Across New Delhi and Bengaluru (and few other cities’) select few pincodes, a silent revolution has seemingly begun, one which aims to disrupt how e-commerce happens in India. The pilot for a re-imagination of e-commerce dubbed ONDC is being run based on open network standards like never before. So much so that ONDC is already being compared as India’s next UPI moment.
UPI vs ONDC: What are the similarities?
Over six years ago, when UPI was first introduced by the NPCI (National Payments Corporation of India) to unify the payment and receipt of money from multiple bank accounts through a single mobile application, it unleashed a tsunami of usability. Further spurred by the demonetization effect, apps like Paytm, Google Pay and PhonePe quickly became household names – indispensable from people’s mobile phones. I know so many people within my extended family who had never bothered to sign-up for netbanking ever in their life quickly took to UPI payment apps like fish to water. It’s a testimony to the ease of use and simple intuitiveness exhibited by UPI apps that truly remains unparalleled in empowering crores of Indians across different walks of life.
What UPI did to online payments in India, ONDC (One Network for Digital Commerce) wants to do something similar with e-commerce in the country – aiming to disrupt and re-imagine it from the ground up, to level the playing field for small businesses and mom-and-pop stores against the Amazons and Flipkarts of the online marketplace.
What e-commerce problems will ONDC solve?
Think about the e-commerce experience in India, how we all buy goods and gadgets online right now: We all download a shopping app (like Amazon, Flipkart, Etsy, etc), which allows us to buy or sell stuff on these shopping platforms. Every e-commerce platform is its own separate shopping universe – you have to download the Amazon app to shop on Amazon’s online marketplace, similarly you download the Flipkart, Etsy, and other shopping apps to buy stuff from these respective online marketplaces.
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You cannot buy an item listed on Flipkart through Amazon, or vice versa. Each online shopping app only gives access to its own marketplace, and this can be a problem in the long-term. Just imagine, this model of online commerce completely shuts out consumers who are unaware of, can’t or are unable to access these online shopping portals; they tend to lose out on participating in any form of commerce – which is the biggest flaw of traditional e-commerce in the form it exists right now.
Think about the past two pandemic years and how much pain and suffering would’ve been avoided if all the kirana stores and local shops in your vicinity, including the street vendors, were instantly accessible over the Internet? You know they were around, and they knew all their customers were around as well – just physically unreachable because of the lockdown and fear of Covid-19. Imagine not having to wait for (or search for) apps like Swiggy, Zepto, Fraazo, etc, to enable veggies and grocery delivery services, and if there was a way to intuitively interact and transact with all hyperlocal businesses around your current location? That’s essentially what ONDC will seemingly enable for buyers and sellers all over the country very soon.
So what exactly is ONDC?
Where ONDC starts to become as disruptive as UPI is in the open nature of its network protocols. In an open network, as long as the platforms and applications are interoperable, buyers and sellers can transact no matter what platform or application they use to be digitally visible or available on the network. ONDC’s strategy paper argues creation of a whole new network protocol for “e-commerce” activity, just like the “Internet Message Access Protocol (IMAP) / Simple Mail Transfer Protocol (SMTP) is for emails, Hypertext Transfer Protocol (HTTP) is for the World Wide Web, UPI for the payment systems,” etc. This idea of ONDC itself is potentially disruptive, at a conceptual level. But there’s more…
ONDC doesn’t want to restrict itself for use in the retail sector alone, as its use cases and benefits can be extended to any digital commerce domains – mobility, food delivery, logistics, travel, urban services, etc. Virtually “any digital transaction between a buyer and seller for goods or services.” And now you start to realize just how massive the scope of ONDC is conceived to be, how far reaching its impact on all forms of e-commerce activity will be.
There’s no doubt that ONDC is being introduced by the government to stop the Indian e-commerce sector from becoming a duopoly of Amazon and Flipkart, which together account for over 50% of all e-commerce activity in the country. It isn’t here for everyone yet and I don’t think it will allow for app-less digital commerce, but ONDC will create a whole wave of new online apps and force the existing ones to better connect and serve buyers and sellers like never before. And more competition in the marketplace invariably has a way of benefiting the customers in the long run, as it rightly should.
This column originally appeared in Digit’s October 2022 print edition under the title of ‘Indian e-commerce’s UPI moment’.
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Jayesh Shinde
Executive Editor at Digit. Technology journalist since Jan 2008, with stints at Indiatimes.com and PCWorld.in. Enthusiastic dad, reluctant traveler, weekend gamer, LOTR nerd, pseudo bon vivant. View Full Profile
