The government has launched the pilot phase of the Open Network for Digital Commerce (ONDC) as it attempts to end the dominance of Amazon and Walmart-owned Flipkart in the rapidly growing e-commerce market.
The ONDC platform will allow buyers and sellers to connect and transact online.
The government document says “two big multinational players” control more than half of the country’s e-commerce, limiting market access, giving preferential treatment to some sellers and squeezing vendor margins, Reuters reported on Thursday.
The platform aims to add 30 million sellers and 10 million online merchants with a focus on local languages. It will be launched in five cities – Delhi NCR, Bengaluru, Bhopal, Shillong and Coimbatore and will cover at least 100 cities and towns by August.
The ONDC’s launch comes after India’s antitrust body raided domestic Amazon sellers and some Walmart Flipkarts on Thursday following allegations of antitrust violations.
What is the ONDC
ONDC is a platform for small merchants and kirana stores to sell online so they can compete with Amazon and Flipkart in the e-commerce space.
ONDC will enable local commerce across all segments, such as mobility, groceries, food ordering and delivery, hotel booking, and travel, among others.
The platform aims to create new opportunities by supporting micro, small and medium-sized enterprises (MSMEs) and small traders and helping them access online platforms.
Indian retailers have long argued that Amazon and Flipkart’s platforms benefit a few big sellers, via predatory pricing.
How ONDC aims to help small traders, Kirana stores
Flipkart, owned by Amazon and Walmart, accounts for 80% of the online retail market in the country and they have maintained their dominance with aggressive discounts and promotion of favorite sellers.
ONDC aims to break this dominance by enabling small traders and retailers to reach a wider audience through the online platform. The platform aims to democratize e-commerce by ending the monopoly of big sellers who would have preference over Amazon and Flipkart.
On Amazon or Flipkart, top sellers are listed based on algorithm and commission payment. In ONDC, registration will be based on several parameters, including what the consumer wants, the price, the location of the seller or the delivery time.
Along with sellers and buyers, logistics players and payment gateways will be part of the ONDC, which has Infosys co-founder Nandan Nilekani, former McKinsey India director Adil Zainulbhai and CEO of the National Health Authority RS Sharma, among others, as key advisers.
“It’s an idea whose time has come,” Nilekani recently told Bloomberg. “We owe it to the millions of small sellers to show an easy way to participate in the new, high-growth area of digital commerce.”