ONDC: The Monopoly Barricade

What is ONDC?

The Department for Promotion of Industry and Internal Trade (DPIIT) of the Government of India founded the private company known as Open Network for Digital Commerce (abbreviated as ONDC) to advance open e-commerce. It was incorporated on December 31, 2021, with the Quality Council of India and Protean of Technologies Limited providing the initial funding (formerly NSDL e-Governance Infrastructure Limited). The ONDC is a set of specifications intended to promote open communication and connections between consumers, technology platforms, and retailers. It is not an application, a middleman, or software.

The network of the non-profit company ONDC will allow products and services from all participating e-commerce platforms to be displayed in search results across all network apps.

For instance, a user searching for a Bluetooth headset on Amazon would also see results from Flipkart and the Amazon app, if both Amazon and Walmart's Flipkart integrated their platforms with ONDC. This platform will also help the customers find the best price for their product on the internet.

Target of ONDC

The main goals are as follows:

• Putting an end to platform monopolies

• Democratic and decentralised changes

• Digitization of the value chain, standardisation of operations, accessibility for sellers especially small and medium-sized businesses and local businesses and inclusivity

• Increased logistical effectiveness, more consumer choice, and independence

• Ensured the confidentiality and privacy of data

• Reduced operating costs

Within the next five years, it aims to sign up 900 million buyers and 1.2 million sellers on the shared network, with a gross merchandise value of $48 billion.

With 1.35 billion people living in India, ONDC wants to increase the country's e-commerce penetration to 25% of consumer purchases within the next two years from just under 8% at the moment.

Challenges Faced by ONDC

According to the Confederation of All India Traders, a group that represents 80 million businesses of this type, ONDC's primary goal is to access millions of small businesses, which frequently lack the technological expertise necessary to participate in the programme. As a result, the government will need to run a massive awareness campaign to get these businesses on board with the initiative.

There is a possibility that smaller companies with lower volumes do not have the resources necessary to compete with the discounts provided by heavyweights such as Amazon and Flipkart.

ONDC will also take time to gain recognition around India because of the utter dominance shown by Amazon and Flipkart.

The end of monopoly?

The government asserts that existing platforms operate in silos and are strictly regulated, thereby excluding numerous small players. It anticipates that ONDC will increase competition and encourage innovation among start-ups.

It also intends to recruit logistics companies and others who can work with sellers to deliver products to customers. With apps in Indian languages, the focus would be on small merchants and consumers in rural areas.

ONDC officials compare the network to a mall with 1,000 gates rather than just two, thereby limiting opportunities for selected sellers to receive preferential treatment - a common accusation levelled against major e-commerce firms.

On ONDC, users will be able to rate service providers, which will be applicable and visible throughout the network.

According to the government, ONDC will assist in ending "predatory pricing, particularly for high-margin, high-value products." Amazon and Flipkart deny engaging in predatory pricing practices.