ONDC – Big Bang moment for eCommerce

 

The universe after the Big Bang evolved and is still evolving continuously. Not as a centrally controlled and managed process. But, as an ecosystem with each component in its trajectory, impacted by, and impacting, the other ecosystem building blocks. Zooming in further, the lifeforms also evolved from the single-cell wonders in the primordial soup to the atomic-age man through continuous innovation by nature what we know as mutation across the ecosystem. Every new innovation adds or subtracts functionalities and capabilities, with some succeeding to sustain and some failing and perishing. The technological progress we made as a human race from wheel to spacecraft also followed this incremental innovation across the ecosystem. That is the “Order of Nature”.

 Very often, success in the natural order arises in a simple yet fundamental paradigm shift, and successful players are those who quickly adapt to the evolving paradigms, cooperating and collaborating with the ecosystem. Thought leaders from Darwin to Schumpeter to Niall Fergusson in the modern era, have argued that, “This is the age of digital Darwinism, in which it is not the strongest or most intelligent that survives, but the one that most successfully uses technology to adapt to change.”

When it comes to eCommerce w can see that it has evolved out of line with this natural order of the nature. Two or three giants with deep pockets building up stranglehold in each domain tuned to maximise their shareholders’ interest.

There is extensive innovation in this model. But limited to innovation to maximise their self-interest through a centrally managed process, to meet the requirements of their typical user group and/ or enhancing their user group through a cookie-cutter approach.  Any outside innovation has no chance to survive unless it is subservient to or sold out to the biggies. [1] It is an uncontrolled that is engulfing commerce, eventually taking control of it all and leading to stifling diversity. Much like the magma chamber of a dormant volcano, this keeps the lid on growth and evolution. This has already set alarm bells ringing across the world, with many developed countries trying to mitigate through regulation, be it the America Innovation and Choice Online Act in the US, the Digital Markets Act in the EU or UK’s Digital Markets, Competition and Consumers Bill,

It is here that the idea of ONDC has come in with a big bang. Encouraging innovation and specialisation across the ecosystem with all of these building blocks communicating among them and interoperable through an open-source protocol. This allows and encourages lots of people to work on different building blocks and come out with a plethora of solutions for diverse user groups and not to straight jacket users or shape the users into a straight-jacket. As Howard Moskowitz observed in his research paper; there is no single optimum, but there are multiple optima for every use case. Some will fail and some will succeed and the winner is society, as a whole and not shareholders of a few enterprises.

This will address the challenge of market concentration and associated practices that are a challenge in the platform-centric world today.  This will encourage a natural order of continuous innovation with some succeeding and some failing with the overall ecosystem marching forward.

The Build for Bharat Hackathon organised by ONDC recently in collaboration with Industry demonstrates this. 100,000+ participants in 2,100+ teams from across the country coming together with outstanding solutions with most of them having a working model and monetization plan shows. This shows how Open Model will unleash creativity across a wider cross-section of big and small enterprises and individuals. This is what excited representatives from 20 VCs who attended the hackathon final.

Now it is clear why I have the audacity to term ONDC as the Big Bang Moment of eCommerce that can totally transform the world of commerce in the near future.

 

“When money, rather than innovation or value, is your competitive advantage, that’s when things get boring and stagnant, and monopolies take root.” —Hank Green

Redefining Customer Acquisition Cost in Open Network.

 

Whenever a new product or service is launched in the market, the product manager often plans for triggers like incentives, free samples and so on to act as a catalyst to stimulate product trials. When ecommerce companies launched their service, they took this idea to its next level. With a platform, based on proprietary protocol, the incentives became a tool not just to stimulate trials, but also to build a committed userbase of significant magnitude that it will be practically impossible for many competing platforms to evolve resulting in few walled gardens in each domain who eventually not in the best interest of the industry and economy.

Towards building these walled gardens, the early entrants blew billions of dollars. This was neither charity nor helping the merchants to establish themselves in the digital space. But with the idea of stifling competition which will help them to extract return on this investment through monopolistic / oligopolistic practices like rent- seeking.

This is not just an Indian phenomenon, but seen all around the around the world and the world is worried. The developed countries like USA and EU are attempting to address the challenges of this market concentration through regulation. America Innovation and Choice Online Act in USA and Digital Market Act of EU are attempts in this direction. The UK has also a bill (Digital Markets, Competition and Consumers Bill)  under consideration by the parliament.

We in India have now taken a bold step in resolving this conundrum through the power of technology and markets with enabling policy support. It is in this direction that ONDC has been established with a mandate to democratize commerce. In first two years since the ONDC was was incorporated, it has managed o achieve a merchant base of 450,000 with a daily transaction level of more than 250,000 transactions at less than one tenth of the cost of the other ecommerce players blew up in the same time period after they launched. 

More importantly, this removal of the stranglehold by the platform providers is ensuring that these efforts, initiatives and incentives are also from the collective of sellers, brand owners and buyer and seller NPs and not from the select group of platform providers who use this as a tool for market share concentration and not to help to expand the market. The participation is wide spread ranging from multinational giants like Google, Meta, HUL , ITC, McDonald, Dominos to Philanthropic Organizations like BMGF and Wadhwani Foundation, Government Departments like Agriculture, Fisheries, MSME etc . Each of these entities are figuring out and rolling out innovative interventions to help broad-basing of the market with participation from big and small enterprises alike. Advertisement and hoardings with “Buyer App”-agnostic ONDC QR codes is another powerful idea in the hands of merchants and brands.

