what is Open Network for Digital Commerce and how does it work?
ONDC, Open Network for Digital Commerce, is a private non-profit section 8 company established by the Department for Promotion of industry and Internal Trade (DPIIT) of Government of India to develop open e-commerce . It was incorporated on 31 December 2021 with initial investment from Quality Council of India and Protean eGov Technologies Limited. According to section 8(1)(a), (b) and (c) of the Indian Companies Act, 2013, a section-8 company can be established ‘for promoting commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment or any such other object’, provided the profits, if any, or other income is applied for promoting only the objectives of the company and no dividend is paid to its members.
In
India, there are 3 legal forms exist for an NGO or Non-Profit Organizations i.e
Trusts, Societies and Section 8 Companies. Indian Trusts have no central law;
Indian Societies have different legal and institutional frameworks from state
to state while Section 8 companies have one uniform law across the country.
How does ONDC works?
The ONDC uses "free software methodology, open
specifications and open network protocol". On the ONDC, the consumers and
merchants can transact goods and services independent of platform or
application. Beckend will provide the technology and specification layer on
which ONDC will design the network policies, network trust, network grievance
handling and network reputation system. ONDC plans on implementing dynamic
pricing model, digitized inventory management and optimize the delivery cost to
help reduce cost of doing business for everyone on the platform.
It means it
will not only limited app to app. In today suppose we have to a purchase a
watch and when we search for it ,search engine suggest top websites like amazon
and Flipcarts etc, which produce very tough competition for small sellers and
retailers. Also when we like any product on amazon then we have to purchase it
from Amazon’s official sites or from amazon app, But ONDC will provide an
interface between all other sites, in
Other words people can search any product on one app and all the sellers
offers come on that same app. ONDC aims to democratize virtual commerce by bringing all platforms under
one open network. It would create a new, equal-level playing field for the
e-commerce landscape, which is currently dominated by international players
Amazon and Flipkart. ONDC will work on a hyper local search engine model based
on GPS proximity data as default setting. The buyer can independently select
the seller and logistics partner to complete the order.
Microsoft and Oracle Corporation are looking for partnership to supply technology solutions which can add value to base ONDC network by helping companies scale up their operations. They are part of an industry working group for developing buyers, sellers and logistics provider registry, network reputation index and online dispute resolution framework. To ease on-boarding process, Microsoft started providing sellers toolkit. Oracle is designing a neutral, transparent reputation index for sellers.
Amazon is working with ONDC to digitize Kirana stores. A kirana store is a small retail business that stocks a range of everyday items such as coffee, groceries, snack foods, confectionery, soft drinks, ice creams, tobacco products, lottery tickets, newspapers and magazines.
ONDC PhonePe
As of 12 May 2022, Flipkart, Reliance Retail and Amazon
started talks with ONDC officials. As Logistics Network Partners, Ekart and
Dunzo joined ONDC. Paytm and PhonePe which is in advance stage of integration
will act as Payment Network Partners (PNP) for ONDC. PhonePe planning to join
ONDC both from buyers and sellers side. Till 15 May 2022, 24 ecommerce platforms
are joining ONDC.Paytm Mall confirmed joining ONDC network with primary focus
on exports. As of July 6, 200 sellers are active in grocery, and food and
beverage category. To access ONDC, a seller has to join a seller platform.
Key points of ONDC or Advantages of ONDC.
Currently, Amazon and Flipkart have end-to-end control over
the entire e-commerce ecosystem which includes seller onboarding, customer
acquisition, order fulfillment, payment, returns and complaint redressal.
Imagine a platform that not only shows products from Amazon,
Flipkart and Meesho under one umbrella, but also from all your local kirana
stores. That’s exactly what the open network intends to do. You would be able
to compare the prices of Amazon finds and product specifications of Flipkart
finds through one application.
It will unbundle the supply chain, shifting the power from
the likes of Amazon and Flipkart to consumers, merchants, and providers of
support services. With an open network, smaller players will also have access
to Amazon or Flipkart controlled data. ONDC, therefore, aims to support MSMEs
and small traders and help them get on online platforms. Snapdeal is the first
e-commerce platform to get on the open network. E-com platforms Dunzo and
Ekart have also partnered with ONDC.
I have write this article based on research from google and wikipedia, Please comment below to know more about how does ondc work. If you find this article helpful to you please share it with your friends.