With the global eCommerce market expecting to reach a projected market volume of $4,703 billion by 2028, it seems there’s a great scope for retailers worldwide.
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But if you’re a small or mid-sized retailer trying to make ends meet, you would realize that this is far from the truth. Ecommerce giants like Amazon and Flipkart monopolize the entire market. Small retailers either struggle to stay afloat or sell products at the prices dictated by these giants.
To overcome this monopoly, the government of India has launched ONDC, a market and community-led network offering a democratic eCommerce stage to all the retailers.
As the member of a company for eCommerce development , I am excited about ONDC and the impact it would have on the eCommerce landscape. You also might’ve many questions about ONDC, such as what it is, how it’s different from traditional eCommerce, and which you must choose from eCommerce and ONDC for your business. Let’s find out the answers to all of them:
An acronym for open network for digital commerce, ONDC is the government of India’s ambitious initiative to revolutionize the way retailers sell their products. It aims to offer a single platform for sellers to sell at a price dictated by them, not at the ones dictated by Flipkart and Amazon.
The idea is to counter the monopoly of established eCommerce platforms and offer small and mid-sized retailers a chance to compete on their terms.
For years, various eCommerce platforms have been monopolizing the market. For online shopping, Amazon and Flipkart own 60% of the eCommerce market, for ride-sharing Uber and Ola dominate a major portion, while Zomato and Swiggy capture the Food delivery industry.
Now, small retailers and service providers are forced to sell on the conditions dictated by them. If they decide to go against these big brands, they’re wiped from the market. India’s restaurant owners’ body had even filed a case on food aggregators Zomato and Swiggy alleging that they’re monopolizing the market and imposing their price terms on them.
Another problem lies in the private label products of these eCommerce platforms. They sell these products at much less price, thus reducing the demand for small retailers’ products. Also, these platforms promote their privately labeled products than of these sellers, thus killing the competition.
With ONDC, the government wants to level the playfield and offer all retailers a fair chance to compete in the market by:
- Letting any retailer list their products and compete on the same level. Here, you don’t have the fear that the eCommerce platform owner will give unfair preference to their privately labeled products.
- Lowering the commission charges on products. Sellers no longer have to pay 18-30% of the product sales as commission. The overall expense will only be around 5-7%.
eCommerce platforms follow a platform-centric business model, where a single entity has end-to-end control over the complete eCommerce process, from seller onboarding and customer acquisition to order fulfillment and payment process.
A popular example is Amazon, which hosts various sellers on its platform, acquires customers, receives orders, processes the payment, and then transfers the payment to the seller after deducting its processing fee. This end-to-end control allows Amazon to dictate the terms of business for sellers. They can decide the price, prioritize certain sellers, even ban/blacklist a seller for violating their terms and conditions.
ONDC, on the other hand, breaks the entire eCommerce process into several microservices. This way, a single entity doesn’t control the entire eCommerce ecosystem and dictate the terms of business. Instead, retailers can conduct business on their own terms.
Let’s understand this with an example. Suppose you own an electronics store. If you’re a part of ONDC, you can list your products with the price you dictate on the seller’s side. When a buyer would search for the item on the buyer app, it would get linked to the ONDC platform connected to the seller-side interface listing all the sellers selling the product. Then, it’s up to the buyer whether they want to buy your product or not.
In the end, you get the desired price for your product, while a buyer gets multiple options and hence better offers.
Here are a few other differences between ONDC and eCommerce platforms:
- Most eCommerce platforms are privately owned and these owners dictate the terms of business for sellers. On the other hand, no entity or agency owns ONDC. Businesses can join it and do business on their terms.
- eCommerce platforms charge a hefty joining fee to get sellers onboard, which becomes costly for small retailers. On the other hand, the ONDC fee is much more affordable (5 or 10x less) as the government dictates it.
- Thousands of sellers offer services on eCommerce platforms and only a few appear in search results repeatedly, limiting the scope for small sellers. On the other hand, each seller gets equal opportunity as sellers are in control of what they’re looking for.
- Seller reviews are not transferable on eCommerce platforms. It means if you have built a credibility and earned good reviews on Amazon and now you want to start selling on Flipkart, you would have to start from zero. However, ONDC doesn’t have this issue. No matter from where you sell your products, reviews would be uniformly visible to buyers.
The answer to this question depends on the following factors:
- Are you a small local business looking to reach customers in your area? If yes, you must use ONDC as it promotes hyper-local networking, i.e., connecting sellers with local stores in specific geographical regions to offer them a better shopping experience. But if you want to reach a global audience, eCommerce platforms will be a better choice.
- In which category do you deal? If you deal in F&B, groceries, and home décor – you can choose ONDC as these are the only categories available at this moment. But if you also provide healthcare, beauty, or fashion products, you must stick to eCommerce platforms.
- What are your business goals? ONDC can be a great option if you want more control over your data and want to do business on your terms. But if you’re looking for a global exposure, you can try your hands on eCommerce platforms.
- Do you want to experiment with new sales approaches? If yes, ONDC is for you. It can offer you a chance to penetrate the market and reach more buyers through a different sales approach.
The rise of eCommerce giants and their monopoly on the market has been the cause of concern for many retailers. ONDC takes this power from these retail giants’ hands and gives small and mid-sized retailers an equal chance to compete and earn a fair profit. So, for a small retailer like you who’s struggling to keep their business afloat, ONDC can be a sigh of relief.
However, just because ONDC has a great scope doesn’t mean you must opt blindly. Always keep your business requirements, your customers, and the market in mind before making a decision. It would ensure you don’t do something that doesn’t yield results.
Hopefully, the blog gave you enough idea about in which situations you must choose ONDC over eCommerce and vice versa. Now, you can make an informed decision.
Still, if there’s anything you need to know about, please share in the comments. I would be happy to help you.