Existing players will join once penetration crosses single digits: ONDC CEO

In a Q&A, T Koshy, dwells on the network's national road map, challenges in onboarding small retailers, and the value proposition for customers

With the Open Network For Digital Commerce or ONDC expected to open to the public shortly, its chief executive officer, T Koshy, talks about the network’s adoption by larger payers and customers over time in an interview with Sharleen D’Souza. Edited Excerpts. 

How does the ONDC plan to get big players on the network? Will this reduce the dominance of big players?

The ONDC is an inclusive agenda providing opportunities for big and small entities. The opportunities that will evolve when the market adoption explodes from the current single-digit levels of penetration will become a natural road map for existing players to join it. We are already in talks with all of them and we believe that they will arrive at a meaningful mechanism to be part of this new paradigm of digital commerce.

When will the network go public? In how many cities will the ONDC go live by the end of 2022?

It’s not like the rollout of a centralised solution like a bank or a stock exchange or even an e-commerce platform wherein significant components of the system are controlled centrally. The components of the ONDC, except the protocol, registry, and gateway, organisational capabilities of ecosystem partners, priorities, and resources are critical and there will be handholding support by the ONDC in this journey. The components to be developed by participants, including network participant apps, onboarding/training of merchants, and digitisation and upload of their catalogues form critical elements of the network. Therefore, the rollout, including the pilot, is planned in a stepped fashion.

In the pilot phase, the ONDC rolled out the central components like registry and gateway, and started field-testing by limited consumers, with five seller platforms, one buyer platform, and one logistics provider making services of grocery supplies available in five cities. 

Since then, this pilot has been extended to more than 50 cities and covers domains of food and fashion, with more than 200 merchants fully operational. As of now, around 260 entities are under various stages of integration as sellers/buyers/logistics apps; 25 of them are in advanced stages. Many of them are focused on onboarding a large number of small and micro merchants in the near future. We are also adding merchants from more and more cities and adding domains like garments and electronic goods, besides grocery and food.

As we now have experienced transactions through a select list of buyers. It has been proposed that the network is opened to the public at large at one location with a reasonable spread of online merchants, and then the network is made operational across the country in a phased manner.

What is the transaction limit on the ONDC?

There is no transaction limit on the ONDC.

With banks also choosing to be part of the ONDC, do you think this will change the game in MSME lending?

Many banks in both private and public sectors are seriously considering becoming part of the network and we expect three prominent banks to become operational on the ONDC this month (September). With a significant increase in digital transactions, we expect industry will have a great opportunity for availing credit, based on digitally verifiable transaction flow, which will be a great boon for the industry, especially MSMEs.

What are the challenges you are facing with onboarding smaller retailers?

We need to give special attention to associated capacity enhancements required in the areas of streamlined business processes, order fulfilment, and customer service, besides technology enablement.

How will this make it easier for customers to shop on the ONDC?

With buyer apps on the anvil from telcos, banks, Fintech firms, etc, there will be specialised offers for diverse segments of buyers across the country and not just for urban consumers. Further, these buyer apps with no conflicting priorities of pushing their own sellers will have their loyalty to buyers and will attempt to give their best for them.

The ONDC has finished one round of funding. Will you look to raise further funds? 

We have tied up for necessary funds and are not planning for more rounds than what has been already tied up.

By the end of this year, in how many cities will ONDC be open to the public?

The current pipeline will complete integration in the next couple of months and many more are in active discussion. These seller apps are expected to add multiple domains like electronics, garments, handicrafts, garments, agri products, etc. Some like grocery and food are meant purely hyperlocal and many are relevant for intercity delivery. With multiple logistics players like Dunzo, Shiprocket, Ekart, and India Post, coming online, the delivery reach will increase significantly. Similarly, entities like CSC (citizen service centre) once onboard with both buyer and seller apps, expect merchants from smaller towns to benefit and buyers in villages to be helped by the VLE (village level entrepreneurs) network of CSC. Another example of expanding reach is Snapdeal going live and it is working towards onboarding sellers from 2,500 cities in the near future. These are some examples of the traction that ONDC is attracting.