Flipkart, Reliance Retail & Amazon Likely To Join Open Network for Digital Commerce

Ecommerce majors including Amazon, Flipkart, and Reliance Retail are likely to join India’s ambitious Open Network for Digital Commerce (ONDC) initiative, which still is at a nascent stage.

The network’s pilot programme to onboard kiranas and small and medium businesses is underway in five cities – Delhi NCR, Bengaluru, Bhopal, Shillong and Coimbatore.

ONDC is an initiative aiming at promoting open networks for all aspects of exchange of goods and services over digital or electronic networks. ONDC is based on an open-sourced methodology, using open specifications and open network protocols independent of any specific platform. 

It is pitched as a solution to break the dominance of large ecommerce companies in India. So, if these players join and integrate with the open network, it will have a huge impact.

Flipkart’s logistics vertical Ekart and Reliance Retail-backed Dunzo have already integrated with ONDC for logistics services while PhonePe, owned by Flipkart and Walmart, is joining the network and is in advanced stages of integration, people familiar with the development told ET.

Paytm is already a part of the network and is likely to offer real estate to ONDC on its platform through which users can log into the network. PhonePe will also offer real estate on its platform. 

With an open network, ONDC will enable all the buyers in the network to be discoverable to all the sellers. Therefore, existing platforms too will have an incentive to be part of ONDC, Thampy Koshy, CEO of ONDC told ET.

The network is currently in the ‘beta testing’ phase with just five sellers onboard and a limited set of buyers from five cities, he said.

The project is a brainchild of Piyush Goyal-led Department for Promotion of Industry and Internal Trade (DPIIT). Formed on December 31, 2021, ONDC has been incorporated as a private sector-led non-profit company.

According to officials of the Ministry of Commerce, 80 firms are currently working with the platform and are at different stages of integration. The platform plans to add 150 retailers in five cities during the pilot phase, they said.

While launching the pilot phase in five cities in April, Anil Agrawal, additional secretary, DPIIT, said, “With this pilot phase, we want to learn as to how this rolls out in the real life environment where you actually make payments, do the deliveries, cancel orders and how refund works. Once these lessons are known, we would create a playbook, which will be a set of standards.”

Outlining ONDC’s future plans, Agrawal said, “Going forward the target of the ONDC is to onboard 3 Cr sellers and 1 Cr retail merchants online. In the next step, we want to go to 100 cities in six months.”

ONDC has roped in eSamudaay, ERP player Gofrugal, digital marketing company Growth Falcon, and analytics firm Sellerapp to work with sellers.

Meanwhile, Nandan Nilekani, cofounder of software powerhouse Infosys Ltd, is leading ONDC projects, aimed at creating a level playing field for small players. He also earlier helped the government develop the Aadhar biometric ID system.

Seeing a lot of opportunities for growth in this network, different arms of the government have come forward to back the ONDC. Country’s largest lender, State Bank of India (SBI), has picked up a 7.84% stake in the network for INR 10 Cr. 

With this, SBI has become the second public sector bank in the country to acquire a stake in the ONDC. Earlier in November last year, PNB had proposed to invest INR 25 Cr or acquire 9.5% equity, whichever would be lower.

Moreover, India is home to the world’s fourth largest retail market in the world, pegged at around $810 Bn, according to a 2021 report by Bain & Company.

An Inc42 report also estimates the addressable ecommerce market in the country to reach the $200 Bn mark by 2026.