India’s ONDC to help smaller players fight Amazon and Flipkart – Vophs India

The dominance of global players in its e-commerce ecosystem has prompted India to establish its own e-commerce aggregator platform.

The Open Network for Digital Commerce (ONDC) will begin beta testing in Bengaluru, Delhi, Shillong, Bhopal, or Coimbatore in September. Users in the selected city can then place orders for groceries, food items and other items using any of the apps available on the platform.

ONDC is being touted as the Unified Payments Interface (UPI) of e-commerce in India. UPI is an open source application developed by the Government of India, which facilitates real-time interbank peer-to-peer and person-to-merchant transactions.

Launched in 2016, UPI, after a sluggish initial two years, enabled India’s digital payments index to rise. It had reached 304.06 in September 2021 from 153.47 in March 2019, Reserve Bank of India data showed.

Its e-commerce cousin, thus, could potentially transform India’s marketplace ecosystem into a decentralized one. A strategy paper (PDF) Published in January. It will be a facilitator-driven interoperable network.

ONDC is likely to provide micro, small and medium enterprises as well as small traders a level playing field with the giants of the e-commerce world.

Amazon and Flipkart mostly set return terms for seller onboarding, customer acquisition, order fulfillment, payment, and complaint redressal. ONDC will allow consumers to view and compare products on various such sites and also with their local grocers.

Microsoft is on board.

ONDC Microsoft has it As its first international marquee member. The software giant will launch a shopping app for its Indian users.

Others like it. Danzo of Reliancealso, I have joinedEnabling buying and selling in addition to offering logistics. Firms such as Kotak Mahindra Bank and PhoneP form the financial backbone of the network.

“ONDC provides the infrastructure to unbundle the supply chain. Credit through AA (Account Aggregator) allows access to formal credit to everyone in the supply chain. So, they now have the supply chain to give them credit. Don’t depend on the next guy from China,” says Nandan Nilekani, chairman of Infosys and member of ONDC’s advisory council. Told Money Control.

What does this mean for Amazon and Flipkart?

Amazon and Flipkart are estimated to hold around 70% share of India’s e-commerce market. However, the new platform is unlikely to challenge them as India is still. A young market According to ONDC Chief Business Officer Shrish Joshi, unlike the US and China with plenty of room for growth.

Penetration of e-commerce in China and the US at 24% and 20% respectively, the Goldman Sachs report shows. In India, It is 4%-5% in the retail sector.

β€œIt is now up to individual business organizations, whether existing e-commerce players or new or non-e-commerce players, what strategy they choose to take advantage of this… ONDC itself is democratic and open. And not against anyone,” Joshi told Inc42.

Joshi said the next step for the ONDC initiative could be to include food delivery and hospitality.

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