NB Twitter Scan | ONDC: India's smart move to end monopoly of WESTERN giants in E-commerce market
Just the way UPI took away the monopoly of US-based Master Card & Visa, ONDC will drastically bring down overpriced food and also goods sold on Amazon, Flipkart, Zomato etc.
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The Indian startup ecosystem is going gaga over this Buzzword: ONDC.
The monopoly of Giants like Amazon, Flipkart, Swiggy, & Zomato has dominated the local markets, retailers, & Kirana stores which has somewhere killed Small and medium-sized enterprises that are considered the backbone of India’s retail system. This Monopoly of Giants harms SMEs' business growth & pushing local vendors towards debt.
It should be noted that the Indian online grocery market is estimated to reach US$ 26.93 billion in 2027 from US$ 3.95 billion in FY21, expanding at a CAGR of 33%.
India's consumer digital economy is expected to become a US$ 1 trillion market by 2030, growing from US$ 537.5 billion in 2020, driven by the strong adoption of online services such as e-commerce and Ed-tech. According to Grant Thornton, e-commerce in India is expected to be worth US$ 188 billion by 2025. With a turnover of US$ 50 billion in 2020, India became the eighth-largest market for e-commerce, trailing France, and a position ahead of Canada.
Despite such soaring numbers and great potential in the Indian E-commerce space, there's still a massive gap in the marketplace aggregators' platform. Small businesses in India have traditionally been disadvantaged in digital commerce, with larger businesses having more resources and access to better technology.
Understanding the urge to break the dominance of big players in the Indian e-commerce market, the government of India launched ONDC - An open network for digital commerce to compete with Amazon and Walmart, the two dominant global goliaths.
A network-based open protocol that will transform the e-commerce landscape in India by connecting all the buyers to all the sellers on the network. This happens through an interoperable protocol that allows the unbundling of the e-commerce value chain this will freely enable a buyer using one app to transact with a seller listed on a different app as long as both apps are on the one network.
ONDC as an Ecosystem will also enable millions of Merchants, SMBs, Women & Micro Entrepreneurs across India. It is a network of several small and large-scale e-commerce players which aims towards breaking the dominance of firms like Amazon and Flipkart in India.
The Indian startup ecosystem is going gaga over this Buzzword:
— vivan. (@VivanVatsa) May 6, 2023
ONDC.
What is ONDC?
What is the next revolution from the Indian government in the E-commerce space?
Why is ONDC being called the UPI of E-commerce?
Is this the end of Amazon, Flipkart in India?
Here's a simple… pic.twitter.com/1kiYQN12Qv
ONDC's architecture is similar to that of UPI (Unified Payment Interface). Just like, how UPI works for Digital payments where a sender and a receiver can have different banks & can be on different payment apps, still have a transaction through UPI. Likewise, on ONDC, the buyer and the seller can be on different apps and can still have a transaction. ONDC is designed to bring the next big revolution to the e-commerce industry.
How ONDC works?
ONDC is not a separate app that you can download from Play Store. Instead, ONDC works like UPI, which means it can be added to existing apps like--Paytm, PhonePe and Meesho, etc. ONDC has more than 29,000 sellers that are selling 36 lakh plus products.
ONDC Gateway checks the multi-domain registry and broadcasts this search to a large number of Sellers. As per the category of items searched sellers can be listed on any app on the network search results show the buyer multiple options to choose from. Buyer picks the one they like the most and adds details of the delivery options. ONDC Gateway broadcasts a request with buyers' location details as well as of the seller to all Logistics providers that serve at both locations.
In simple words, with the help of ONDC, any buyer can connect with any seller who signs up for the platform. This allows you not just to place orders but also to get the best deals & best prices. This enables anyone, yes ANYONE to open a store online.
Let’s understand this with an Easy Example
Your Next Grocery Order can directly come from ‘Vikas General Store’ near your home.
Instead of some Dark Stores owned by Tech Biggies Zepto, Blinkit, Big Basket or Swiggy Instamart, with the ONDC you can choose if you wish to order with Vikas General Store or 100s of other such nearby stores based on factors like Time, Ratings, Pricing etc. Now you know, it’s the people who can get benefited and earn their living, instead of a few Big VC Funded Tech Aggregators. The 10-minute delivery dream might be true now :)
Similarly, For Food Ordering Restaurants Pay Various Charges & Commission to Aggregators e.g. Swiggy & Zomato
For unreserved, Swiggy, and Zomato have been increasing commissions from restaurants to the tune of 18-24% right now. On which they also have to pay taxes & platform fees. By offering massive discounts to customers, the restaurants suffer from lower profit margins which hurts their business.
This is where ONDC comes into the picture:
— Romaana Aamir (@RomaanaAamir) May 5, 2023
Restaurants pay only up to 2-4% 📌
The delivery right now is free but will be paid for by the users later.
Every restaurant is jumping on the ONDC bandwagon to break the duopoly of Zomato & Swiggy. 🧲
This is where ONDC comes into the picture. ONDC will bring down the commission charged by these operators. On ONDC they will have to pay a cumulative commission of 8% to platforms. Apart from it, ONDC will also give restaurants access to customer data. The lower commissions and access to customer data will be huge plus points and incentives for restaurants. This ensures smooth operations and less likelihood of bad service.
The delivery right now is free but will be paid for by the users later. Since ONDC has become viral, every restaurant is jumping on the ONDC bandwagon to break the duopoly of Zomato & Swiggy. Apart from that, there are also other crucial aspects like restaurant ratings, and customer data access as well which restaurants claim they can have on ONDC. This is unlike Amazon, Ola's earlier attempts to end Swiggy, and Zomato duopoly.
This is just a start in the next revolution India is building for the world. Just the way UPI took away the monopoly of US-based Master Card & Visa, ONDC will drastically bring down overpriced food and also goods sold on Amazon, Flipkart, Zomato etc.