A lot of discussions are taking place around ONDC and how it is going to be a game changer like UPI!
ONDC stands for Open Network for Digital Commerce.
A thread on everything you need to know about it 🧵👇
Retweet for a wider reach, please!
ONDC stands for Open Network for Digital Commerce.
A thread on everything you need to know about it 🧵👇
Retweet for a wider reach, please!
1/n
India’s next UPI kind of bet is on e-commerce.
ONDC is a community-led network that aims to create an open, inclusive & competitive marketplace.
India’s next UPI kind of bet is on e-commerce.
ONDC is a community-led network that aims to create an open, inclusive & competitive marketplace.
2/n
Currently, e-marketplace platforms follow a platform model, whereby they have end-to-end control over the entire e-commerce transaction process, right from seller on-boarding, customer acquisition, order fulfillment, complaint redressal, and managing payments
Currently, e-marketplace platforms follow a platform model, whereby they have end-to-end control over the entire e-commerce transaction process, right from seller on-boarding, customer acquisition, order fulfillment, complaint redressal, and managing payments
3/n
ONDC's open network will 'unbundle' or break down this complex system of granular activities into separate microservices that can be addressed separately by any entity that chooses to perform one or more of these activities.
ONDC's open network will 'unbundle' or break down this complex system of granular activities into separate microservices that can be addressed separately by any entity that chooses to perform one or more of these activities.
4/n
Example - Assume Company A is a consumer-facing app that helps in order leads & acquisition, B helps in catalogs, C helps in marketing and D helps in logistics. ONDC’s network will make it possible for A, B, C and D to work together/interoperate and fulfill an order.
Example - Assume Company A is a consumer-facing app that helps in order leads & acquisition, B helps in catalogs, C helps in marketing and D helps in logistics. ONDC’s network will make it possible for A, B, C and D to work together/interoperate and fulfill an order.
5/n
This way, platforms can be replaced by a plethora of such providers who will work together to provide services of logistics, payments, processing, lead generation, and that too under the ONDC’s open protocol.
This way, platforms can be replaced by a plethora of such providers who will work together to provide services of logistics, payments, processing, lead generation, and that too under the ONDC’s open protocol.
6/n
The biggest benefit?
Large-scale democratization of digital commerce in India by providing a level playing field for large and small players.
The biggest benefit?
Large-scale democratization of digital commerce in India by providing a level playing field for large and small players.
7/n
Just what the government did with UPI, it plans to do with e-commerce. The government plans to unify e-commerce platforms into one single open network.
That's what ONDC is, Open Network for Digital Commerce.
Truly Ambitious, Let's hope the Government cracks this :)
Just what the government did with UPI, it plans to do with e-commerce. The government plans to unify e-commerce platforms into one single open network.
That's what ONDC is, Open Network for Digital Commerce.
Truly Ambitious, Let's hope the Government cracks this :)
8/n
Similar Initiatives -
UPI -
- Does it even need any introduction?
- Launched in 2016
- Now accounts for a 50% share of retail digital payments in India
- Processes annual transactions of US$1tn+
- India's biggest and most successful fintech story!
Similar Initiatives -
UPI -
- Does it even need any introduction?
- Launched in 2016
- Now accounts for a 50% share of retail digital payments in India
- Processes annual transactions of US$1tn+
- India's biggest and most successful fintech story!
9/n
EESL -
- Energy Efficiency Services Ltd
- pioneer of the UJAALA scheme (JV of 4 PSUs and Ministry of power)
- EESL helped improve India's global LED market share from 0.1% in FY14 to 12% by FY16.
- Bulk procurement enabled EESL to reduce the prices of LED bulbs by 85%.
EESL -
- Energy Efficiency Services Ltd
- pioneer of the UJAALA scheme (JV of 4 PSUs and Ministry of power)
- EESL helped improve India's global LED market share from 0.1% in FY14 to 12% by FY16.
- Bulk procurement enabled EESL to reduce the prices of LED bulbs by 85%.
10/n
The Need for ONDC -
- Task to get the next billion users online and the next hundreds of millions of shoppers online
- Getting MSMEs on platforms
- Platform-centric models where transparency can be limited
- High entry barrier limiting new competition
The Need for ONDC -
- Task to get the next billion users online and the next hundreds of millions of shoppers online
- Getting MSMEs on platforms
- Platform-centric models where transparency can be limited
- High entry barrier limiting new competition
11/n
- Most of the hyper-local stores were digitally excluded. Most platforms have their own warehousing, payments, logistics, buyers, etc.
- ONDC standardizes protocols so sellers won’t have to follow separate mandates.
- Most of the hyper-local stores were digitally excluded. Most platforms have their own warehousing, payments, logistics, buyers, etc.
- ONDC standardizes protocols so sellers won’t have to follow separate mandates.
