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Table Of Contents
1) Introduction to Open Network for Digital Commerce (ONDC)
Every budding entrepreneur and businessperson has watched at least one clip of Shark Tank. You will always see the sharks discouraging businesses that conduct most sales through ecommerce marketplaces. These marketplaces can be tricky to deal with and drain your revenue. To prevent this monopolization and foster MSMEs in the ecommerce sector, the ONDC initiative is being implemented in India.
The MSMEs (Small and Medium Businesses) contribute significantly to economic development. However, since a developing economy like India is a huge potential market, giants in the sector tend to leverage their capital to capture as much market as possible. While doing so, they may suppress the MSME sector's efforts that lack the capital to support their growth. In a democracy, the greater good becomes more important.
Therefore, an initiative like ONDC goes a long way. ONDC provides an unbiased open-source platform for vendors and product manufacturers to sell their products directly to the end-customer without having to worry about charges or commissions. The Government of India ran a pilot program for ONDC in 5 cities in India. As the pilot received an overwhelming response, the government has further plans to expand it to four more cities.
As the ONDC model is likely to hit the Indian market and impact the way business is done, it becomes crucial for you as an ecommerce business owner to understand the concept and its benefits. In this blog, we will discuss why an open-source digital commerce platform will fuel the country's economic growth and improve the shopping experience for ecommerce customers.
2) Advantages of the ONDC platform
The ONDC is a vast concept. It is so vast that the Government of India decided to incorporate a Public-sector company to manage the implementation in the country. As the idea is vast with the solutions to the problems in the modern-day ecommerce system, the idea's advantages can be classified according to the receiver. These open source platforms mainly benefit three kinds of people in the ecommerce ecosystem:
2.1) Advantages for Vendors
Vendors are the most crucial part of modern-day ecommerce. With customer service being the main focus of the ecommerce ecosystem, most ecommerce businesses procuretheir products from vendors and use their technology to reach maximum customers. To maximize profits, popular marketplaces can exploit these vendors and small businesses. The concept of ONDC is a solution to this exact problem. Here are a few benefits the vendors can enjoy on open-source platforms under the ONDC model.
2.1 a) Operating Expenses
Ecommerce can be a capital-heavy endeavor, especially for new players. Marketplaces take a commission on every sale; most of the time, the percentage is not feasible for vendors or product manufacturers. ONDC platforms aim to serve as an alternative vendor. They come with value chain services that reduce the overall operating cost for vendors.
2.1 b)Product Cost
Since the ONDC platforms are based on open source technology, the vendors can sell their products at a much lower cost. The vendors do not have to worry about profitability as they do not have to cut in marketplaces for their customer base.
2.1 c)Buyer Access
Most product manufacturers and vendors have to use the marketplaces despite hefty commissions as they have a customer base for their products. The subsidized operations help the vendors get their customers at a much lower cost than privately run marketplaces. By developing a customer base on the open-source platforms, ONDC platforms can provide the same and even better reach to their vendors.
2.1 d)Value Chain Services
It becomes challenging to avail value chain services on your merchant account. As the marketplaces are for-profit organizations, their technology and code are closely guarded secrets. This makes it difficult for the service providers to provide integrated services to the merchants. ONDC works on open-source technology, making it easier for service providers to develop integrated services. Vendors can take advantage of the technology available in the market and streamline their operations.
2.1 e)Digital Visibility
In India, the ONDC platforms will be operated as a public-sector undertaking responsible for most of the civic facilities in the country. As a result, these platforms will be promoted by the government and will be looked at as the standard place to look for products and services. Thus, vendors can take advantage of this boosted visibility and capture a better customer base for their products.
2.2) Advantages for Customers
Customers are at the heart of the ecommerce boom. The ability to provide the convenience of shopping from the comfort of their home is one of the main reasons for the tremendous growth of ecommerce in recent years. The open-source platforms of the Open Network for Digital Commerce are designed to benefit the customers in a way that does not impact the bottom line of the businesses. Here are some of the critical advantages of ONDC for customers:
2.2a) Availability of Products
As the open source platform allows vendors of all sizes to sell their products on the platforms seamlessly, the customers get a range of product and product-related services to choose from. For example, while buying an electronics item, you would want to select a seller/vendor that is well-known in your locality so that you get better after-sales service.
