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The story thus far: The Union authorities is seeking to formally launch the Open Network for Digital Commerce (ONDC) this yr to “democratise e-commerce” and “to provide alternatives to proprietary e-commerce sites”. While it has urged corporations to hitch the ONDC platform, main e-commerce gamers reminiscent of Amazon and Flipkart have been reluctant to get on board. Commerce Minister Piyush Goyal just lately requested these corporations to hitch ONDC quickly or threat being left behind.
What is the ONDC?
The authorities needs to alter the elementary construction of the e-commerce market from the present “platform-centric model to an open-network model”. The ONDC is modelled after the Unified Payments Interface (UPI) mission that is seen as successful by many. The UPI mission permits folks to ship or obtain cash regardless of the funds platforms on which they’re registered. Similarly, the authorities needs to make sure that consumers and sellers of products in the e-commerce market can transact no matter the platforms on which they’re registered. So beneath ONDC, a purchaser registered on Amazon, for instance, might immediately buy items from a vendor who sells on Flipkart. To make such transactions a actuality, the authorities has ordered corporations to checklist themselves on the ONDC. The pilot model of ONDC was launched final yr in just a few main cities and 1000’s of sellers have already been on-boarded onto the platform. Amazon and Flipkart, nevertheless, haven’t on-boarded their essential buying platforms onto the ONDC community but.
Why is the Centre pushing for it?
The authorities believes that the ONDC will put an finish to the domination of the e-commerce market by just a few giant platforms. It says that the e-commerce market is at present damaged into “silos” operated and dominated by personal platforms. Amazon and Flipkart, for occasion, have been accused of selling sure vendor entities through which they maintain oblique stakes. Food supply apps reminiscent of Swiggy and Zomato have additionally been accused of charging excessive commissions from sellers. With an open community like ONDC that connects consumers and sellers throughout platforms, the authorities hopes to degree the enjoying area and make personal platforms redundant.
What do critics say?
Critics argue that the purported advantages of an open community for digital commerce are removed from sure at the second. For one, sellers are already free to checklist their merchandise throughout varied e-commerce platforms even in as we speak’s platform-centric e-commerce mannequin. Buyers additionally routinely store throughout platforms. Then there are additionally companies reminiscent of price-comparison which are provided by varied personal web sites that bridge the info hole and assist consumers make higher choices. So, critics argue, the domination of the e-commerce market by platforms reminiscent of Amazon and Flipkart is probably not as a consequence of any captive maintain that these platforms have over consumers and sellers. Further, the supposed monopoly that platforms are mentioned to take pleasure in could also be no totally different from the restricted monopoly that any enterprise as we speak has over its property.
What lies forward?
The capability of the authorities’s technocrats to provide you with an environment friendly different to e-commerce platforms that may work seamlessly will likely be examined as the authorities rolls out the ONDC. It stays to be seen if and the way the authorities’s open community will checklist merchandise provided by varied sellers. Competition usually pushes e-commerce platforms to prominently checklist merchandise which are more than likely to catch the fancy of consumers. Their on-boarding and itemizing of sellers is additionally closely influenced by the capability of sellers to fulfil buyer orders. In reality, platforms might make investments cash to construct unique on-boarding and itemizing processes. If the open community’s guidelines stop platforms from benefiting from such investments, they could stop to make them anymore. This will ultimately have an effect on the high quality of companies accessible to customers. Building an environment friendly market for the sale of products and companies might grow to be the key problem for ONDC.
