A Fair Deal

For years, Karthikeyan Anguchamy has refused to abdicate to ecommerce giants that control about 60 per cent of India’s $40 billion online marketplace. “I may be wrong but I don’t want to sell on Amazon or Flipkart. I don’t like the idea of submitting to their rules and giving them a chunk of my margins,” says the 46-year-old owner of Shree Kandhan Stores, a store in Bengaluru’s Ramamurthy Nagar that specialises in dry fruits and native grocery. Anguchamy has invested in a website, but discoverability remains an issue. When he heard of a government-backed open platform for connecting with buyers via an app, without the trappings of a monopoly, Anguchamy was sold on the idea. One of the first merchants in the city to go live on the Open Network for Digital Commerce (ONDC) about two months ago, Shree Kandhan Stores has made as many as 1,400 items—or SKUs (stock keeping units), in ecommerce parlance—available on the platform with the help of GoFrugal, a retail ERP software company and an ONDC network partner for onboarding sellers. Right now, in the pilot phase, the network only supports delivery to a few pin codes, but the hope is that as more buyers discover the platform and more logistics partners come onboard, small sellers like Anguchamy will be able to seamlessly sell to a vast, pan-India market. Anguchamy was in his late teens when his father, who had a butter, ghee and cold-pressed oil business, died. “My brother and I diversified the business, launching our own snacks and sourcing traditional ingredients like palm jaggery, honey and pickles. We hope that over time, the ONDC network evolves to find a way of highlighting specialty items. Otherwise, we may become just another grocery store on the platform,” he says, after completing a handful of orders on ONDC. Even as sophisticated product categories are getting added to the network, stores like Anguchamy’s are meanwhile tapping into ONDC’s hyperlocal marketplace to sell to early adopters.

“We started with the most difficult categories—grocery and food. Home decor will go live shortly. In the next two to three months, you will see multiple categories like fashion, beauty, electronics, consumer durables, mobility and so on being made available on the network. When the buyer platform feels more comfortable, we will see broader participation of the merchants from multiple domains growing in an organic fashion,” says Thampy Koshy, CEO, ONDC. Koshy, who was executive director at Ernst & Young, has played a leading role in many large scale e-governance projects, including Aadhaar. Like Aadhaar, which began as a startup in a south Bengaluru apartment, ONDC functioned out of a WeWork co-working space in Gurugram until recently. Built by some of India’s brightest minds, both projects are wildly ambitious and without precedent. Nandan Nilekani, the founding architect of Aadhaar and a key influence behind India Stack’s Unified Payments Interface (UPI), is on ONDC’s advisory council and believes that ONDC, together with RBI’s Account Aggregator framework and iSPIRT’s Open Credit Enablement Network (OCEN) protocol—both of which aim to improve easy access to credit—will help India’s supply chain level up in efficiency and reach.

An ecommerce platform as a public good may sound oxymoronic, except it isn’t. ONDC aims to be a sprawling digital bazaar to trump the monopoly of e-supermarkets. It wants to break silos and connect buyers, sellers and logistics providers on a democratic platform, and to bring those underserved or unserved by ecommerce online. And it is taking startups like Dunzo and PhonePe along on this journey. “Ecommerce penetration today is just 5-6 per cent on the buyer side and around 1 per cent on the seller side. The industry is focused on the affluent segment with products and experience all tailored for them. This is going to change with more product options coming via ONDC network partners like Spice Money, which targets rural buyers, and CSC e-Governance Services India Limited and options.” Koshy says.

With buyer-side apps by PayTM, Mystore and SpiceMoney, and Digiit, eSamudaay, Gofrugal, GrowthFalcons, SellerApp and others on the seller side onboarding hundreds of small merchants, besides logistics partners Dunzo, Shiprocket, Shadowfax, Loadshare and eKart (Flipkart’s logistics arm) on the network, ONDC is gathering steam. These are very early days yet for the community-led network, and there are rough edges, including grievance redressal, partial returns, time taken for delivery and a very limited set of offerings for the buyer, but the possibilities are enchanting. Extending the digital revolution to agriculture is one of them. A recent hackathon organised by ONDC in association with NABARD explored ideas to democratise agri-tech by bringing FPOs, food processors, mandis, MSMEs, exporters, and small retailers on the network. “We are laying down the specifications for making Lego blocks. Innovators will come and shape these new building blocks, out of which some enterprising entrepreneur will build a spacecraft and another, a bullock cart,” Koshy says. “Everyone will have equal opportunities to build a market for themselves so long as they have offerings that are meaningful. What the Open Network offers is unlimited scope for innovation.”

