Will the ONDC be as revolutionary as the UPI?

Let’s look at E-commerce in today’s edition and see if ONDC will be as revolutionary as UPI.

Logo Of ONDC

The Backstory📜

My parents always persuaded me to buy a pair of shoes from a local vendor rather than from an e-commerce behemoth like Amazon or Flipkart when I was younger. Why? Their motto was simple: “Vocal for Local” meant promoting local businesses. But it’s evolved into much more.

According to reports, the Indian E-commerce industry is expected to reach $1200 billion by 2026, with a compound annual growth rate (CAGR) of 7.6% from 2022 to 2030.

Source – Precedence

As we all know, the E-commerce market is dominated by big boys like Amazon and Flipkart, who have created a moat and an entry barrier for newcomers by offering huge discounts. The government has devised a revolutionary plan known as ONDC to break this monopoly and encourage small local businesses.

Come Watson, come! The game is afoot.

-Sherlock Holmes

 

🖥️ So, what exactly is ONDC?

The Open Network for Digital Commerce (ONDC) is an open protocol network that will allow any network-enabled application to discover and engage in local commerce across segments such as mobility, grocery, food order, delivery, hotel booking, and travel, among others. Or, to put it another way, it’s a fantastic app that covers everything from online shopping to travel while also supporting local businesses.

While Amazon and Flipkart’s business models are based on a platform and inventory model (buying goods in bulk and storing them close to where demand is greatest), here’s an example: On Z.com, a bookseller sells books for Rs. 200. Where Z would make a profit of Rs.20 on it. With the Inventory model, Z.com can now purchase the same books at a lower cost and sell them at a higher profit margin.

ONDC, on the other hand, has this advantage because all of the buyers and sellers are nearby, which will help to reduce costs and speed up delivery. ONDC will assist buyers in finding products, filtering prices, and getting them delivered quickly.

Source – Precedence

This is how the ONDC can benefit buyers, sellers, and technology platforms alike. Will it, however, be as revolutionary as UPI? Let’s see what happens.