ONDC Faces Teething Troubles in Bengaluru

Nadeer, a mid-size grocery retailer in central Bengaluru told us that the only reason he was excited by the go-live of ONDC on September 30 was the thought that unlike private players, the government would not leave you in the lurch during tough times. However, he is still skeptical that the solution could remain half-baked if the operators only rely on technology solutions to what is essentially a problem of understanding and acceptance. 

“My life got overturned during the pandemic when sales dried up. Before that I was quite happy making between Rs.3000 to Rs.4000 in margins on a daily basis. However, his loss during the lockdown proved to be the gain of the quick-commerce players who took away customers by promising the comfort of home delivery. 

However, when companies such as SellerApp and eSamudaay approached him and a few others in the locality with the proposition of going digital, he decided to try out things. “The wait was inordinately long and we were losing hope, but now we do get a few orders, but these are just five to six a day,” he quips when asked whether life has changed for him.

There’s hope in his heart that things would improve soon, but that does not stop him from identifying a few bottlenecks. I am not a big store and the only way to ensure cash flows is to get enhanced credit from my suppliers. But, if transactions take a week to be squared off by the payment gateway, it would be tough for me to sustain, he says. 

The challenge points still persist

In fact, players like Nadir need to first get help in digitizing their catalogs through an easy to use solution, which essentially means direct help in adding and removing products, changing prices etc. to be done through the use of simple solutions on a personal laptop. In fact, this is where some of the existing participants have left these merchants in the lurch. 

What’s the status of companies such as Khatabook and OkCredit? They have given up their digitizing solutions MyStore and OKShop due to the thin margins they brought as well as the limitations on technology use among the store owners. Of course, these companies expected the store owners themselves to generate local demand, which was not happening as they neither had marketing solutions nor were they skilled in its use. 

Another shop owner down the street who signed up due to peer pressure from Nadeer, says the chaps who initially helped us set up the catalogs told us that the onus on getting orders was theirs and that no more help would be forthcoming from the seller app providers or ONDC. “Tell me how can I do something like this when my margins are between seven to ten percent,” he asks and wants to know how the government can help raise the awareness around buying locally instead of using the quick commerce companies or the big-tech companies. 

This is where the problem starts. Tech solutions companies moved away from local stores because they felt the customer acquisition costs to lifetime value wasn’t rosy enough for them to go after small businesses. However, the real reason is that most small businesses do not have the discipline when it comes to inventory management and auto-update of their catalogs. 

Process discipline and its impact

And this is where the comment made by ONDC CEO Thomas Koshy makes sense. He had said that the small stores need a behavioral shift in terms of process discipline. He claims that things will fall back into place when the merchants ensure right catalogs and committed deliveries, though that’s exactly where merchants like Nadeer want ONDC’s help. 

We were told that delivery agents would be available on the network as would the digital payment. Now, how can they ask us to wait for a week for our money and then expect us to deliver within timelines where the number of delivery agents that we have isn’t even enough to fulfill the orders we get over WhatsApp, says Nadeer. 

Looks like the teething troubles are far from over though things may improve considerably when competition emerges at each of the four operational levels on ONDC comprising seller apps, buyer apps, delivery apps and payment apps. And that will take some time and lots of commitment from those that want to be part of this eCommerce decentralization program.