The Indian government's Open Network for Digital Commerce (ONDC) is rapidly gaining traction, attracting small retailers, restaurants, and grocery outlets and posing a significant challenge to established e-commerce giants like Amazon and Flipkart. This initiative aims to level the playing field, offering SMEs opportunities that the current platform-centric model like Amazon and Flipkart oftenly don't give leverage to them.
The Indian e-commerce market is expected to grow at 20% Compound Annual Growth Rate (CAGR) and reach $350 billion by 2030. At this time, ONDC can play an important role in SME current e-commerce space.
ONDC's open network model fosters transparency and independence in digital commerce, addressing issues such as high commission rates and a lack of equitable access for smaller businesses. Unlike Amazon and Flipkart, which function as centralized platforms, ONDC is designed as a decentralized, unified digital marketplace. This allows sellers to connect with a broader customer base across different platforms; for instance, a restaurant can use Zomato while choosing Dunzo for delivery.
Several factors make ONDC attractive to small retailers. One key advantage is the lower commission fees, which range from 5-8% compared to the 25-35% charged by Amazon and Flipkart and other delivery platforms. This significant reduction in commission translates to higher profit margins for sellers. Additionally, ONDC helps small businesses reduce costs by providing a platform to offer their products and services without requiring investment in their own e-commerce infrastructure.
ONDC fosters a more inclusive and competitive e-commerce environment. By implementing open-source protocols for price discovery, cataloging, and seller matching, ONDC promotes accessibility. The platform also expands access to a wider customer base, especially benefiting rural small enterprises that lack e-commerce capabilities6. This increased visibility and broader reach empower SMEs to compete more effectively in the digital marketplace.
ONDC is also proving attractive because it is platform-independent. With ONDC, sellers don't need to be present on multiple platforms, the network's unified structure connects them to various delivery services. This allows even small restaurants without established delivery partnerships to reach customers through services like Dunzo or Instamart.
With its focus on empowering small businesses, reducing costs, and fostering an open and competitive environment, ONDC has the potential to redefine India’s e-commerce landscape. By offering a viable alternative to the dominance of Amazon and Flipkart, ONDC could very well be the next big disruptor in the Indian e-commerce scene.