The idea took root during the pandemic with Anil Agrawal, additional secretary, Department for Promotion of Industry and Internal Trade, reaching out to the private sector to solve the technical challenges of delivering food and supplies to those whose lives had been disrupted. Many ideas were floated, a super app and an e-kirana platform among them. Those who sat in on some of those sessions say Agrawal is to be credited with having the foresight to form a committee and to rope in the private sector to build something transformational. The Nandan Nilekani-backed Beckn Foundation was meanwhile independently developing an open, platform-agnostic protocol for ecommerce. Besides Nilekani, Anjali Bansal, chairman of Avaana Capital, Adil Zainulbhai, chairman, QCI and Capacity Building Commission, Arvind Gupta, cofounder, Digital India Foundation, Dilip Asbe, MD and CEO, National Payments Corporation India, and others were roped in as advisers. Koshy was the first employee, joining ONDC in February 2022. By April, they were ready for an alpha pilot. In early October, the network was thrown open for beta testing in several cities.

While the hope is that stores that haven’t yet gone digital will begin their ecommerce journey with ONDC, many sellers who already have an online presence are among the first to get on board, says Dilip Vamanan, cofounder of SellerApp, an AI-powered ecommerce intelligence platform for sellers. As an ONDC partner, SellerApp reached out to thousands of sellers over the past few months, 7,000 of whom expressed interest in joining the network, Vamanan says. “Eighty per cent of them are already online. This includes D2C brands that are aiming for omnichannel growth,” says Vamanan, who has helped about 300 sellers go live on ONDC. “On ONDC, the cost of customer acquisition is near-zero. As a number of buyer apps start to integrate with ONDC, customer experience and discoverability of products will both improve hand-in-hand with the maturing of the network.” As on date, SellerApp supports next-day delivery on ONDC, and hopes to offer same-day delivery as order volumes swell. “We do 20-40 orders a day now, but by December, we could be doing 1,000. We are working with agri-tech players, we just onboarded 14 public limited companies in Kerala and we are talking to Karnataka government-run handicraft stores. Here’s the thing about ONDC—we don’t know who our target customer is, and what he or she wants to buy. The market will lead the way as the network goes mainstream,” Vamanan says.

Kapiva, an Ayurvedic nutrition brand, is among the D2C brands to have been onboarded by SellerApp. Says Arshdeep Singh, head of tech for Kapiva, “I don’t know if it will work, but if it does, an open market is the best thing that could happen to Indian ecommerce. Although Amazon accounts for the largest chunk of our sales, we are consciously omnichannel, and we will be watching ONDC closely to see if we are able to reach more customers.”

For a small delivery company, it is next to impossible to approach a BigBasket or a Flipkart to do business with them, says Mahesh Herle of Loadshare, a logistics company. “If you want to work with an ecommerce company that involves integration efforts by us as well as by that company, imagine doing that for not just the two leading ecommerce marketplaces, but for the whole range of players in the food delivery space. On ONDC, we can integrate into the network once and for all, and service orders on the platform at no additional effort.”

On ONDC, sellers can negotiate directly with logistics providers on the network for better terms, or opt to self-deliver. For many of them, ONDC will be their only opportunity to go online, says Kumar Vembu, founder and CEO of Gofrugal, a Chennai-based retail ERP software company. “There are 10 million sellers in India, most of who had never been touched by technology until UPI happened. Now, they use UPI more than anyone else. ONDC could be the next revolution as far as they are concerned.” For merchants who already sell online, open commerce could usher in an era of sustainable business practices, Vembu adds. “Amazon, Jiomart, Flipkart—all of them are the everything store. They own everything about the shopping experience, from app development to payment, packing and delivery. The trader whose stock is in the marketplace is mostly invisible. Most sellers don’t make a profit on these platforms as they pay 18-40 per cent in commissions. For many, their offline business subsidises their online presence. Imagine if they could bypass these platforms and reach out directly to the customer.”

Seller apps are the fulcrum of the network. Orders placed on buyer apps are passed on to seller apps where they are converted to bills and marked as ready for shipment, then assigned to logistics partners. Besides, onboarding a new seller takes considerable effort. It involves outreach, education and digitisation of the catalogue as per standardised policies. For instance, all products must come with two images, one including the expiry date where applicable, and a basic description. For returnable products, the return window must be specified. “When product becomes a commodity, the distribution wins. When product as well as distribution become commodities, the experience wins. When product, distribution and experience all become commodities, the network wins. While ONDC’s win-win proposition could take two-three years to make an impact, let’s not underestimate the power of millions of entrepreneurial sellers,” Vembu says. “When Mahatma Gandhi said, ‘First they ignore you, then they laugh at you, then they fight you, then you win’, he may as well have been talking about ONDC.”

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