Explainer: What is ONDC, India’s venture for an open up e-commerce network?

A shipment moves on a conveyor belt at an Amazon Success Centre (BLR7) on the outskirts of Bengaluru, India, September 18, 2018. REUTERS/ Abhishek N. Chinnappa

NEW DELHI, June 1 (Reuters) – India’s governing administration in April launched its Open up Network For Electronic Commerce (ONDC) as a future choice to dominant international giants Amazon.com (AMZN.O) and Walmart (WMT.N) in its quickly-expanding e-commerce current market.

Listed here is a description of the different moving areas of ONDC.

WHAT IS ONDC?

ONDC is a non-gain corporation whose network will help the screen of solutions and services from all taking part e-commerce platforms in search success across all applications on the network.

For illustration, if equally Amazon and Walmart’s Flipkart combine their platforms with ONDC, a consumer exploring for a Bluetooth headset on Amazon would also see success from Flipkart on the Amazon application.

WHAT ARE ONDC’S TRANSACTION TARGETS?

ONDC aims to increase e-commerce penetration in the upcoming two years to 25% of India’s customer buys, from nearly 8% now, in a region of 1.35 billion people today.

It also hopes to signal up 900 million buyers and 1.2 million sellers on the shared community in just the future 5 years, whilst acquiring gross products benefit of $48 billion.

The federal government estimates that India’s e-commerce industry was really worth extra than $55 billion in gross products worth in 2021 and will increase to $350 billion by the stop of this 10 years. Now, Amazon and Walmart’s Flipkart manage extra than 60% of the sector.

HOW DOES ONDC Intention TO Improve Competition?

The governing administration claims present platforms perform in silos and are tightly managed, trying to keep out many smaller gamers. It expects ONDC to boost competitiveness and foster innovation by begin-ups.

It also hopes to bring in logistics firms and others who can collaborate with sellers to supply products to shoppers.

The focus would be on compact retailers and rural people, with apps in Indian languages.

ONDC officers liken the community to a shopping mall with 1,000 gates alternatively of just two, thereby restricting prospects for chosen sellers to acquire preferential treatment method – a common accusation from main e-commerce businesses.

People will be ready to amount services companies on ONDC, which will be applicable and seen throughout the network.

The govt says ONDC will support to close “predatory pricing, especially in high-margin, superior-value goods”. Amazon and Flipkart deny that they have engaged in predatory pricing.

WHAT Worries DOES ONDC Confront?

ONDC aims largely to tap thousands and thousands of modest firms that frequently lack technological expertise, so the federal government will have to run a large recognition marketing campaign to get them on board, explained the Confederation of All India Traders, a team that signifies 80 million such enterprises.

More compact firms with low volumes may also lack the sources to match the special discounts supplied by heavyweights like Amazon and Flipkart.

Reporting by Munsif Vengattil in New Delhi Enhancing by Edmund Klamann

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