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Open Network for Digital Commerce (ONDC): Pros & Cons

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This topic of “Open Network for Digital Commerce (ONDC): Pros & Cons” is important from the perspective of the UPSC IAS Examination, which falls under General Studies Portion.

Summary

In simple terms, the Open Network for Digital Commerce (ONDC) is a digital project initiated by the Indian government to revolutionize e-commerce. It aims to create a more inclusive, open, and interoperable system for online commerce, similar to the transformative impact of UPI in digital payments. ONDC seeks to connect buyers, sellers, and service providers (like logistics and payments) through a common network, overcoming the limitations of current e-commerce platforms. This network-centric model enables greater participation of small sellers, enhances buyer choices, and fosters startup growth, addressing challenges like limited seller competitiveness and platform monopolization. However, it faces challenges such as scaling, standardizing quality, and improving user experience. The future of ONDC involves enhancing transparency, visibility for small sellers, sustainable livelihoods, and expanding its range of offerings.

Article

In the ever-evolving landscape of digital commerce, the Open Network for Digital Commerce (ONDC) stands out as a transformative force. This article delves into the intricacies of ONDC, its objectives, recent developments, and the road ahead.

Recent News: ONDC and Meta Partnership

The recent collaboration between ONDC and Meta (formerly Facebook) is making waves in the digital commerce sphere, with the following key highlights:

  • Enable Small Businesses: This partnership aims to empower small businesses by providing them with the tools and resources to thrive in the digital commerce landscape.
  • Digital Commerce Unlocking: ONDC, in association with Meta, is unlocking new dimensions of digital commerce, revolutionizing the way businesses operate online.
  • Conversational Experiences on WhatsApp: Small businesses can now harness the power of conversational experiences on WhatsApp, creating a more personalized and engaging shopping journey.

Transactions Growth: Powering Digital Commerce – ONDC has witnessed a significant surge in transactions, with a staggering 2 lakh transactions per day. This growth is fueled by innovative strategies such as the introduction of scores and badges, creating a competitive and rewarding environment.

Good Glamm Group Joins ONDC The inclusion of the Good Glamm Group as a direct seller on ONDC marks a pivotal moment in the platform’s expansion in the digital commerce landscape. This move promises to extend the reach of the platform and boost digital commerce in India.

Inception and Rollout

  • Incorporated: ONDC was incorporated in December 2021, signaling its commitment to driving digital commerce in India.
  • National Rollout Plan: The national rollout plan, endorsed in August 2021, set the stage for ONDC’s ambitious journey.
  • First Transaction: The platform achieved its first end-to-end transaction by the first cohort in December 2021.
  • Network Go-Live: ONDC went live with its first cohort in March 2022, ushering in a new era of digital commerce.
  • First Order Delivered: ONDC celebrated its first successful order delivery in Bangalore on the 29th of April 2022, marking a significant milestone.

The Why and What of ONDC

Why ONDC?

  • India’s Digital Infrastructure Success: ONDC is a testament to India’s digital infrastructure success stories, drawing inspiration from achievements like UPI and AADHAAR.
  • Transforming E-Commerce: ONDC is built on open protocol principles, aiming to transform e-commerce by making it more accessible, efficient, and inclusive.
  • Boosting Startup Growth: By providing a level playing field and access to a vast customer base, ONDC plays a pivotal role in boosting the growth of startups in the digital commerce sector.

What is ONDC?

  • Inclusive Ecosystem: ONDC fosters an inclusive ecosystem, focusing on improving e-commerce accessibility and aiming for maximum e-retail penetration across India.
  • Founding Members: Quality Council of India and Protean eGov Technologies Limited are the founding members, lending credibility and expertise to the platform.
  • Investors: ONDC has garnered support from various banks and financial institutions, underlining the industry’s recognition of its potential.

Where and Who

  • Origin: ONDC is proudly rooted in India, showcasing the nation’s commitment to digital commerce advancement.
  • Expansion: ONDC’s vision extends beyond its origin, with plans for expansion into other cities and domains.
  • DPIIT: The Department for Promotion of Industry and Internal Trade (DPIIT) plays a pivotal role, with an advisory council established to guide ONDC’s growth.
  • Leadership Team: ONDC’s leadership team brings a wealth of experience onboard, ensuring the platform’s success.

How ONDC Operates

  • Unbundling System: ONDC employs an unbundling system, breaking down complex processes into microservices for enhanced efficiency.
  • Network-Centric Model: ONDC’s network-centric model is designed to be interoperable and decentralized, facilitating seamless interactions among stakeholders.
  • Beckn-Protocol: The platform utilizes the Beckn-protocol, offering adaptor interfaces for information exchange, ensuring smooth communication.

Significance and Challenges

Significance of ONDC

  • For Sellers: ONDC offers sellers access to a broader customer base, reducing business costs, and increasing profitability.
  • For Buyers: Buyers benefit from a wider range of choices and better service quality, enhancing their shopping experience.
  • For Technology Platforms: ONDC creates opportunities for innovation, spurring advancements in the digital commerce ecosystem.

Challenges Faced by ONDC

  • Discounts for Sales: The long-term viability of discount-driven sales strategies poses a challenge.
  • Democratizing Digital Commerce: Bridging the gap and communicating with un-digitized stores is an ongoing challenge.
  • User Experience: Ensuring a seamless user experience for small sellers is a critical hurdle.
  • Credit Access: Limited credit access for small sellers can impede growth.
  • Standardization and Quality Assurance: Addressing issues related to standardization and quality assurance remains a priority.

The Way Forward

As ONDC continues its journey, several key areas will be in focus:

  • Transparency in Pricing: The platform aims to provide transparent pricing, allowing customers to compare prices across sellers easily.
  • Visibility: Enhancing discoverability for small sellers is essential to foster healthy competition.
  • Sustainable Livelihoods: ONDC is committed to creating sustainable rural employment opportunities and streamlining logistics.
  • Future Planning: Future plans include improving customer experiences and tracking.
  • Vision and Mission: ONDC’s vision and mission are supported by major bodies like NABARD and SIDBI, emphasizing its national importance.
  • Range of Offerings: ONDC envisions extending its offerings beyond e-commerce to encompass finance and insurance, creating a comprehensive digital commerce ecosystem.

In conclusion, ONDC is a catalyst for change in India’s digital commerce landscape. With its inclusive approach, innovative strategies, and collaborative efforts, ONDC is poised to drive the transformation of digital commerce, benefitting businesses, consumers, and the nation’s economy as a whole.

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