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Open NETWORK FOR DIGITAL COMMERCE (ONDC)

Man Carrying a Box
Tablet Outline

ONDC stands for Open Network for Digital Commerce which is a protocol for e-commerce, just like UPI is for e-transactions. There is a buyer side on which the customer can search for the product/service and the app will direct the user to the ONDC platform. The government of India launched this open network to bring all e-commerce under one umbrella. This is a very silent evolution taking place in the heart cities of India like Delhi and Bengaluru. While this is not available to all cities and millions of people yet, it will soon change the idea of e-commerce that we know now.

1. Open network let by market and public sector.
2. The central intermediary is not needed.
3. Enables broad-based innovation while expanding the e-commerce market​

The Need for ONDC...

Talking about the need for ONDC, one could easily say that it is the initiative of the government to bring equality to the retailers and small Kirana stores that are being neglected due to the mega e-commerce hubs like Amazon and Flipkart.

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  • 50% of the e-commerce activity is done on Flipkart and Amazon.

  • Less physical shopping and loss to small sellers.

  • The economy is regulated by two companies making it a duopoly of them.

  • One platform to fulfill all your e-commerce requirements while providing you with the nearest store and seller to you.

Changes by ONDC

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ONDC has the potential to completely change the e-commerce platform as it will allow a buyer to make more choices. It will provide them with options to choose from like,​

  • Price

  • Payment method

  • The nearness of the seller

  • Delivery time

  • Product Quality

  • Preferable stores

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"This will act as a game changer for the e-commerce platforms that have been ruling the department. Not only this but through ONDC buyers can even avail services and logistics. Which means one platform for all your needs."

The Government’s Take on ONDC

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While this open network is the one launched by the government, there are no set rules and regulations as of now, as the set-up is in testing mode. However, the government is all set to take help from relevant ministries and might even set up a council to specify rules and regulations that are required to be followed by all the involved parties. Not only this but these guidelines and regulations will be updated and changed according to the progress of time.

Short Term Implementation

  • QCI or the Quality Council of India will be the one to proceed with the implementation of the project mode of the network.

  • The development of the technological blocks like the open registrations, gateway, and all the tools to be user-friendly.

  • The focus will be on the expansion of the eco-system so that the open network works as a community initiative rather than an initiative of the government or centralization of its working.

Long Term Implementation

  • Making strong rules, regulations, and policies to ensure the easy and smooth running of the network for all the parties involved. Ensuring that time does not hinder the working and that the policies and regulations are updated with time.

  • To help it extend in all service/ product sectors of Bharat and bring the required change in e-commerce while making it completely digitalized.

  • Developing and maintaining powerful communication strategies so that inconveniences do not arise and if they do then are being resolved properly and on time to keep the smooth running and working of the network.

Technological Built-Up

While we understand the workings of ONDC, it's now time to have a look at the building block technologies used in creating this open network, which are majorly divided into four parts, adaptor interface, gateway, open registries, buyer and seller side applications.

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  1. Buyer and Seller side applications: these will be the set of applications that will be used to transact between the end user and the seller.

  2. Open Registration: an application that will keep track of who joined and left the network, jotted policies, rules, and so on.

  3. Adapter Interfaces: open APIs that will help in the informational exchange for transactions, and a way to allow all the participants of the open network to interact and integrate using the certified interfaces of ONDC.

  4. Gateway: this application will be used to find the sellers by casting the request from the buyer to the network of all sellers using information like the location, availability of product, ratings, and preferences of the other customers.

Key Factors

  1. Will connect Kirana stores make up 80% retail sector of India to the digital market.
  2. ONDC went live through Paytm and three other buyer apps that launched the setup on their application. All the user did was search for an item that would lead them to the ONDC platform.
  3. Launched on 30th September in Bengaluru it turned out to be a great success.
  4. The alpha version is live in 85 cities while the beta is live in just 1, Bengaluru.
  5. Currently, there are just 3 domains that are available, that are food & and beverages, Logistics, and Retail.
  6. While there are only 18 Network Participants available at the time.

