What is ONDC in India & how is it going to transform the job market

The open network for digital commerce ONDC India pilot programme, which intends to make online shopping accessible to everybody and make it democratized and decentralized, was officially unveiled in India on April 29 of  2022. Union Minister of Commerce and Industry Piyush Goel has called the ONDC plan a “game changer,” as it will foster an open platform for all elements of e-network product and service exchange. It is estimated to be a $200 Billion opportunity by 2027

What is ONDC? Here’s an analogy to elaborate:

Now, here in India, we have a favourite snack that is sure to please anyone: hot chips. These are chips, and they come in a wide variety of flavours and types; they may be made from a wide range of vegetables and fruits, and they taste great.

But let’s say one has aspirations of expanding her business online and becoming a household name in all of India. Well, one option is for him to launch a website and start selling his chips online, but doing so will require a sizable initial investment for a number of reasons: she will need to create a website or online storefront, which isn’t impossible; she could, for example, use the services of an e-commerce technology company; however, she will also need to deal with cataloguing, inventory management, dynamic pricing, order management, order fulfilment, and optimization of delivery costs. Some or all of these features could be provided by an e-commerce technology firm; however, even if this happens, will customers still want to buy hot chips from him online? Will his company’s name even be recognised? But online it will be really, really hard for her to get seen; she will need to spend huge amounts of money on a website or social media ads to make his products stand out, and this is why many small business owners in India choose to stay offline.

They may have to compete with just one or two other establishments in the area if they’re located by the roadside. There isn’t much competition, but in the online environment, your hot chip business is in direct competition with every other online hot chip business. The sheer investment of time, money and effort required to compete with these giants is enough to discourage many would-be entrepreneurs from even trying. However, as of late August, Indian marketplace sellers now have another option: listing their wares on an e-commerce platform like Amazon or Flipkart, where they will receive extensive promotion. If their items perform well on these marketplaces in terms of sales volume and customer satisfaction, they will receive recommendations simply by being present on these sites. As a result, vendors can earn far more than they would have by selling just to end users through their own website or physically. The appeal of these e-commerce platforms lies in the fact that they have lowered the bar to entry for sellers, allowing them to feel secure and comfortable displaying their wares on the sites.

A natural follow-up question is how you plan on making purchases from ONDC without access to their mobile app or online store. Though, you won’t have to do anything; it’ll happen automatically. When an existing platform joins the ONDC network, all of the goods that are currently offered on that platform are also added to the ONDC network. So, if you’re shopping for garments on, say, Flipkart, and let’s pretend for the sake of argument that Flipkart has joined ONDC, you may also find clothes that are offered on other platforms.

How will ONDC work and how will it ensure a democratized and decentralized network?

Any ONDC-compatible app can be used by buyers to contact merchants on the platform. Through these partnerships, retailers will manage all shipping and handling. Services like ledgers and payment processors will be available to vendors through ONDC as well.

In order to avoid any confusion, when it comes to e-commerce platforms, ONDC is neither a replacement nor a rival. It is an open-source platform that is unbiased and establishes protocols for cataloguing, vendor matching, and price discovery.  It does not follow a platform-centric model thus the Indian government hopes it will unify the Indian online market without any bias. We already have companies like Paytm Mall, PhonePe, Ekart (Flipkart’s logistics arm), and Dunzo figuring out how to integrate their offerings with ONDC, while others like ITC, Unilever, Dabur, Nivea, Shopify, Google, Meesho, and Snapdeal have shown interest. Since ONDC is not an app, an aggregator, or a competitor, they have expressed interest and are cooperating with ONDC. 

There won’t even be a dedicated app for ONDC. ONDC is expected to be the next UPI of the e-commerce industry. The way UPI has favourably influenced the Indian payments industry, ONDC is likely to mirror its success. The central government and other specialists in the commerce business are exuding a great deal of optimism and belief. However, before emerging as a winner, any effective concept must overcome numerous challenges and issues.

How will ONDC help in creating jobs?

Because ONDC is neither a platform nor an intrinsic source of new employment opportunities, it will be up to the participants or players themselves to drive development through the expansion of the network. Third-party logistics providers, for instance, will likely play a significant role in getting products to customers. Between 30-50% more delivery positions are predicted to be created by the end of the current fiscal year because of the ONDC initiative. 

Furthermore, ONDC will greatly increase the need for 3PL as many large e-commerce enterprises and retailers are considering making the transfer from captive logistics to 3PL. The third-party logistics industry is expected to play a significant role in the supply chain operations of e-commerce, quick commerce, and conventional stores. It is estimated that 8 Lakh people will enter the 3PL sector by the end of the current fiscal year.

Apart from this, jobs will be created from the integration side of things. ONDC will expand its network through four integration channels and jobs expected to be created will be as follows:

  • Connecting buyers to the network: Jobs such as building Web Apps, and mobile applications and developing a buyer interface
  • Connect Sellers to the network: Jobs to develop a seller interface, catalogue team to develop a crisp detail page for buyers to know more about the product/service they want to buy/use. 
  • ONDC Gateway: Jobs in maintaining the ONDC gateway, a network application that will notify all seller-side applications of a search request from a buyer-side application based on a set of criteria like domain or location, are also to be anticipated.
  • Technology Services: Gainful employment creating and supplying software and other technological add-ons for the remaining three integration channels.

Conclusion:

The retail and e-commerce market in India is poised to develop into a colossal sector as a result of the country’s rapidly expanding consumer base. ONDC will democratize and decentralize the e-commerce and retail sector with Small and medium-sized enterprises having a bright outlook. Changes in lifestyle and habits are a direct result of increased ethnic variety. Online shopping as a whole will continue to expand as a result of the ONDC initiative. As mentioned earlier, the job market for delivery and tech would increase significantly. There will be an increase in demand for gig work as well. 

Author

Mayur Taday

Chief Business Officer - Services
TeamLease Services Limited

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