India is preparing to launch a government-backed e-commerce initiative to “democratize” online shopping, in an ambitious bid to challenge the dominance of companies. companies like Amazon and Walmart-owned Flipkart in one of the world’s fastest-growing markets.
Open Network for Digital Commerce, a non-profit company set up by India’s commerce ministry last year, is holding trials in more than 85 cities including tech hub Bangalore, ahead of a nationwide launch next year. .
While companies like Amazon run proprietary services that control everything from supplier registration and shipping to customer experience, ONDC is an “interoperable” network where buyers and merchants can transact regardless of the app or service they’re using.
The open source network will allow customers to use an app, such as fintech service provider Paytm, to find and order groceries from a vendor registered with another platform, such as a grocery store. eSamudaay small business center. This can then be shipped by any alternative platform, such as delivery service Dunzo, that can do it with the fastest and lowest speeds.
Indian authorities argue that opening transactions on platforms in this way will create a much larger pool of sellers and consumers, and lead to lower costs and increased trade growth. Electronics accelerated in this country of 1.4 billion people. They point to the success of the UPI mobile payments network, developed in 2016, as a blueprint.
Thampy Koshy, chief executive officer of ONDC, also says that it could provide an alternative to the trend of monopolization by big companies. ecommerce platform, at a time when authorities around the world are looking for ways to rein in the power of Big Tech.
“Worldwide trade has grown like walled gardens,” he said. “That has created serious concerns for developed and developing markets.” With ONDC, “people will have to compete based on what they have to offer, not the fixed user base they have.”
India There are about 200 million e-commerce users, according to investment bank Jefferies, and domestic and international e-commerce companies have invested billions of dollars in developing their platforms there.
Still, the sector remains concentrated in relatively affluent urban groups, with only 0.1% of the country’s 12 million retail stores “digitally enabled,” Jefferies said. Authorities say barriers to entry are still too high for small businesses, which in turn are losing market share to large e-commerce players.
Indian authorities see fixing this as part of a larger effort to develop the country’s digital economy through tools like UPI and ONDC. UPI transactions have increased to more than 7 billion a month as cash-based businesses start to move to digital currency.
Authorities hope that ONDC can encourage brick-and-mortar stores to sell online. It has raised Rs 1.8 billion ($22 million) from a range of investors including the government-run State Bank of India and private lenders like Kotak Mahindra Bank.
But analysts say getting ONDC to work will be much more difficult. “The problem with this is that UPI is the movement of funds from one digital wallet to another,” said Satish Meena, an independent analyst. “In this case, it is physical goods. This is very difficult to do on the ground.”
According to local media reports, the tests have hit a bump as users in cities including Bangalore complain of cancellations, delays and mixed listings.
Meena also doubts that ONDC will break up monopolies, pointing out that tech giants like Google and Walmart-owned PhonePe currently dominate the UPI transaction market share.
Not everyone is involved with ONDC. While Paytm has joined, Amazon and Flipkart are not yet active on the platform, although they have publicly indicated that they will join.
Koshy admits that the biggest e-commerce companies “will take a little longer” to sign up as they weigh the pros and cons of joining.
But he added that other difficulties, such as those in the tests, would be addressed. “It could change the entire supply chain,” he said. “There’s no reason why it wouldn’t work.”
