Why in News?
- Open Network for Digital Commerce will impose a “small fee” from platforms that will contribute towards “maintenance and development” of the network.
- The network will aim to decrease the compulsory commissions charged from sellers and logistics partners on the network by private e-commerce firms like US-based Amazon and home-grown Flipkart- the two largest e-commerce firms in the country.
About ONDC-
- It is an open e-commerce protocol establish by the Ministry of Commerce’s Department of Promotion of Industry and Internal Trade (DPIIT).
- Under ONDC, it is envisioned that a buyer registered on one participating e-commerce site (for instance, Amazon) may purchase goods from a seller on another participating e-commerce site (for instance, Flipkart).
- At present, buyers and sellers have to be on the same app for a transaction which happens through the same platform. For instance, a buyer needs to go to Amazon, to purchase a product from a seller on Amazon.
- Objectives-
- Democratisation and decentralization of e-Commerce.
- Inclusivity and access for sellers, particularly small and medium enterprises as well as local businesses.
- Increased choices and independency for consumers.
Benefits Offered by ONDC –
- Level Playing Field- ONDC is eager to level the playing field for e-commerce operators and enlarge the digital market access for Micro, Small and Medium Enterprises (MSMEs) and small traders in the country.
- Competitive and Innovative Ecosystem- ONDC will empower suppliers and consumers by breaking the monopoly of giant platforms to drive innovation and transform businesses in sectors such as retail, food, and mobility.
- Freedom of Choice for Consumers- Consumers can potentially discover any seller, product or service in a common platform, thus raising freedom of choice for consumers.
- Neutral and Regulated Platform- ONDC aims at promoting open networks developed on open-sourced methodology, using open specifications and network protocols, and independent of any specific platform.
- It will set protocols for cataloguing, vendor match, and price discovery on an open source-basis, like the Unified Payments Interface (UPI).
Issues with ONDC-
- It is a complex ecosystem to implement, unlike UPI.
- Switching customers from the incumbents, which are offering a satisfactory service, will be challenging.
- Network participants may not make significant market development investments initially.
- Growth in the seller base will not necessarily enhance buyer experience on the network.
- Monetisation on the network is unclear.
- Achieving critical mass will be difficult as buyer and seller sides are disconnected.
- Lack of clarity on accountability, particularly in addressing customer complaints and returns.