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Earlier in 2022, the Department for Promotion of Industry and Internal Trade (DPIIT) launched its Open Network For Digital Commerce (ONDC) as a prospective alternative to e-commerce platforms such as Amazon.
ONDC builds on the success of UPI and is expected to revolutionise e-commerce in India, which is one of the fastest-growing markets in the world.
With ONDC, the government aims to tap millions of small businesses that often lack technological expertise and help them sell their products online.
Thampy Koshy, CEO of ONDC, said that it would enable all the buyers in the network to be discoverable to all the sellers. ONDC hopes to sign up 900 million buyers and 1.2 million sellers on the platform within the next five years and reach a gross merchandise value of USD 48 billion.
It is currently in its pilot phase in five Indian cities—Delhi, Bengaluru, Coimbatore, Bhopal, and Shillong. However, by August–September 2022, the platform is expected to be available in 75~100 towns across India.
Companies live on ONDC
Currently, firms such as Paytm and Benguluru-based logistics firm ‘Loadshare’, are already live on the platform. Let’s look at some of the other companies that recently announced their integration.
Dunzo for Business (D4B), which is the logistics arm of Bengaluru-based hyperlocal delivery app Dunzo, recently partnered with ONDC to provide last-mile delivery services to businesses on the platform.
“Enabling access to hassle-free delivery for local merchants will open up opportunities to service a larger customer base, unlocking the growth potential of these businesses,” said Dalvir Suri, co-founder of Dunzo and head of Dunzo for Business (D4B).
While Dunzo will start offering its services from metro cities, for now, it will scale its services to smaller cities.
Grab.in, which was acquired by Reliance Retail in 2019, is also joining the ONDC platform to offer last-mile delivery services.
“Currently, we are in the process of initiating the pilot project with the ONDC, and it is at a nascent stage,” Pratish Sanghvi, co-founder of Grab.in, told Economic Times.
Grab.in caters to businesses ranging from retailers (offline and online), restaurants, pharmacies, online grocers as well as e-commerce platforms.
The integration of third-party logistics players to the ONDC platform is expected to play a crucial role in helping small traders scale their businesses.
Interestingly, Reliance Retail is also the largest shareholder in Dunzo, with a 25.8 per cent stake.
Kiko Live, an industry-first Live video shopping and selling app, has also recently joined the ONDC platform and will be available in September 2022.
Once the integration is complete, sellers listed on the Kiko Live app will be discoverable across the ONDC network.
The platform allows small sellers to open an online store and allows customers to enter these shops virtually and engage with the seller as well as seek assistance while purchasing.
“Kiko Live solves the online selling problem of millions of small retailers, which is nearly a $1 trillion business in India,” said Rajesh Sawhney, founder and chief executive officer of GSF Accelerator.
Delhi-based e-commerce platform Snapdeal has also joined the ONDC platform and will cater to three categories—fashion, home, and beauty & personal care.
The e-commerce company signed an onboarding agreement in July 2022 and is in the advanced stages of completing its integration on the ONDC platform.
Snapdeal is expected to go live on the platform in mid-August, making it the first e-commerce platform to debut on the ONDC platform.
In a statement, Snapdeal said that its launch on ONDC will be supported by a network of sellers from Delhi-NCR, Jaipur, Agra, Ludhiana in the Northern region to Surat, Rajkot and Mumbai in the West and Tirupur, Chennai and Bengaluru in the South along with Kolkata and Guwahati in the East.
Innoviti Payment Solutions, which is a collaborative commerce platform that helps diverse businesses—banks, product brands, and merchants—partner to acquire consumers together, has also joined the ONDC and is expected to complete its transition soon.
For small sellers to compete effectively, they require digital tools such as zero-cost EMI, cashback and upgrade offers, which are aggressively used by e-commerce platforms.
These tools, often offered through partnerships with banks, help the platforms drive sales. Innoviti hopes to address this problem of co-funded offers for small sellers. This will help create a level playing field for small sellers, enhancing the chances of conversion while reducing the conversion cost, the firm explained in a statement.
Who else has joined ONDC?
The e-commerce market in India, which is expected to reach USD 200 billion by 2027, according to Statista, is currently dominated by giants such as Amazon and Flipkart. However, small merchants often find it hard to sell their products on these platforms.
As of July 6, 2022, a total of 200 small sellers were in the grocery and food and beverage categories on ONDC.
Five seller applications—Digiit, Gofrugal, Growth Falcons, eSamudaay and SellerApp, are also active on the network.
The Confederation of All India Traders (CAIT) is also expected to join ONDC by year-end, another report claimed. CAIT represents small retailers in India and has around 70 million traders as members.
E-commerce giants such as Amazon, Flipkart and Reliance Retail are also in talks with ONDC. Flipkart’s logistics arm ‘Ekart’ has already joined the platform. Ecom Express and Shiprocket are at the final stages of integration.
Further, fintech unicorns Paytm and PhonePe are in advanced stages of talks to act as Payment Network Partners (PNP) for ONDC.
Reportedly, banks such as HDFC Bank, IDBI Bank, SBI Bank, and ICICI Bank are also in talks to join ONDC.
FMCG companies such as ITC Store, Hindustan Unilever, Nivea India, have shown interest in joining ONDC.
Government of India-operated postal system India Post has also initiated integration to ONDC.