What is ONDC? How It Will Take On Amazon And Flipkart?

What is ONDC: The Government of India has launched an open-source system that can completely change the e-commence game in the country. It is called Open Network for Digital Commerce (ONDC). This will let all the electronic retail applications and platforms communicate with each other, similar to the way UPI lets all the payment apps transfer funds. To know more details on what is ONDC? then read the complete article as we will be discussing how it will take on the Amazon and Flipkart.

What is ONDC?

Open Network for Digital Commerce (ONDC) is initiated under the Department of Industry and Internal Trade (DPIIT) by the Government of India. As the name suggests, it aims at promoting an open network for all the sellers or service providers. The government explained that just like the Unified Payments Interface (UPI) is a platform for all electronic payments, the ONDC acts the same for the e-commerce world in India. With this, the government aims at including democratic principles in digital e-commerce.

What is ONDC?

Till now the e-commerce system is working on a platform-centric system. This means that in order to buy or sell the product, the concerned parties have to interact through the same platform. In simple words, for a complete transaction, a buyer and a seller have to meet in one location. From the buyer’s point of view, if you want to buy a product from a brand or e-retail app, you have to log in to that particular platform in order to make a successful purchase. With this, the buyer gets only limited options to choose from and for small retail sellers, it creates some entry barriers that we will be discussing in this article.

Open Network for Digital Commerce: Highlights

Project NameOpen Network for Digital Commerce (ONDC)
Initiated By Department of Industry and Internal Trade (DPIIT)
PhaseTrial Period
Assigned To Quality Council of India (QCI)
Pilot Phase Five Cities

Reason For Introducing ONDC

As discussed earlier, how a platform-centric system is being used in the country’s e-commerce transactions. Despite being a vast concept for the online selling and buying of products and services, It actually lays out some problems in the nation. To explain it further, big e-commerce players like Amazon and Flipkart have captured a large part of the digital market. With this, the small retailers face difficulties in entering the marketplace to get exposure to the digital market. To talk about Indian commerce in general, there are many sellers who are not able to get the benefits of the digital marketplace. The goods and services are delivered with the help of e-commerce in small cities and towns. However, the retailers of such places are not able to sell their products through e-commerce. This indicates that small retailers like Kirana stores are still not getting the benefits of the digital market.

To eradicate such problems and to bring digitalization to a higher level, the ONDC was formed. It will increase the reach of e-commerce to a large scale so that even small retailers can be benefited from it.

Also Read, BSF Pay Slip

How Will ONDC Work?

It will create an open network for the digital Market. Unlike the closed platform-centric model, the ONDC will enable the buyers and sellers to transact through any e-retail application or digital marketplace. It is compulsory for both the marketplace to be connected with ONDC. To simplify, if a seller has made a product catalogue in a different portal and the buyer has registered in another portal. They still can transact if both the portals are connected with ONDC Network. This means the seller and buyer app does not need to be the same for a successful transaction.

The Open Network for Digital Commerce (ONDC) is currently running on a trial period. Moreover, its pilot phase has been rolled out in the following five cities:

  • Delhi
  • Banglore
  • Coimbatore
  • Shillong
  • Bhopal

Advisory Council

An advisory council has been formulated for advising the government on things needed for the adoption of the ONDC. The council consists of the following nine members:

  • Shri R.S Sharma, CEO, National Health Authority
  • Shri Nandan M. Nilekani, non-executive Chairman of Infosys
  • Shri Adil Zainulbhai, Chairman, QCI and Capacity Building Commission
  • Ms Anjali Bansal, Founder & Chairperson, Avaana Capital
  • Shri Arvind Gupta, Co-founder & Head, Digital India Foundation
  • Shri Dilip Asher, MD & CEO, NPCI
  • Shri Suresh Sethi, MD & CEO, NSDL
  • Shri Praveen Khandelwal, Secretary-General, CAIT
  • Shri Kumar Rajagopalan, CEO, RAI

How ONDC Will Take On Amazon And Flipkart?

As the big players in the e-commerce market, Amazon and Flipkart have a good and trusted customer base along with tested technology. In order to experience a good result, the local retailers have to sign into it. However, they have to pay commissions for doing so which eventually results in less profit margin. In addition, these platforms list their premium sellers at the top which makes the visibility of other sellers very less. With the introduction of ONDC, the small retailers will get the same benefits without having to contact Amazon and Flipkart. Eventually, it will break the monopoly of the big players.

Final Words

We have shared information on the ONDC network, we hope it helped in understanding the concept.

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