India Post To Join ONDC, Network's Aim Is To Boost Small Businesses, Not Wage 'Price War': CEO Koshy

The Chief Executive Officer of the Open Network for Digital Commerce (ONDC), Thampy Koshy, recently clarified that the network's aim is not to instigate a "price war." Instead, it aims to help small businesses reach a threshold in digital commerce.

The network is supported by the government and offers modular services for e-commerce, food and grocery delivery, and cabs.

Incentives provided by ONDC have contributed to a significant growth in its activity. India Post is reportedly considering joining the network, which could potentially bring one of the largest logistics systems in the world on board.

Koshy, in January, revealed that ONDC had 800 merchants, twenty network participants, and received fifty transactions daily. The addition of mobility, retail, and food delivery saw the orders per day increase to 1,000 by March end and rise further to 10,000 by April end.

The current performance boasts an impressive statistic of over 25,000 orders per day, according to Koshy, reports The Hindu.

The aim of ONDC is to prevent top e-commerce platforms in retail, food delivery, and cab aggregation from exhibiting "potential rent seeking" behavior and dividing each aspect of the value chain into separate businesses.

According to Koshy, having a single platform doing everything results in inefficiencies.

The aim of ONDC is to prevent top e-commerce platforms in retail, food delivery, and cab aggregation from exhibiting "potential rent seeking" behavior and dividing each aspect of the value chain into separate businesses.

According to Koshy, having a single platform doing everything results in inefficiencies.

ONDC offers financial incentives to new participants in the network. The funds are raised from banks and aim to provide "handholding support." Some beneficiaries have passed the benefits on to their customers, with substantial discounts.

ONDC is growing at a rate similar to its competitors thanks to its incentives. India Post will join ONDC as a part of the government's supported Digital Public Infrastructure. This announcement was made by Minister of State for Communications Devusinh Chauhan.

ONDC's architecture enables network participants to concentrate on optimising the economics of their specific segment of the e-commerce process. However, it also has a more significant objective, which aims to reduce the impact of dominant market, with food delivery players like Swiggy and Zomato most under threat.

According to Ritu Chhikara, head of the Centre for Sustainability and Social Responsibility at BML Munjal University, reports The Hindu, restaurants are feeling the pressure from food delivery services such as Zomato and Swiggy.

With 30-35 per cent of the commission staying with these services, only a portion is transferred to the restaurant. In order to make a profit, restaurants have to increase menu prices, ultimately affecting the customers.

According to Chhikara, there are multiple stakeholders in the e-commerce value chain. If a single company dominates it, it defeats the purpose.

As ONDC grows, venture capital-backed firms have been experiencing a rapidly changing economic landscape. With economic headwinds and recession fears, investors are becoming increasingly cautious, affecting quick-commerce firms and food delivery players the most.

For example, Zomato-owned Blinkit had to slash its grocery delivery agents' pay to Rs 15 per order, resulting in strikes in certain cities.

As per the report, ONDC is providing incentives to sellers and apps in the growth stage, offering more than ` 2 lakh per day to apps that can persuade customers to make purchases. This strategy imitates that of venture capital-backed apps.

However, unlike UPI, there are no long-term financing plans for ONDC from the government, informed the Department for Promotion of Industry and Internal Trade secretary Rajesh Kumar Singh in a statement.