Democratising commerce: ONDC could be the UPI moment for small retailers, MSMEs

• ONDC is the Indian government’s attempt to democratise commerce, said Thampy Koshy, the CEO of ONDC.
  
• With ONDC, Koshy wants to do to commerce what UPI has done to payments.
  
• ONDC “will give equal opportunity to every buyer to discover any seller and any seller to be discoverable by any buyer,” he said.
  

ONDC, or Open Network for Digital Commerce, is the Indian government’s attempt to democratise commerce, said Thampy Koshy, the Chief Executive Officer of ONDC during a panel discussion organised by State Bank Institute of Leadership, Kolkata.

Koshy, an IIM Bangalore graduate and former executive director of National Security Depository (NSDL), also played a leadership role in the UID project – also known as Aadhaar.

Now, with ONDC, Koshy wants to do to commerce what UPI has done to payments – make the entire process entity-agnostic and give equal access to buyers and sellers.

E-commerce makes up a tiny portion of India’s retail ecosystem. According to a report, the share of e-commerce in India’s retail commerce stood at just 4.3% in FY20. This means that a vast majority of India’s buyers and sellers are still untouched by the likes of Amazon, Flipkart and more.

That presents a huge opportunity for everyone, Koshy said during the discussion. He added that with ONDC, the intention is to bring e-commerce within the reach of buyers and sellers of Bharat, who are yet to experience buying and selling products online.

But what exactly is ONDC?

Simply put, ONDC is an open platform that allows sellers to make their catalogues visible to every buyer on the platform.

For example, if Amazon and Flipkart integrate with ONDC, a buyer searching for a product on the Amazon app will be able to see results from Flipkart as well, along with many others.

ONDC does not restrict this to just apps – this will work even on websites, messaging platforms, and IVR (interactive voice response) systems – if the seller has any of those services enabled.

ONDC – the UPI moment for commerce

Koshy likened ONDC to UPI, saying “What UPI did was to essentially streamline and democratise the payment side of it. What ONDC is trying to do is a similar kind of transformation on the transaction side of goods and services.”

He added that while we are used to the forced nature of digital commerce – being restricted to select platforms for buying and selling products, ONDC will bring in an open layer to enable interoperability between all these platforms. That, of course, requires them to sign up on the network in the first place.

With ONDC, the Indian government and Koshy are trying to change this and bring more retailers and MSMEs online, connecting them to hundreds of millions of buyers across the country on a single platform.

ONDC “will give equal opportunity to every buyer to discover any seller and any seller to be discoverable by any buyer,” he added.

Giving small and big sellers alike equal access to a billion buyers

One of the problems plaguing small sellers is their inability to compete with big names like Amazon and Flipkart – in terms of reach, economies of scale, the massive infrastructure to serve millions of customers daily, among other things.

Koshy says that ONDC solves this problem and creates a level playing field for small sellers to compete with big ones when it comes to visibility.

“Because of the equal opportunity being provided to any seller, the opportunity for micro and small enterprises becomes larger,” Koshy added.

He further explained that sellers will not be constrained by the terms and conditions of the proprietary platforms, and that the open nature of ONDC will encourage competition and reduce the concentration of market share with a handful of players.

ONDC is currently live in a limited beta trial in Bengaluru. Some of the participants live on the network include Dunzo, IDFC First Bank, Kotak Mahindra Bank, Paytm, PhonePe, among others.

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