EXCLUSIVE: ONDC to go live in Bengaluru on September 30; IDFC, Spice Money join as buyer apps

ONDC or the Open Network for Digital Commerce, a Government of India-backed initiative to democratise e-commerce in India, is set to begin its beta testing with public users in Bengaluru Urban District on September 30, 2022, a person familiar with the development said. 

The soft launch will feature more than 200 merchants across grocery and F&B (food & beverages).

Besides Paytm, ONDC will go live in the Karnataka Capital with four other buyer-side apps, such as private sector lender IDFC, rural fintech firm Spice Money, e-commerce firm CraftsVilla, and e-commerce enablement platform MyStore. As per one of the aforementioned persons, seven more buyer apps including Flipkart-owned PhonePe and Kotak Mahindra Bank are in advanced stages of implementation. 

The network will have 10 seller apps including Unilever Ushop, Uengage,  nStore, and Bizom in addition to the existing five - Digiit, eSamudaay, GOFRUGAL, GrowthFalcons and SellerApp. 

Logistics players Dunzo and LoadShare are also piloting on the platform, and Shiprocket is expected to go live in a couple of weeks to bring intercity shipping capabilities on to the network. Grab and Flipkart’s logistics arm eKart are in the final stages of integration as well. 

According to a second source BT spoke to, the soft launch is going to be invite-only at the beginning before moving out of beta and be made available to the public. 

ONDC is aiming to launch the network in at least one more city in a month’s time, the person said. With these launches, the network aims to gather suggestions from public users to improve the experience of the service. 

An email sent to ONDC seeking more details on the launch did not elicit an immediate response. 

ONDC is a private non-profit company, established by the Department for Promotion of Industry and Internal Trade (DPIIT) as a Section 8 company, like the National Payments Corporation of India (NPCI), which runs the UPI platform. The interoperable, open platform aims to bring about structural changes in the current platform centric e-commerce model so that more small sellers get a shot at e-commerce and have equal opportunities to grow. At present, about 60 per cent of India’s e-commerce market is controlled by two US-based platforms – Amazon and Walmart-owned Flipkart. It also aims to change the trend of discount-led online buying. 

For the uninitiated, ONDC’s community-led network has three basic components—buyer-side apps, seller-side apps, and logistics providers. Buyer-side apps are any applications that will interact with the consumers (on the demand side), and seller-side apps are applications that will interact with the merchants (on the supply side). Seller-side apps onboard merchants on their platforms and every merchant integrated with any of the seller-side apps is automatically discoverable on all the buyer-side apps on the network.

As companies with substantial user bases like telecom operators, banks and social media platforms sign up for ONDC, a consumer will no longer be dependent on a particular e-commerce platform. They can access the network with their bank, telecom or chat app, or any entity that is a buyer-side partner on ONDC. Whichever buyer side app the consumer uses, they will have access to the entire list of sellers present on the network. 

From the merchant’s perspective, the primary pain point that ONDC solves is discoverability on the e-commerce platforms. Search results are delivered by them based on the brands that give them more margins, or those that spend more money on advertising on the platform. Merchants who cannot do that have little visibility with the customers. But on ONDC, every registered merchant will be discoverable across buyer apps, irrespective of the seller-side app it has signed up with.

Moreover, the outrageous commissions that platforms levy on merchants exert tremendous pressure on their unit economics. And ONDC promises to ease that. According to partners in the network that BT spoke to, the network has set a 3 per cent cap on buyer-side commission (charged from seller-side apps) while seller-side commission (charged from the merchants) is about 10-15 per cent, as against 25-40 per cent charged by platform-based marketplaces.  
 
Also read: ONDC wants to give the small seller a platform beyond Amazon and Flipkart. Here's how it is preparing the tech

Also read: How’s ONDC solving small sellers’ discoverability and commission concerns on e-commerce