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Indian online retailing has been experiencing an upward trajectory. The covid-19 pandemic, coupled with 5G technology and increased smartphone penetration, has accelerated e-commerce growth in the country. According to Statista, the projected value of the Ecommerce market in India will be $350 by 2030.
Apart from big players, several small businesses are foraying into the online retail space. While the Ecommerce landscape is rapidly transforming in India, the road is full of obstacles. Poor infrastructure, logistics bottlenecks, and lack of standardization are some of the common factors that hinder the growth of online retailing. To overcome these roadblocks and unlock the full potential of e-commerce in India, the Indian government launched ONDC.
What is ONDC?
Open Network for Digital Commerce, is an innovative and non-profit initiative by the Government of India. The purpose of ONDC is to build a robust digital infrastructure to fuel the growth of India’s e-commerce ecosystem.
It aims to provide a single interface for stakeholders such as retailers, manufacturers, logistic providers, and customers for better transparency, efficiency, and enhanced ease of business. Leveraging ONDC empowers businesses to streamline processes and create a collaborative channel for secure and reliable transactions.
Let’s explore the major objectives of ONDC:
Digitalization of the Supply Chain
Opportunities for Small Businesses
Increased Data Privacy
Enhanced & Transparent Transactions
How Does ONDC Work?
The Open Network for Digital Commerce (ONDC) is an advanced ecosystem that enables smooth and interoperable online transactions. Similar to the UPI for payments, ONDC provides open protocols that envelopes different aspects of e-commerce for a streamlined exchange of goods and services.
ONDC uses a set of APIs (Application Programming Interfaces), enabling different e-commerce stakeholders to integrate and share data efficiently. This allows the stakeholders to access a wealth of data about customer behavior, products, and price, making it easy to make informed decisions.
API facilitates the addition and development of new products/services, making way for innovation in the e-commerce industry. Moreover, these protocols are used for creating a robust public digital platform, such as open registries and network gateways.
This enables effortless communication between service providers and consumers.
With ONDC, small retailers can integrate their business into any compatible application instead of restricting themselves to specific platforms. In addition, ONDC protocols allow small business owners to standardize various operations such as inventory management, cataloging, cart management, and delivery.
Also, consumers can easily discover any seller or product via any compatible application. Thus, buyers have increased freedom of choice to buy their desired product or service. One of the biggest roadblocks in the e-commerce industry is the lack of transparency and data security. ONDC enables a consolidated registry of all the online sellers, facilitating the consumers to verify their authenticity.
Significance of ONDC for Indian E-commerce Landscape
Post-pandemic small and medium-scale businesses across India are experiencing steady growth. However, they find it difficult to adopt technology despite the widespread availability of smartphones and internet connections.
The Indian government's new ONDC initiative aims to change this status quo and offer complete control to small and medium-scale entrepreneurs. This will encourage competitiveness and foster innovations among start-ups, pushing the Unicorns culture in the country. Additionally, ONDC creates a collaborative channel between logistic companies and sellers to make product delivery efficient, timely, and effortless.
India is a huge country with diverse languages. One of the biggest advantages of ONDC is that small merchants and rural consumers can access the apps in regional Indian languages. Sellers in remote locations can get an opportunity to interact and compete with large players, serving consumers across the country.
Moreover, ONDC will support fair trade practices providing small players better control and the ability to engage with potential customers directly, eliminating the intermediary channels. With no intermediaries, the buyers don’t have to pay any extra charges and can buy products or services at reasonable prices.
Furthermore, the ONDC platform offers much-required digital empowerment to small and medium-scale entrepreneurs. This means, they no longer have to rely on the big e-commerce businesses to sell their products or services.
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How will ONDC disrupt the Indian E-commerce Market?
India is set to level the field for e-commerce businesses and broaden the digital market for thousands of small businesses. Here are five ways in which ONDC can change the dynamics of the e-commerce industry:
1. Tailored Shopping Experience
While global bigwigs such as Amazon have a huge presence in India, their products are not always attuned to the preferences and needs of Indian consumers. ONDC allows online sellers to fine-tune the products or services, plan their catalog, streamline the inventory, and manage the supply chain. This means businesses can deliver a more personalized and tailored eCommerce solutions.
2. Multiple Sellers
With ONDC, a buyer could democratically interact and connect to multiple buyers through a single interface. This allows the buyers to discover players up and down the stream and browse through a wide array of products and services from multiple sellers. Moreover, ONDC features a proprietary algorithm that displays multiple options near the user’s current location. What’s more, consumers can browse through the catalog and buy products from sellers from anywhere in the country.
3. Faster and Secure Payment
Providing fast and secure payment is one of the biggest challenges for e-commerce stores in India. ODNC uses blockchain technology and virtually removes any 3rd party payment gateways. This not only makes the payment quick and hassle-free but also makes it secure. Besides, the ONDC platform can be integrated with the Aadhaar Payments Network (APN) which makes it possible to verify consumers’ identity and avoid financial malpractice.
4. Prevents Data Exploitation
Every e-commerce platform still relies on 3rd party servers for data collection and analytics. A majority of these servers are located in foreign countries and are not subjected to data protection laws in India, posing a risk to the data security and privacy. ONDC uses blockchain technology to collect and store data on its platform, removing any intermediaries. Since the network is secure and tamper-proof, the chances of hackers accessing or altering the data becomes minimal.
5. Improved Customer Experience
Better customer experience means higher revenues! ONDC platforms are designed to deliver a seamless shopping experience as it only allows authentic and verified sellers. Personalization is becoming increasingly significant in the e-commerce industry. ONDC offers a sea of data such as customer preferences and purchasing behavior to the sellers. Retailers can use this information to create a personalized and streamlined shopping experience. Moreover, ONDC integrates a secure payment gateway, streamlined logistics and robust customer support APIs. This ensures a smooth end-to-end experience for both the consumers and retailers.
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Advantages of ONDC platform for Small and Medium-Scale Enterprises
India is one of the fastest growing economies in the world. This has resulted in a massive growth in micro, small and medium-scale enterprises. ONDC boosts the emerging Unicorn culture and levels the field for all the online businesses. Here are some of the advantages of ONDC for businesses:
1. Easy Digitization of Business
From ordering food online to buying groceries, consumers are thronging to digital platforms. However, small or medium scale businesses don’t possess the technical abilities to take their business online. ONDC’s open protocols are designed to standardize and digitize the entire store. Business owners can create a comprehensive online catalog and inventory for better order management, thus promoting operational efficiency and better user experience.
2. Explore the Untapped Markets
Rural India is a relatively unexplored market for the e-commerce industry. However, absence of proper infrastructure and unstable internet connectivity in rural areas create a major roadblock. ONDC aims to bridge the gap by offering a robust digital infrastructure in rural areas, enabling the e-commerce businesses to tap into the uncharted territories.
3. Opportunity to Innovate
To stay ahead of the competition, ONDC is likely to incorporate technologies such as machine learning, blockchain, Internet of Things and artificial intelligence. Leveraging these technologies can automate the process, enhance security and allow for more personalization shopping experience.
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Calling ONDC a pathbreaking moment won’t be an overstatement! With a focus on creating open-source, robust and decentralized digital infrastructure, ONDC democratized the Indian e-commerce industry. Our developers have worked on many eCommerce platforms, and it might be worth having a chat with us to share your requirements. You never know you might be able to create something unique with our help! Contact us today.