ONDC – The One-Stop Solution for Online Sellers in India

The Indian e-commerce industry has grown rapidly in recent years, offering a vast array of products and services to consumers and creating new opportunities for sellers. However, operating in this market has also posed several challenges for businesses. Logistics costs, advertising and marketing expenses, and limited portability of reputation and ratings are just some of the hurdles that e-commerce sellers face. To address these challenges, the Open Network for Digital Commerce (ONDC) has emerged as a solution to help businesses succeed.

Problem 1: High Logistics Costs in Online Selling

One of the major challenges faced by e-commerce businesses in India is the elevated cost of logistics, which can occupy a significant portion of the revenue, ranging from 25% to 40%. While larger sellers have the leverage to negotiate for better rates, smaller sellers or those with limited bargaining power are subjected to higher rates and discriminatory pricing, as they are often compelled to rely on the logistics services provided by the marketplaces.

ONDC’s Solution: Competitive Logistics Rates on Demand and Supply

ONDC offers a solution to the high cost of logistics in e-commerce by providing spot rates from logistics companies based on demand and supply. This equalizes the cost of logistics across all sellers, as logistics companies do not offer differential pricing to larger or smaller sellers. ONDC’s approach to logistics is democratic, providing businesses with cost-saving benefits and increased flexibility, ultimately contributing to their bottom line.

Problem 2: High Marketing and Advertising Costs in Online Selling

Online selling in India is faced with a significant challenge of high advertising and marketing costs, which can account for anywhere between 25-40% of the selling price on marketplaces. The high costs are a result of the high competition among businesses to reach out to potential customers and sell their products. Marketplaces control visibility through their native advertising platforms, which determine how much a seller’s products are seen by the customers. The result is that larger sellers, who have larger budgets, are able to advertise more and therefore, are more visible and competitive than smaller sellers. On the other hand, smaller sellers or those with lower budgets, find it challenging to make their products visible and compete with larger businesses. This puts them at a disadvantage, making it harder for them to sell their products effectively.

ONDC’s Solution: Buyer App-Driven Traffic and Reduced Customer Acquisition Costs

ONDC addresses this challenge by placing the responsibility of driving traffic on the Buyer App (marketplace). This approach aggregates marketing efforts for all sellers, reducing the cost of customer acquisition by approximately 5%. By pooling resources, ONDC makes advertising and marketing more cost-effective and accessible for all sellers.

Problem 3: Bound to Marketplaces for Reputation, Reviews, and Ratings

Sellers in the e-commerce industry are often bound to a single marketplace where they have built their reputation, reviews, and ratings. This discourages sellers from participating on other channels of sales and limits their ability to reach a wider audience and grow their business.

ONDC’s Solution: Portable Seller Ratings Across All Platforms

ONDC offers a solution to this problem by allowing seller ratings to be shared across all apps. This allows sellers to sell across multiple platforms and build their reputation, making it easier for them to expand their reach and grow their business.

Problem 4: Lack of Transparency and Favoritism in Marketplaces

Finally, e-commerce marketplaces in India often adopt favoritism practices that dictate who gets discovered and who doesn’t. This can leave smaller sellers at a disadvantage and limit their ability to reach their target audience. 

ONDC’s Solution: Transparent Showcasing of All Sellers from All Apps

ONDC offers a solution to this issue by transparently showing all sellers from all apps. This approach ensures that no single app or marketplace controls discoverability and provides equal opportunities for all sellers to reach their target audience.

In conclusion, the Indian e-commerce industry presents significant challenges for businesses, but ONDC offers a solution to these issues. By providing competitive logistics rates, cost-effective advertising and marketing, portable reputation and ratings, and transparent discoverability, ONDC helps businesses succeed and grow. By leveraging the power of the network, ONDC offers a new model for e-commerce that is more accessible, cost-effective, and fair for all sellers.