Open network for digital commerce

Open network for digital commerce

Subject: Economy

Section: Indian Economy

Context:

• The government of India announced the launch of the pilot phase of open network for digital commerce (ONDC) in five cities with an aim to “democratise” the country’s fast growing digital e-commerce space that is currently dominated by the two U.S.-headquartered firms — Amazon and Walmart.

What is ONDC?

• As per the strategy paper on ONDC, it is a not-for-profit organisation that will offer a network to enable local digital commerce stores across industries to be discovered and engaged by any network-enabled applications.
• It is neither an aggregator application nor a hosting platform, and all existing digital commerce applications and platforms can voluntarily choose to adopt and be a part of the ONDC network.
• The ONDC aims to enable buying of products from all participating e-commerce platforms by consumers through a single platform.
• Currently, a buyer needs to go to Amazon, for example, to buy a product from a seller on Amazon.
• Under ONDC, it is envisaged that a buyer registered on one participating e-commerce site (for example, Amazon) may purchase goods from a seller on another participating e-commerce site (for example, Flipkart).
• The ONDC model is trying to replicate the success of the Unified Payments Interface (UPI) in the field of digital payments.
  • UPI allows people to send or receive money irrespective of the payment platforms they are registered on.
• The open network concept also extends beyond the retail sector, to any digital commerce domains including wholesale, mobility, food delivery, logistics, travel, urban services, etc.

What is the current status?

• Presently, ONDC is in its pilot stage in five cities — Delhi NCR, Bengaluru, Bhopal, Shillong and Coimbatore — with a target of onboarding around 150 retailers.
• The government has also constituted an advisory council to analyse the potential of ONDC as a concept and to advise the government on measures needed to accelerate its adoption.

What are the likely benefits of ONDC

• The ONDC will standardise operations like cataloguing, inventory management, order management and order fulfillment, hence making it simpler and easier for small businesses to be discoverable over network and conduct business.
• However, experts have pointed out some likely potential issues such as getting enough e-commerce platforms to sign up, along with issues related to customer service and payment integration.