ONDC CEO T Koshy took time out of his busy schedule to speak to Jayadev Calamur on the role ONDC is playing, and breaking the myths surrounding India’s next big thing in building a digital retail network.

Can you explain the role of ONDC in organizing India’s retail sector and how it aims to streamline and simplify the process of buying and selling goods online? 

The ONDC initiative was designed with the aim of creating an open, inclusive and competitive marketplace. Currently, the majority of the ecommerce market is governed by a platform-centric model of business that has a full range of control, including the ability to onboard sellers, find customers, process orders, handle complaints, and manage payments. Though Indian ecommerce has registered a strong upward trajectory over the years, it still faces a few persistent challenges.  India fares fairly low in digital commerce share, barely 6%-7% of the total Indian retail market against China’s share of 25%-30% and the US share of 14%-16%. Only 5%-6% of India’s 100 million MSMEs or small firms actively sell on digital platforms, despite the fact that 65%-70% of them have access to the internet. 
ONDC network’s unbundling and interoperability will pave the way for the emergence of all kinds of sellers online without any barriers resulting in varied options for customers to buy rather than limiting their choices to only big sellers. ONDC also takes out the equation of sellers and buyers being registered on the same platform to carry out orders and transactions. As a part of the ONDC network, buyers can see/access any sellers no matter on which domain they are present as long as they are part of the network.

Can you elaborate on the measures taken by ONDC to ensure the security and privacy of the data of businesses and consumers using the platform? 

In order to be in sync with the changing legislation and the discourse surrounding data privacy in India as well as globally, ONDC aims to adopt an adaptable legislative, institutional, and technological architecture for secure data sharing. This will strike a balance between privacy concerns and data regulation that takes into account the realities of India’s business ecosystem’s requirements and constraints. Some key principles followed by ONDC include; only the buyer and seller applications to have access to transaction data, and ONDC won’t be able to see it or store it. The exchange of this data will be governed by evolving rules that are consent-based and purpose-restricted.  ONDC will ensure data security and credibility at the transaction level, which will be key to the growth of digital commerce and the success of ONDC. User’s Personally Identifiable Information (PII), as well as seller data critical to trade (i.e., competitive data), will be protected from third-party access.  

How does ONDC plan to collaborate with existing retail players and marketplaces to enhance the overall retail industry’s digital commerce ecosystem? 

As a community-led market network, ONDC’s vision is to foster a unified, interoperable and open digital ecommerce ecosystem creating a level-playing field for all businesses. We are dividing a complex system into distinct microservices for different players to address separately. This is a substitute for the platform-centric paradigm currently in use, where it controls the entire buyer and seller journey.

We understand the needs and the pains of potential network participants (NP) from a broad spectrum of domains ranging from retail, logistics service providers, restaurants, hotels, etc. The network intends to offer tailor-made solutions to address such needs through a collaborative approach. Most importantly, ONDC is built on the foundations of trust and transparency, and itself is a network that is open to all.

Can you discuss ONDC’s vision for the future of the retail industry in India and how ONDC aims to support its growth and expansion in the digital commerce space?

Our overarching vision is to create a level playing field for all kinds of businesses, whether it is a well-known established brand or homegrown regional start-up. The network will facilitate all types of commerce, from direct-to-consumer (D2C) to business-to-business (B2B) providing an access to even Kanchipuram saree weavers to reach out to bigger markets.  Additionally, ONDC would make it easier for B2B transactions to be digitized, giving pharmacies and grocery shops access to a larger distribution network and saving them time and money. Direct connections between manufacturers and merchants would probably result in price reductions and higher profit margins in industries like agriculture and construction.

With ONDC scaling up with time, it would be easier to meet hyperlocal demand as digital channels would bring the neighbourhood market online. Meanwhile, omnichannel accessibility may make it simple to order from home after making a purchase at a physical touchpoint. Consumers can search online for a variety of services, including plumbers, transport, tailors, and even education and skill-based training. By digitising the entire supply chain, enhancing price visibility, and reducing logistics expenses, ONDC will further improve logistics efficiency.  Marketplaces have the potential to encourage cross-border trade, especially by making MSMEs more visible to international customers and corporations. Lastly, even self-employed professionals and gig workers will be able to promote themselves in bid to acquire new customers. 

In next 5 years, we wish to cover the retailers using digital commerce from 15000 to 20 lakhs out of 1.2 crores of retailers, geographic coverage of ecommerce to touch 75% of pincodes and amplify the number of people buying online from 9 crores to 25 crores.