Since the focus of the ONDC platforms is to promote local businesses through the medium of ecommerce, customers get to enjoy the benefits of hyperlocal deliveries. Hyperlocal deliveries are quick, accurate, and seamless. It is also easier for customers to process ecommerce returns with hyperlocal merchants as the product does not have to go through a complex supply chain.
2.2c)Improved Customer Experience
The open source platforms allow vendors to increase their focus on customer service. Since the platform is publicly owned and unbiased, vendors can focus on their products and related services to enhance the customer experience. This enhances the customer experience by enabling various value-added services like live tracking, faster deliveries, and seamless returns. The ONDC platform also allows developers to create apps for better functioning order fulfillment.
2.3) Advantages for Tech Platforms
Technology platforms are one of the most significant catalysts in the growth of the ecommerce sector. If true innovation and development are not fostered for technology platforms, the sector's growth will be slowed, ultimately hampering the customer experience. Since the modern logistic supply chain is much more complex than one can imagine, businesses typically use software that helps them navigate their products through the ecosystem. Here are benefits of the open network for these tech platforms.
2.3a) Foster Innovation
Generally, tech platforms must jump through many hoops to access private platforms' source code and APIs. This makes it challenging to innovate and create integrated solutions for the media and merchants. Since the ONDC platforms are publicly owned and open source, developing technology around them is more manageable.
2.3b) Convenience Applications
As the platform's open-source nature fosters technological innovation, the ONDC platforms have a lot of convenient applications for the various processes to be carried out. It serves the vendor, the customer, and the technology platforms as it elevates the entire supply chain to a new level. The technology platforms can use the potential customer base for their technology platforms and promote their services on these platforms. The technology platforms can use the potential customer base for their technology platforms and promote their services on these platforms.
2.3c) Time to Market
This term is used to define the actual time the product spends in the development and testing phase. The features of the ONDC platforms reduce the time to market for tech platforms, boosting technological development in the ecommerce sector. Since all the processes and required APIs are readily available for development and testing, tech platforms can provide better features and upgrades to their software in a quicker way.
2.3d) Customer Experience Development
Since the merchants and vendors do not have to worry about the requirements of the ecommerce platforms they are selling their products, they shift their focus on customer experience to boost their sales. You will typically find better descriptive content and product visuals on ONDC platforms.
3) The Need for ONDC platforms in India
As ecommerce becomes the new normal, the business potential and opportunities in the field continue to grow exponentially. In such cases, for a country to foster economic development, the MSME sector in the government must tap into this potential. However, the Indian market already struggles with a low literacy rate and the tendency to stick to traditional business methods. Along with that, it is not financially feasible for every ecommerce business to build a platform that organically reaches out to every customer in every location organically.
The recent pandemic hit made us realize the power of screens in front of us. We can carry out every errand through them. The ecommerce business model was happily accepted by some businesses, while other companies had no choice. But, the ability to deliver any product or service to a customer’s doorstep increases the growth potential. However, building an ecommerce business is not that simple. You will have overcome many operational and logistical challenges to provide a seamless shopping experience to your customers.
Technology plays a crucial role in the smooth functioning of the ecommerce ecosystem. If a particular company has mastered the technology, it may be able to foster growth at a faster pace than its other counterparts. As these companies enjoy a higher cash flow, they use the capital to monopolize the market or product category. This hurts the Internet of the MSME sector as they do not have much space to grow on their own. ONDC is a concept designed to tackle this issue.
ONDC, or Open Network for Digital Commerce, creates a free digital market. The idea is to allow any product seller with the proper authorization to sell a product on an open source platform to avoid domination by any single player. Since the platform and technology will be open source, even the MSMEs and the sector giants will enjoy equal opportunity.
