Explained: The open e-commerce network ONDC that Flipkart, Amazon and others are planning to join
The Open Network for Digital Commerce (ONDC) is a network of several small and large-scale offline and online traders. Even though it is in a nascent stage, it is being pitched as a solution to break the dominance of large e-commerce firms
Several e-commerce majors, including Flipkart, Reliance Retail and Amazon are planning to join an ambitious open e-commerce network named Open Network for Digital Commerce (ONDC).
As per a report by The Economic Times, the network’s pilot programme to on-board kiranas and small and medium businesses is already underway in Bengaluru and four other cities.
What is ONDC?
The Open Network for Digital Commerce (ONDC) is a network of several small and large-scale e-commerce players. Even though it is in a nascent stage, it is being pitched as a solution to break the dominance of large e-commerce firms like Flipkart and Amazon in India.
The network based on open protocol will enable local commerce across segments, such as mobility, grocery, food order and delivery, hotel booking and travel, among others, to be discovered and engaged by any network-enabled application.
Why does it seek to do?
According to Business Standard, the platform aims to create new opportunities, curb digital monopolies and by supporting micro, small and medium enterprises and small traders and help them get on online platforms. It is an initiative of the Department for Promotion of Industry and Internal Trade (DPIIT) under the Ministry of Commerce and Industry.
Flipkart and Amazon’s interest in joining and integrating with the ONDC will likely break their monopoly. In return, it will help the bigger platforms to tap into the seller side of ONDC to supply goods.
“The bigger ecommerce players have indicated to ONDC that they will support it. Besides tapping into new users, this will also enable platforms with sizeable business-to-business verticals to tap into the seller side of ONDC network to supply goods,” one of the people in the know of the programme told The Economic Times.
Who all have joined so far?
The report found that Flipkart’s logistics arm Ekart and Reliance Retail-backed Dunzo have already integrated with ONDC for logistics services.
PhonePe, which is also owned by Flipkart and Walmart, is joining the network and is in advanced stages of integration, the report said. Paytm is already a part of the network.
Why is it a significant move?
Apart from creating a level playing field for online and offline merchants, the ONDC will also make a larger segment of buyers available to all the sellers on the network.
“The existing large etailers work with a captive set of users. With an open network, ONDC will enable all the buyers in the network to be discoverable to all the sellers. Therefore, existing platforms (too) will have an incentive to be part of ONDC,” said Thampy Koshy, CEO of ONDC, as quoted by The Economic Times.
When and where will it be functional?
The ONDC is already running its pilot programme in five cities – Bengaluru, New Delhi, Coimbatore, Bhopal and Shillong.
The network aims to increase its presence in about 100 cities by August and also open it to a wider public in the current five cities.
The report said that the network is currently in the “beta testing” phase with just five sellers onboard and a limited set of buyers from five cities.
“By the first week of June, we want to make it available to the broader public in these five cities. By August, we want to be there in 75-100 cities and by the end of the year we should be there across the country,” Koshy said.
How will it work?
Customers can access sellers on ONDC through any app that is integrated with the network. Sellers will then handle deliveries through tie-ups with logistic firms.
ONDC will also have services like ledgers and payment processors for sellers.
With inputs from agencies
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