ONDC launched in Bengaluru to take on Amazon and Flipkart, here’s what it means for small traders

ONDC has been welcomed as democratic tech by Commerce Minister Piyush Goyal, who had earlier slammed Amazon and Walmart as arrogant.

FPJ Web DeskUpdated: Friday, September 30, 2022, 04:18 PM IST
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ONDC allows consumers to buy products from vendors on any platform, no matter which app they are registered on. | Photomix

Earlier people in India could call up and order supplies from their nearby grocer, but that has changed with the rise of e-commerce platforms, where multiple vendors put their goods for sale. At the same time, it has created a dominance of a handful of e-commerce giants, which makes smaller local businesses vulnerable. To break this duopoly of Amazon and Walmart-owned Flipkart, the Indian government has democratised e-retail with Open Network for Digital Commerce (ONDC).

Backed by the government and bigwigs

The open network for taking orders and receiving payments has been launched for 16 pin codes across Bengaluru for Beta testing. ONDC has been powered by a Rs 255 crore fund infusion from 20 lenders including ICICI and HDFC. Global tech giant Microsoft has also joined ONDC to create an app where social commerce, for local sellers to market their products, can be implemented.

So how is it a democratic space?

On Amazon or Flipkart where only vendors registered on the platform are visible to consumers and some of them are favoured by the respective e-commerce giants. But on ONDC, any consumer, irrespective of which app they are using, can find products listed by a seller on another platform. This is a lot like the Unified Payment Interface (UPI), where one UPI ID is used for payments via Gpay, Paytm or PhonePe. Through ONDC, local vendors can sell their products independently, and won’t have to comply with prices decided by two major platforms.

For consumers, the open network means more products to choose from and lower prices. Being able to access local vendors directly, means that goods can be delivered quickly. Simply put, it cuts out a powerful middleman and also motivates vendors to innovate as standalone businesses in a digital marketplace.

A way to address grievances of local traders?

Trouble between local traders and Amazon started when traders’ organisation CAIT took Amazon and Flipkart to court over violation of foreign trade norms, and using their clout for predatory pricing policies. CAIT later demanded a CBI inquiry into allegations that Amazon’s lawyers had bribed Indian officials, and urged Commerce Minister Piyush Goyal to intervene.

The minister also went on to call Amazon and Flipkart arrogant for flouting Indian laws and has now welcomed ONDC as a democratic technology. The new system will empower everyone from businesses selling homemade products to neighbourhood Kirana stores and other vendors, against well-funded e-commerce giants.

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