ONDC is the disruption Indian commerce needs

Source: The post is based on an article “ONDC is the disruption Indian commerce needs” published in the Live Mint on 12^th July 2022.

Syllabus: GS3 – Indian Economy

Relevance: Open Network for Digital Commerce (ONDC)

News: Currently, Indian cities are seeing a pilot run of the Open Network for Digital Commerce (ONDC) which is aimed to make headway towards democratizing e-commerce.

What are the advantages of the ONDC?

It offers an opportunity to medium and small retailers to adopt digit tools and expand beyond the limits of brick-and-mortar sales.

It removes the need of the small sellers to register on multiple platforms, removes fear of predatory pricing and the risk of losing visibility to brands which are owned or favoured by the platform itself.

It would provide a level playing field between small businesses and big brands at the e-commerce platform as it will be inclusive in nature. The smallest seller in the ONDC ecosystem will be offered as much opportunity to sell products as available to large players.

It aims to provide access to e-commerce platforms, to small manufacturers and suppliers so that they can create their own brands.

The framework may help create several new vertical marketplaces, with players catering to specific or niche segments of customers.

New opportunities will be provided to local players (say in the Tier-II+ cities). For example, imagine a homegrown health and beauty brand collaborating with a small retailer in Madhya Pradesh that deals in forest-based products like mahua, honey, amla, or ashwagandha.

How can the small businesses signing up for the ONDC, create their brands?

They should set standards, maintain the quality of products and services, test products and read markets.

Firms like Mensa and Upscalio could help small businesses create digital brands, optimize product distribution and integrate their operations with the large supply chains.

The small business can tie up with the fast-moving consumer goods (FMCG) companies like Marico and Tata Consumer Products. They procure raw materials or processed goods from smaller players, and help them with quality assurance, standardization and other aspects of branding along the way.

Way Forward

In order to become successful, the ONDC needs players of various stripes to build on it. For example, a greater number of sellers from smaller cities should embrace digital technology.

The ONDC should help in integrating businesses to create niche products, provide brand consultants or investors and facilitate hand-hold support of FMCG companies to smaller players.