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Today, Gupta Kirana shop’s dream of tapping more customers (beyond his area) for his small Kirana shop in one of Bengaluru’s low-density places is a dream come true. Gupta Kirana shop gets a fair chance to compete and showcase his store “digitally” with equal opportunities that other ecommerce players have.

Even two years ago, this would not have been possible. Today, it is, thanks to a ground-breaking revolution underway in India. The government-backed Open Network for Digital Commerce (ONDC) has the potential to reshape the landscape, propelling India’s digital consumption to unprecedented heights.

According to McKinsey, this game-changer could increase digital consumption by five times, reaching a staggering $340 billion by 2030. Moreover, the number of digital transacting consumers is projected to surge three to four times, from 165-190 million to 450-500 million users during the same period.

This is surely the tip of the iceberg on the remarkable importance and role ONDC will play for the benefit of small and medium-scale merchants.

ONDC: Beyond UPI, an operation-driven innovation

Comparisons to the transformative Unified Payments Interface (UPI) would be shortsighted. While both play an important role in digital inclusion their roles and purpose are entirely different.

While UPI primarily focuses on payment transactions, ONDC fosters an entire ecosystem for merchants, ensuring their success in the digital realm. ONDC is an operation-driven force that seamlessly combines technology, logistics, and a comprehensive onboarding process for merchants.

Merchants, retailers, and logistics companies

Previously, kirana stores and small merchants faced significant hurdles to get onboarded onto digital platforms and access the ecommerce pie. With ONDC, this struggle could become a thing of the past.

The platform provides a simple and accessible means for merchants to sell within their locality, facilitating their entry into the digital marketplace. ONDC’s unique framework encourages collaboration among various stakeholders.

Merchants can approach seller apps in the network, from buyer fronts like Paytm and Pincode to growth enablers like Growth Falcon and Magicpin, as well as logistics partners like Dunzo. The buyer apps will approach growth enablers to fulfill orders. This inclusive approach ensures that merchants can tap into a wide range of potential customers, both within cities and across inter-city boundaries.

The potential of ONDC extends beyond traditional retail. New players in the food delivery segment, such as Waayu, have pinned their hopes on ONDC for exponential growth. Additionally, Farmer Produce Organisations (FPOs), representing small and marginal farmers, have embraced ONDC to access a nationwide market.

While the prospects for ONDC are undeniably bright, a few challenges must be addressed to unleash its full potential.

• One of the biggest hurdles is for merchants to comprehend the wide array of benefits that ONDC brings to the table. Education and awareness programs will play a crucial role in familiarizing merchants with the platform’s capabilities and how it can empower their businesses. Ensuring a seamless and efficient customer experience is paramount.
• Clear standard operating procedures (SOPs) for handling erroneous orders and swift order delivery are crucial for building trust and loyalty among customers. The network is already working on the same.
• To drive sustainable growth, ONDC must encourage buyer & seller apps to strike a balance between competitive pricing and maintaining product quality. Ensuring affordable prices without compromising on quality will be vital for the long-term success of the network and its merchants.

A post-incentive ONDC world would mean that the network has enough buyer and seller apps to sustain itself. In time we will know what more changes need to be made to reach the point of self-sustainment. ONDC represents an unparalleled opportunity for smaller and newer merchants across India. It provides them with crucial visibility and exposure, enabling them to reach over a billion people and offer their products and services. We believe in the cause deeply and are working closely with ONDC to list merchants on their network.

This level of impact cannot be underestimated. By providing “equal opportunity and exposure,” ONDC empowers merchants to have an opportunity to meet their customers online and bring in more demand within their radius.

Dalvir Suri is the Co-founder, Head, Dunzo4Business