12/n
- Seller’s products will be visible to all platform-enabled buyers. In the same way, buyers will be able to view products from various sellers
- It will connect logistics on the same network so buyers/sellers can keep track of their orders irrespective of platform they use
- Seller’s products will be visible to all platform-enabled buyers. In the same way, buyers will be able to view products from various sellers
- It will connect logistics on the same network so buyers/sellers can keep track of their orders irrespective of platform they use
13/n
- ONDC is not just for retail transactions but also for food delivery, travel, distribution, and more!
- India’s e-com purchase penetration is 8%. ONDC plans to take it to 25% in 2 years. In the next 5 years, it plans to onboard 1.2 million sellers and 900 million buyers!
- ONDC is not just for retail transactions but also for food delivery, travel, distribution, and more!
- India’s e-com purchase penetration is 8%. ONDC plans to take it to 25% in 2 years. In the next 5 years, it plans to onboard 1.2 million sellers and 900 million buyers!
14/n
- With ONDC, just as primary and secondary sales are recorded, powered with APIs it can also record tertiary sales for drawing unified market insights and building market strategies.
- With ONDC, just as primary and secondary sales are recorded, powered with APIs it can also record tertiary sales for drawing unified market insights and building market strategies.
15/n
Challenges -
- India doesn’t have regulations for e-comm customer liability. If all stakeholders like distributors, sellers, platform providers, and consumers are all on the same page then who will be responsible for any mishaps?
Challenges -
- India doesn’t have regulations for e-comm customer liability. If all stakeholders like distributors, sellers, platform providers, and consumers are all on the same page then who will be responsible for any mishaps?
16/n
- Let's suppose if a consumer receives faulty goods, who will be responsible?
- Challenges in UPI like service failures, and double clocking of transactions lead to a pile of credit reversals. (Tech probs and load probs)
- Let's suppose if a consumer receives faulty goods, who will be responsible?
- Challenges in UPI like service failures, and double clocking of transactions lead to a pile of credit reversals. (Tech probs and load probs)
17/n
The Kirana Angle -
- One big addition to this large network of sellers would be the local Kirana stores.
- Amazon, Flipkart, Reliance are all racing to work with Kiranas on their platform in some form or other (being a supplier , last-mile delivery or digitizing them)
The Kirana Angle -
- One big addition to this large network of sellers would be the local Kirana stores.
- Amazon, Flipkart, Reliance are all racing to work with Kiranas on their platform in some form or other (being a supplier , last-mile delivery or digitizing them)
18/n
- And since all 3 major players have expressed their interest to join ONDC, 12-15Mn Kirana stores may very well be selling their products through ONDC to their nearby areas more efficiently.
- And since all 3 major players have expressed their interest to join ONDC, 12-15Mn Kirana stores may very well be selling their products through ONDC to their nearby areas more efficiently.
19/n
What's happening on the ground?
- Currently, ONDC is live in Bengaluru, Delhi-NCR, Bhopal, Shillong, and Coimbatore.
- Nearly 41% of ONDC is owned by 5 Indian Banks, PNB, SBI, Kotak Mahindra Bank, Axis Bank, and HDFC Bank.
Key Companies Involved -
What's happening on the ground?
- Currently, ONDC is live in Bengaluru, Delhi-NCR, Bhopal, Shillong, and Coimbatore.
- Nearly 41% of ONDC is owned by 5 Indian Banks, PNB, SBI, Kotak Mahindra Bank, Axis Bank, and HDFC Bank.
Key Companies Involved -
20/n
Team of ONDC -
- includes the pioneers of many of the successful government-led digital projects including UPI, Aadhaar, Rupaay, IMPS, and GST.
- The advisory council has a mix of ministry officials, industry experts, corporate leaders, and heads of market associations
Team of ONDC -
- includes the pioneers of many of the successful government-led digital projects including UPI, Aadhaar, Rupaay, IMPS, and GST.
- The advisory council has a mix of ministry officials, industry experts, corporate leaders, and heads of market associations
21/n
- Includes Mr. Nandan Nilekani (Infosys co-founder) and Dilip Asbe (MD & CEO of NPCI).
Remember, good things Take time -
- UPI took 2-3 years to take off, and EESL took 5-6 years to drive big changes!
- Time will show the platform's result!
- Includes Mr. Nandan Nilekani (Infosys co-founder) and Dilip Asbe (MD & CEO of NPCI).
Remember, good things Take time -
- UPI took 2-3 years to take off, and EESL took 5-6 years to drive big changes!
- Time will show the platform's result!
22/n
Sources - Inc 42, ET, Jefferies Report on ONDC, GS Report on ONDC, Medianama
End of thread! Thanks for reading!
Sources - Inc 42, ET, Jefferies Report on ONDC, GS Report on ONDC, Medianama
End of thread! Thanks for reading!
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