Why Indian Companies are joining ONDC? - Business Case Study

Summary

The video discusses the remarkable growth of digital transactions in India, highlighting the success of UPI and the government's initiative, ONDC, aimed at democratizing e-commerce. ONDC has seen exponential growth, with over 3.3 lakh merchants and 90 lakh transactions per month in 2024. The video explores the network effect, benefits like lower commissions, and the challenges of trust and accountability that ONDC is tackling with blockchain solutions like CONFIDEX. It also presents opportunities for innovation within the ONDC network and invites viewers to participate in the Solana Renaissance Hackathon for a chance to win seed funding.

Takeaways

• 🌐 India has seen a dramatic increase in digital transactions, outpacing China, the US, and Europe combined, with growth attributed to the Unified Payments Interface (UPI).
• 🛒 The Indian government aims to replicate the digital transaction success in e-commerce through the Open Network for Digital Commerce (ONDC), targeting the large untapped potential of MSMEs and online customers.
• 📈 ONDC has experienced exponential growth, expanding from 85 cities and 85 merchants to over 543 cities and more than 3.3 lakh merchants within a year, with a significant increase in monthly transactions.
• 🔗 The network effect and benefits like lower commission rates and increased visibility have attracted merchants and big tech players to join ONDC.
• 💡 ONDC offers an open network alternative to marketplace monopolies, providing sellers with more options and lower fees, which can lead to increased competition and better conditions for sellers.
• 🏢 The challenge for ONDC is to build trust among buyers and ensure accountability in case of order issues, which is crucial for its adoption compared to established marketplaces.
• 🔒 ONDC is leveraging blockchain technology to improve the inter-app experience, starting with a transparent and immutable rating system through CONFIDEX.
• 🏅 Ratings on ONDC, once given, are stored on the blockchain, ensuring they cannot be altered and are visible across the entire network, benefiting both users and sellers.
• 🛍️ ONDC is exploring additional blockchain applications for features like an ad network, dynamic pricing, and personalized recommendations to enhance the customer experience.
• 💼 There is a significant opportunity for developers and entrepreneurs to build tools and infrastructure for ONDC through initiatives like the Solana Renaissance Hackathon, with the chance to win substantial prizes and seed funding.
• 🎯 The hackathon aims to foster innovation in the ONDC ecosystem, with a focus on projects that can significantly impact a vast user base and demonstrate innovative use of blockchain technology.

Q & A

What was the significant change in digital transactions between China and India from 2013 to the present?

In 2013, China had four times the digital transactions of India. However, a decade later, India now does more digital transactions than China, the US, and Europe combined.

What is the growth in digital transactions in India from 2013 to the present?

India's digital transactions have grown from 127 Crore in 2013 to 12,700 Crore, marking a 100-fold increase in a decade, largely due to the implementation of UPI.

What is the Open Network for Digital Commerce (ONDC) and its purpose?

ONDC is an initiative by the Indian government aimed at making e-commerce more democratic and accessible for everyone, with the goal of transforming the e-commerce landscape in India.

What is the current state of online sales for MSMEs in India?

Currently, only 5% of MSMEs (Micro, Small, and Medium Enterprises) in India sell their products or services online, indicating a massive potential for growth in this area.

What is the significance of the growth of ONDC from its pilot launch to 2024?

ONDC has grown dramatically from handling 2,000 orders per month in 2023 to over 90 lakh transactions a month in 2024, expanding its presence to 543 cities and onboarding more than 3.3 lakh merchants.

What factors have contributed to the rapid growth of ONDC?

The rapid growth of ONDC can be attributed to the network effect, where new merchants and customers spread the word about its benefits, and the clear advantages of an open network like lower commission rates and increased visibility for sellers.

How does ONDC address the issue of trust in e-commerce transactions?

ONDC is addressing trust issues by implementing measures such as using blockchain technology to improve the inter-app experience, starting with a transparent and immutable rating system through CONFIDEX.

What is the CONFIDEX solution and how does it work?

CONFIDEX is a blockchain-based solution launched by ONDC to establish transparency and trust. It allows customers to rate sellers and service providers across the network, with ratings stored immutably on the blockchain, enhancing the seller's reputation and visibility.

What are some of the challenges that ONDC still needs to overcome to compete with established marketplaces?

ONDC needs to address issues such as trust, customer service, and accountability in case of order issues. It also needs to develop tools for discounting, advertising, and a smooth fulfillment network to compete with marketplaces like Flipkart-Amazon and Swiggy-Zomato.

What opportunities does ONDC offer for developers and entrepreneurs through the Solana Renaissance Hackathon?

The Solana Renaissance Hackathon, in partnership with ONDC, offers a dedicated prize track for building products on ONDC using Solana, with a prize pool of $10,000 and the potential for seed funding for startups, encouraging innovation in the e-commerce space.

What are some of the ideas ONDC is looking for in the hackathon to increase its volume and impact?

ONDC is seeking ideas such as a marketplace for coupons and offers, a negotiation engine for logistics services, an ads exchange with tokenized inventory, asset tokenization for recurring purchases, a skilling ecosystem for certificates and job listings, and a seller blacklisting mechanism to identify repeat offenders.