Advantages

While understanding the need for the government to start such a platform was important, it is equally important to know how it will be beneficial for all the people. thus, here are some pointers that will provide you with the pros of the protocol.
  1. Not just for retail, but covers all the wider aspects like logistics, mobility, food delivery, urban services, and basically every transaction of goods or services that can be bought and sold.
  2. Will enhance e-commerce by providing one single platform for all needs.
  3. Will benefit the smaller and local sellers.
  4. Customers will be able to receive faster services and goods by choosing the seller that is closest to them.
  5. Small businesses and retail stores that are losing business to emerging multinational companies will be uplifted.
  6. While people have to switch between apps to know about the availability of a product or service, it would be possible for them to compare and distinguish through one portal.

Obstacles

While we understood the advantages and the need of why the government of India wants to launch this ONDC, some challenges will be emerging with this emerging technology.
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  1. To create an application that will be fast and use an algorithm that will make it user-friendly and not complicated to create problems.
  2. Security and introduction as people are more comfortable in continuing what they already know.
  3. To be aware, educate, and spread the word about this technology.
People Carrying Boxes

Companies Joined ONDC

After being equipped with the knowledge of how this new system of ONDC works, it’s now time to look at the major companies that became a part of this protocol or are planning on joining the system in the future.

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  1. Paytm: Paytm joined the ONDC network as a buyer and the live categories being offered are goods, beverages, grocery, and home décor in many cities like Bengaluru, New Delhi, Kanpur, and so many more.

  2. Digit: it joined as a seller mainly dealing in groceries in the cities of Bengaluru, Coimbatore, Kannur, Thrissur, and Mannar.

  3. Go Frugal: again, this name is joined as a seller of groceries, food, and beverages in the cities of Bengaluru, Shillong, Lucknow, and so on.

  4. Loadshare: it’s a logistics providing hyperlocal in Bengaluru and New Delhi.

  5. eSamudaay: a seller dealing in groceries in cities like Bengaluru, New Delhi, Kanpur, Jaipur, and so many more.

  6. Dunzo: playing the role of logistics in hyperlocal in Bengaluru, Delhi, Pune, and many more.

  7. Growth Falcons: in the role of seller dealing in food and beverages in the marketing cities of Bengaluru and New Delhi.

  8. Seller App: dealing the groceries and home décor as a seller throughout Bengaluru, Delhi, Lucknow, Faridabad, Mumbai, and Jaipur.

  9. Snapdeal: joined as a seller dealing in fashion, home, beauty, and personal care in the cities of Jaipur, Agra, Guwahati, and so on.

  10. Kiko Live: a platform for selling and buying videos too joined the ONDC platform.

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Some other major named that are joined with the ONDC network are,

  • The Confederation of All India Traders

  • Banks like HDFC, IDBI, SBI, and ICICI

  • FMCGs like ITC, Nivea India, and Hindustan Unilever.

Working of ondc

The working of the ONDC is somewhere between the people willing to buy and sellers willing to sell their products or services, it's an interface that connects the two. Basically, when a buyer searches for a product on the buyer sites, it will lead them to the interface with the list of possible sellers. It’s an open network with no centralization.

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  • Until now, Paytm has been a seller app, which means when a customer searches for a product on the app, it automatically uses the ONDC protocol to provide them with a list of potential sellers.

  • A company can join the ONDC network from the buyer side the seller side or even both.

  • The main points on which the system focuses are data transparency, expanded reach, simplified payment processing, partnership incentives, timely feedback, and on-demand decision-making. With such features, ONDC is expected to be a game changer for e-commerce.

  • The business model for ONDC will be of blockchain-based protocol that uses blockchain technologies. While for a seller to participate they will be required to get a certain amount of token which will ensure that they will keep their side of the deal without any failures.

  • Will bring the list of sellers on the basis of ratings, feedback, and nearness built by the algorithms and data collected from the buyers.

Cities Experiencing ONDC

While initially ONDC was launched in Bengaluru, it is now spread across 15 cities of which Delhi, Coimbatore, Lucknow, Shillong, and Bhopal are also part. The beta testing for this open network is going on in Bengaluru.
The aim is to reach about 100 cities, with 30 million sellers and vendors up to 10 million by the end of this year, 2022.

Future of ONDC

While the idea will act as a game changer in the e-commerce department of India, it will be interesting to note how successful it will be when launched throughout the vast land of India. While the launch was more or less successful in Bengaluru, will it make the same impact when launched for the whole nation? It's something we all would like to see. While there is little to no disadvantage of this technology, bringing it to the heart of Bharat will be difficult as there are still many technologically handicapped people out there. most of the educated sector will benefit from the technology.

"There will also be an increased rate of cyber-crime as well great minds come great harm."

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