News & Analysis

ONDC Aims to Realign India’s eCommerce

India's eCommerce protocols are in motion though the network warns that merchants need to be patient to reap the full benefits

The world is watching with bated breath as India’s experiment of creating a level-playing field on digital commerce kick-started with the public launch of the ONDC network in Bengaluru last week. The launch, which was reportedly postponed a couple of times due to bugs in the system, now offers grocery and food deliveries in some urban locations in the city. 

In an interview published in the Economic Times, ONDC CEO Thomas Koshy believes that post the beta launch, the scope of features, services and domains would evolve continuously over the coming weeks. He also confirmed that the network would add one more city within the next month, though it was still undecided whether it would be a big city or a small one.


How did the beta launch go?

Asked about the response to the beta launch, the official said since ONDC had not set any specific expectations in terms of huge numbers at the outset, there were no surprises. For the next few months orders would just trickle in but soon a hockey-stick growth would arrive. 

He also confirmed that besides Paytm, other buyer apps from Kotak and CraftsVilla would be going live on the network very soon. On the seller app front, he said apart from those currently live such as eSamudaay, SellerApp, Growth Falcon, GoFrugal and Digit, a few others like Unilever Ushop, Uengage, nStore, Bizom and Innobits were in advanced stages of testing. 

The official also confirmed that in addition to Dunzo and Loadshare that were handling logistics, others like Shiprocket and EKart were in testing phase while Protean eGov was ready for beta launch as the gateway operator. He said the buyer apps were being relied upon to enhance consumer awareness about ONDC through community outreach. 


Merchants need to be patient

Koshy said in the early stages, merchants need to accept that only few orders would come via the network, but they need to establish processes and habits for timely delivery experience. Ensuring the right fill rates, deliveries within the committed timelines were critical and would be the metrics that ONDC would be tracking. “In every new product and service launch, educating the participants is very critical. Especially with high expectations on ONDC, any mistake may attract undue publicity,” he added. 

The ONDC official also clarified that in spite of expressing interest publicly, neither Amazon nor Flipkart had officially given an expression of interest, which is why they were missing from the list of companies that integrated with the government-backed network. However, Koshy was clear that these companies would prove no threat to the smaller players on the network. 


No fear of the big guns anymore

He said established players cater to the needs of a certain segment of buyers which is why eCommerce penetration in India had stagnated at 7% on the buyer side and less than 1% on the seller side. A new breed of participants with local community prowess could change the existing discount-led sales as self-funded discounts may no longer be sustainable. 

Koshy made the point that if discounts were the only panacea for sales, only discount stores would exist. In the traditional sales cycle, sellers cater to various buyer types who may measure a diverse criteria before purchasing. Matters like merchant location, delivery time, after-sales etc. would become an important factor eventually, he added. 


How would things go from here?

Referring to the concerns about the existing eCommerce regulations and its impact on ONDC, Koshy said the government’s eCommerce policy was evolving continuously based on the evolving market forces, which would also ensure that the commissions charged from merchants remain in the realm of sanity. 

The ONDC CEO also clarified that talk of the network charging commissions were premature as ONDC, being a Section 8 company, doesn’t have to pay dividends or get listed. The  charges will be applicable only after the network reaches a certain maturity and at best these will be marginal and only for ensuring sustenance of the network. 

He also clarified that ONDC is not going to be limited to the B2C space, but will start experimenting with the B2B segment as well from this month with companies such as Rapidor and SignChat already in advanced stages of testing. In a nutshell, ONDC will provide every seller with the opportunity to make their service / product available on the network with access to a broader market of a billion-plus consumers. 

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