adjustable. It’s time for online retail platforms to collaborate and create a core service that is administered by the government. This is a new digital India, enabling the expansion of the e-commerce market and a terrific step to encourage small businesses as well as new entrants in maintaining their position. 

Why is ONDC Important

Retail players joined the digital commerce market during the pandemic as the best fit for survival. And the well-known popular platforms which have grown during the pandemic are Myntra, Amazon, Grofers, Big Basket, JioMart, and more. 

According to reports, “The online retail market in India is projected to reach $350 billion by 2030 from an estimated $55 billion in 2021, due to rising online shoppers in the country. India’s e-commerce sector is expected to reach $111.40 billion by 2025 from $46.20 billion in 2020, growing at a 19.24 percent CAGR, with grocery and fashion likely to be the key drivers of the growth”. 

Big giants like Amazon, Flipkart, Tata, and Reliance are already dominating the e-commerce market of India. ONDC aims to ‘curb digital monopolies’ by creating new opportunities as well as providing a direction for creating a platform that can be used by all online retailers. ONDC aims to provide equal opportunity for all players without challenging the existing e-commerce companies. 

In one of the recent reports shared by Goldman Sachs, it was shared, “China continues to dominate the global e-commerce market with a 45 percent market share. The penetration of e-commerce in China and the US stands at about 24 percent and 20 percent, respectively”. 

There is a huge space for growth for more market players to be part of this tectonic shift as in India, the reach of digital commerce within the retail sector is just 4-5 percent, shared to Shireesh Joshi, Chief Business Officer, ONDC.

It’s a Vision

Soon e-commerce will be more inclusive as well as accessible for consumers because the consumer will get the freedom to choose not only the seller but also the standardized operations. This open network brings a catch for small pop-up stores of becoming more discoverable, a massive step towards access to the growth of digital commerce to promote innovation. 

In India, here comes the e-commerce revolution making small businesses go online. There are huge potential benefits expected in the coming future for buyers, best deal at a central platform and for sellers, best cost, and product discoverability. It’s not a single entity or a platform, it is going to connect buyer, seller, payment, and logistics through open-source specifications and protocol. 

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