ONDC vs Traditional E-commerce Portals and How it Emerges as a Cost-Effective Alternative

In April, Open Network Digital Commerce (ONDC), a non-profit Section 8 company established by the Indian Government, celebrated its one-year anniversary. Since its inception, ONDC has become a consumer favorite due to its cost-effectiveness, surpassing traditional E-commerce portals.

The Evolution of ONDC

Platforms like Swiggy and Flipkart have monopolized online meal and grocery E-commerce in India for several years. However, they are notorious for adding a “middleman cut” that increases prices. The DPIIT (Department for Promotion of Industry and Internal Trade) created ONDC to reduce costs for consumers by eliminating the middlemen and delivering products without commission.

ONDC is not limited to food or grocery delivery. It can be used for e-commerce and even compete against brands like Flipkart and Amazon. The platform was officially incorporated on December 31st, 2021 and began operations in September 2022 in Bengaluru. The platform was designed to promote free interchange and links between shoppers, technology platforms, and merchants, democratize and decentralize the value chain, reduce the cost of operation, and end monopolies of certain platforms.

Benefits of ONDC

ONDC has been appreciated for its vast cost difference compared to other platforms. For example, an order that costs Rs.209 on Swiggy or Rs.212 on Zomato may cost only Rs.147 on ONDC. The platform’s cost-effectiveness is not limited to food or grocery delivery and can be used for other services like e-commerce, which can compete with brands like Flipkart and Amazon.

ONDC is also beneficial to small businesses as they can avoid paying high commissions charged by traditional E-commerce portals, which can eat into their profits. Furthermore, ONDC provides businesses with access to customer data, unlike Swiggy or Zomato, allowing them to better understand their customers’ needs and preferences.

ONDC vs Traditional E-commerce Portals

Currently, partners like Paytm, Meesho, Magicpin, Mystore, Craftsvilla, and Spice Money act as online storefronts, allowing users to order food or any other product from a business listed on the ONDC platform. However, some companies are reluctant to join due to its limited reach. This has hindered ONDC’s ability to expand to far-flung areas such as villages and small cities.

To overcome this challenge, ONDC needs to collaborate with more partners, especially those that are popular in rural areas. Additionally, the platform needs to educate businesses on the benefits of joining ONDC and the potential for increased visibility and sales.

ONDC can also face stiff competition from established players like Swiggy and Zomato. These platforms have a strong presence and are backed by large investors, making it challenging for new players to enter the market. However, ONDC’s cost-effectiveness and ability to offer e-commerce services can help it carve a niche in the market.

Future of ONDC

ONDC has the potential to revolutionize the E-commerce industry and make it more viable for customers to receive their orders at reduced and affordable costs than traditional delivery portals. As the platform expands and reaches more areas, it has the potential to compete with big players like Swiggy, Zomato, Flipkart, and Amazon.

Moreover, ONDC can become a catalyst for promoting the “Make in India” campaign. By eliminating the middlemen, ONDC can help small businesses sell their products at competitive prices, making them more competitive in the global market.

Conclusion

ONDC is a promising platform that has the potential to disrupt the E-commerce industry in India. Its cost-effectiveness and ability to offer e-commerce services can help it carve a niche in the market. However, the platform needs to overcome its challenges and expand its reach to become a household name. As the platform evolves, it has the potential to benefit both consumers and small businesses by reducing costs and providing greater access to customer data. ONDC is also aligned with the Indian government’s “Make in India” campaign by eliminating middlemen and promoting local businesses.

Overall, ONDC’s success depends on its ability to collaborate with more partners, especially those that are popular in rural areas, and educate businesses on the benefits of joining the platform. As more consumers turn to online delivery platforms, ONDC can become a cost-effective and sustainable alternative to traditional delivery portals.

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