ONDC – The Next Big Ecommerce Revolution? | Real Experience

Summary

ONDC, the Open Network for Digital Commerce, is a not-for-profit initiative poised to revolutionize e-commerce in India, similar to how UPI transformed digital payments. The platform aims to break monopolies by unbundling services like buyer and seller apps, logistics, and technology, fostering competition and reducing seller commissions. However, challenges like user experience, brand trust, and sustainability loom. The video explores ONDC's potential to disrupt big players like Amazon and Flipkart, while also discussing the hurdles it faces in terms of product variety, user interface, and the need to build consumer trust from scratch.

Takeaways

• 🌐 ONDC (Open Network for Digital Commerce) is a platform that aims to revolutionize e-commerce in India, similar to how UPI transformed digital payments.
• 🛒 The e-commerce market primarily operates on two models: marketplace, where a platform connects buyers and sellers, and inventory, where the platform also manages the product stock.
• 💸 Traditional e-commerce platforms charge high commissions (25-30%), which can be a burden for small and new sellers, limiting their market access and growth.
• 🏪 ONDC seeks to democratize e-commerce by providing a low-cost platform for small retailers and shopkeepers, reducing the need to pay hefty commissions.
• 🤝 ONDC is a private not-for-profit company initiated by the government, with the Quality Council of India and Protein E-Gov Technologies as main promoters.
• 💼 It was established in December 2021 to address the low e-commerce penetration in India, which stands at 4.3% compared to over 30% in top global markets.
• 💵 ONDC has raised funds from 19 banks and financial institutions to create a technology platform that unbundles services like delivery, technology, and payment gateways.
• 🔄 The platform allows for separate service providers, encouraging competition and potentially reducing the commission rates charged to sellers.
• 📉 Despite the potential benefits, ONDC faces challenges such as creating a user-friendly interface, building brand trust, and ensuring long-term sustainability.
• 🤔 The success of ONDC hinges on its ability to overcome these challenges and provide a competitive alternative to existing e-commerce giants like Amazon and Flipkart.

Q & A

What is ONDC and why was it created?

ONDC stands for Open Network for Digital Commerce. It is a private not-for-profit company initiated by the government, established in December 2021. It was created to address the challenges faced by small retail players and sellers in the e-commerce space, particularly the high commission fees charged by existing platforms, and to provide a level playing field for all participants.

How does ONDC aim to revolutionize e-commerce?

ONDC aims to revolutionize e-commerce by unbundling services that are typically managed by a single entity in traditional e-commerce models. It allows for separate service providers for buyers, sellers, logistics, and technology, thereby promoting competition and reducing the commission fees that sellers have to pay.

What are the two main e-commerce models mentioned in the script?

The two main e-commerce models mentioned are the marketplace model and the inventory model. The marketplace model involves a platform that connects buyers and sellers, while the inventory model includes the platform holding or producing its own inventory.

What are the potential advantages of ONDC for small sellers?

ONDC has the potential to provide small sellers with a platform where they can sell their products without paying high commission fees, thus preserving their profit margins. It also offers the opportunity to reach a wider audience without the challenges of ranking and visibility that can be present on larger e-commerce platforms.

How does ONDC plan to break monopolies or duopolies in the e-commerce sector?

ONDC plans to break monopolies or duopolies by creating an open network where multiple buyer and seller apps can operate independently, promoting healthy competition. This would reduce the dominance of a few major players and allow for a more diverse market.

What are the challenges faced by ONDC according to the script?

The script outlines three main challenges for ONDC: product experience, brand trust, and sustainability. These include issues like below-average user interfaces, lack of product variety, absence of reviews and ratings, the need to build brand trust from scratch, and questions about the long-term profitability and sustainability of the platform.

What was the experience of the team when they tried out apps registered on ONDC?

The team's experience with ONDC-registered apps was below average. They faced issues with user interfaces, limited product variety, and the absence of reviews and ratings, which are typically available on established e-commerce platforms.

How does ONDC's commission structure compare to traditional e-commerce platforms?

ONDC operates with a smaller margin of 3 to 5%, compared to the 25-30% commission charged by traditional e-commerce platforms. This is intended to make the platform more accessible and less financially burdensome for sellers.

What is the role of the Quality Council of India and Protein E-Gov Technologies in ONDC?

The Quality Council of India and Protein E-Gov Technologies are the main promoters of ONDC. They were instrumental in its establishment and have played a significant role in its development and promotion.

How does ONDC plan to sustain itself financially?

ONDC plans to sustain itself by maintaining a small margin of 3 to 5% on transactions and by raising funds from various sources. However, the script raises questions about its long-term financial sustainability and its ability to continue offering deep discounts to attract users.

What is the potential impact of ONDC on big e-commerce players like Amazon and Flipkart?

ONDC has the potential to impact big e-commerce players by offering an alternative platform with lower commission fees and a more open market structure. This could lead to increased competition and possibly force these players to reevaluate their commission structures and business models.