ONDC, India's e-commerce initiative, offers an alternative to global behemoths such as Amazon and Walmart.

In the next two years, ONDC wants e-commerce to account for 25% of all consumer purchases in India.

HIGHLIGHTS

• INDIA'S ONDC plans to increase e-commerce penetration during the next two years.

• It also intends to attract 900 million shoppers and 1.2 million vendors to the platform.

• ONDC will make it possible for products and services to be shown across several platforms.

In April, the government unveiled its Open Network For Digital Commerce (ONDC) as a potential competitor to Amazon.com and Walmart in the fast-growing e-commerce business.

The many moving pieces of ONDC are described below.

What exactly is ONDC?

ONDC is a non-profit organisation whose network will allow items and services from all participating e-commerce platforms to be shown in search results across all network apps.

If Amazon and Walmart's Flipkart both link their systems with ONDC, a consumer looking for a Bluetooth headset on Amazon will also receive results from Flipkart on the Amazon app.

What are the transaction goals of ONDC?

In a country of 1.35 billion people, ONDC plans to increase e-commerce penetration to 25% of consumer purchases in the next two years, up from almost 8% presently.

Within the next five years, it expects to sign up 900 million customers and 1.2 million vendors on the shared network, with a gross merchandise value of $48 billion (roughly Rs. 3,72,400 crore).

According to the government, India's e-commerce business was valued more than $55 billion (approximately Rs. 4,26,700 crore) in gross merchandise value in 2021, and is expected to reach $350 billion (about Rs. 27,15,100 crore) by the end of the decade. Amazon and Walmart's Flipkart currently dominate more than 60% of the market.

What is ONDC's strategy for increasing competition?

Existing platforms, according to the government, function in silos and are tightly managed, excluding many small businesses. ONDC is expected to boost competitiveness and encourage start-up innovation.

It also intends to attract logistics companies and others who can work with vendors to deliver goods to buyers.

With applications in Indian languages, the focus would be on small merchants and rural consumers.

Officials from the ONDC compare the network to a mall with 1,000 gates rather than just two, restricting potential for chosen vendors to obtain preferential treatment - a typical charge levelled at large e-commerce businesses.

On ONDC, users will be able to rate service providers, with their ratings being relevant and visible across the network.

ONDC, according to the government, will assist to stop "predatory pricing, particularly in high-margin, high-value items." Amazon and Flipkart both deny using exploitative pricing tactics.

What problems does ONDC have to deal with?

According to the Confederation of All India Traders, which represents 80 million small enterprises, ONDC seeks to access millions of small firms that frequently lack technology competence, so the government would have to undertake a large awareness campaign to bring them on board.

Smaller firms with low volumes may also lack the resources to compete with Amazon and Flipkart in terms of discounts.