4) Role of Shipping Software in the Growth of ONDC
The open source ONDC platforms promote the growth of technology at an accelerated rate and create space for the vendors and product manufacturers from the MSME sector to improve their product visibility. But, while doing so, the customer experience and the delivery experience can be hampered. Many moving parts must come together in the ecommerce ecosystem for a customer to enjoy a seamless shopping experience.
Most businesses from the MSME sector are either product manufacturers or importers. In traditional markets like India, these businesses deal with bulk shipments where the distribution network has individual legs. Therefore, they do not typically have to deal with the logistical complexities of the ecommerce sector. However, the delivery experience is a crucial part of the customer experience and cannot be compromised.
The advantage of an open network for digital commerce is that it promotes the growth of technology and innovation at an accelerated rate. Since the shipping and delivery process is one of the most complex endeavors in the ecommerce ecosystem, technology has made it simple for us. But, it is easier for you as an ecommerce business if you make the right choice.
Complete fulfillment solutions like ClickPost are an excellent option to manage your logistical operations. These services have an integrated API and dashboard that allows you to use the shipping services from multiple carriers through a single window. Shipping software like this assists you by going through the technical hassle themselves. A fulfillment solution provides you with other benefits like live order tracking and a carrier allocation algorithm, which allows you to automate your entire order fulfillment process.
The advantages of shipping software and the ONDC platform complement each other well. With features like NPR management, shipping software can reduce the manual intervention required in order fulfillment to make it quick and accurate. Along with that, ClickPost also has a returns management feature that automates your ecommerce returns process. These technologies are designed so that the vendors and the customers benefit equally from their use.
India is said to be one of the largest functioning democracies in the world. Our constitution says, “Of the people, For the people and by the people.” These principles are also followed in the ways of business in the country. Most projects and activities are carried out in a Public-Private Partnership to boost the economic and infrastructural development of the country. As we progress in the new era, where the internet is added to the list of life essentials, developing economies like India are a prime target for large corporations in the ecommerce sector. These platforms tend to enter the market early and leverage their capital to suppress the MSME sector.
The MSME sector forms the backbone of every developing economy. To ensure that this crucial sector has a spot in the bustling ecommerce ecosystem, the ONDC initiative was started. ONDC or Open Network for Digital Commerce is the conceptualization of ideas where the interests of customers and vendors are prioritized. It is necessarily the creation of an open-source platform that allows transparent and unbiased trade in the open market. The open source concept's evident nature benefits the vendors, customers, and technology platforms.
With the help of ONDC, the government aims to provide a platform for the MSME sector of the country to promote their products and services to a broader platform. While the initiative may seem like a charity case, it has more technological potential than one can imagine. As the platform is openly available to all, the software and IT sector in the country can participate with their innovations in improving the ecommerce supply chain. On the other hand, the vendors do not have to worry about fees and charges. This allows the vendor to focus on their products and order fulfillment process. These developments enable improved and upgraded versions of the product to be readily available in the market. The innovations in the software field allow them to deliver these products seamlessly. As a result, the end customer gets a better product and delivery experience.
The ecommerce boom has changed the way a customer views the process of purchasing a product. With technology and the internet changing how we tackle logistical challenges, the ecommerce sector will continue to grow. ONDC platforms are an excellent initiative not just for the vendors and product manufacturers but also for the end customers. The impact that this venture carries does make us wonder, have we given Indians given the world another ‘zero’?
6) FAQs about ONDC
6.1) What is ONDC?
ONDC is a non-profit company started by the Department of Promotion of Industry and Trade. ONDC is a concept that believes in using open source platforms as the primary marketplace in the ecommerce economy. These platforms will be open source platforms that will integrate search results from all participating ecommerce platforms and merchants to display an integrated search result.
6.2) Is ONDC the future of Indian Ecommerce?
The ONDC organization ran a concept pilot program in five Indian cities of various population sizes and nature. The DPIT released a statement saying the pilot program was successful and will be expanded to four more cities. The nature of the ONDC platforms provides a wide array of benefits to the sellers and the buyers. In a growing and hustling economy like India, such platforms can easily outperform privately run marketplaces. So, in a way that UPI soared in the International market, ONDC platforms will most likely shape the future of Indian Ecommerce