Clickable PDFs and social media post taking the reader directly to the product to place and order and make a payment is an interesting innovation that agencies like SFAC have already attempted with demonstrable outcome. Many direct marketing companies are now evolving interesting solutions around this idea.

On the other hand, with ONDC enabling every catalogable products and services to be available in the network, diverse enterprises with large digital consumer base like media organizations, fintech etc. are also developing strategies to offer related products and services to their clients. Each of them with their loyalties primarily to their customers, will find innovative means (may be drawing the power of AI and ML) to help their customers what is relevant for them more. Foray into ONDC network by medial giant Dainik Jagran is a case in point which many others have initiated.

If you let your imagination run wild, you will be surprised at the possibilities for innovation exploding on your face which in the current platform centric model is unthinkable. Let me dare you to be innovative in this new paradigm.

“Without leaps of imagination or dreaming, we lose the excitement of possibilities. Dreaming, after all is a form of planning.” Gloria Steinem

 

Who is your Mentor ?

 

Mentor is a person who can make a significant impact on your career or on your company, drawing on the expertise and experience that person has. Whom you choose as or who gets thrusted upon you to play a mentorship role can be a game changer for you.

It will be fun and also useful to be aware of the nuances with respect to mentor and mentorship to help you choose and benefit from mentors. The role of the mentor is not standard or same in all context. There are different roles that a mentor can play.

The mentor could bring superior subject matter expertise to help you to solve a problem or guide you through corporate web. For example, if you are trying raise funds for your new venture and if you have no prior experience in this, a mentor who may have had extensive exposure as a venture capitalist can be a great help in dealing with multiple service providers and to get the best possible deal. Or if you are considering organisation wide computerisation, someone who have lived through this transformation could help you to be ready for challenges on the way.

The mentor could offer references and endorsements with people of influence and relevance for your growth through his/her network. For example, when you are raising funds, some one who have dealt multiple investors and have had the experience to understand the agenda of the diverse players could help you to refine your investment pitch and may even give reference to different investors.

The mentor could be someone could act as a sounding board for your ideas and provide a philosophical foundation for your initiatives and decisions.  For example, someone who has had good experience in guiding organisational growth could help you in your process of developing alternate growth strategies, evaluating them and make a choice.

While a good mentor may be a mix of all, very often the larger focus may be in a few roles based on their comfort and your priorities.  A genuine mentor with appropriate experience and right intention can make a big difference to you and your company. They can add significant value in helping you to evolve strategies, guide your team, select better tools, turbocharge your marketing and magnify your public relation. Therefore. it will be great for any company to have a mentorship program established as it can contribute to its overall development through development and retention of good managers.

While we give due attention when working with a mentor there is another important dimension, we should be conscious of when choosing and or working with a mentor.

Ideally a mentor would be a person who has achieved certain stature and/ or position that he plays the role of a mentor as a giver and not a taker. Let us go a little deeper on the difference between giver and taker. The giver is a person who has more to give to the mentee. They are self-confident and will work with you to bring the best out of you and also not try to usurp the credit for your achievement, but help you to grow in your role. They will spent time to understand your context, the opportunities available, challenges you face, the strategies your following and proposing and identify your weaknesses and will give you considered advice. They will help you to track progress and act as a sounding board to help you to continuously refine your way forardy

The takers are those who act or pretend to act as your mentor, primarily to enhance their agenda. They will manage to make you doubt yourself and make it look like you are surviving on their ideas. The worst is when often they have nothing really to offer. They are too impatient to understand your context, your challenges, your option and their merits and weaknesses.  They will ask you about all your thoughts and make general comments and motherhood statements with no real value addition and at best may keep goading you to up your aspirations with no suggestions or input or support to make it happen. If you end up succeeding, they will go around announcing to the whole world that your success is courtesy their idea.

You have to be mindful of such people when you choose your mentors independent of their stature and position so that you don’t end up with the latter category. Very often they are in this position because they are better at managing their environment and more than willing to sell their souls for a price. For them end justifies the means with ‘end’ defined as maximising personal agenda. They are too happy to live off the hard work of the doers and smart in edging out the doers in due course like the pirates. (Read this post https://rollingstone-revelations.blogspot.com/2012/05/some-people-all-time-humour.html for a light hearted depiction of such mentors)

Sometimes they are thrusted upon you as advisors, or consultants or directors with you having no choice. Then you will have to have your strategy to protect you from them or manage them and may be the  support of another genuine mentor who will help you in your attempt for self-preservation.

C’est la vie!

“A mentor is someone who allows you to see the hope inside yourself.” Oprah Winfrey – Host, Producer, Author & Philanthropist

Implementing ONDC – A Journey

 

Standing on the shoulders of giants…

I read somewhere that in the early nineties when India attempted computerisation of the banking sector which was one of the major early attempts at computerisation across a domain, there was very high resistance from the bank unions who were worried about job loss. The idea was then sold as a provision of the Advanced Ledger Posting Machine (ALPM) to reduce the drudgery of the staff. India has come a long way since then.

The launch of the National Stock Exchange (NSE) as one of the earliest fully computerised stock exchanges, as against the “ring-based trading” that was prevalent in India and across the world, was a bold attempt in computerisation of the capital market. Establishing of National Securities Depository Ltd (NSDL) for dematerialised holding and trading of shares helped India leapfrog from being the most backward, to one of the most modern settlement systems in less than five years.

UIDAI was India’s attempt to build a population-scale digital ID solution first time in the world using open-source technology.  This project aimed to provide each individual with a unique ID.  The factors that contributed to its runaway success were very clear and simple problem definition (one unique ID for every person) which limited the extent of data collection required to issue the ID and functionalities offered which were only ID issuance and authentication), ensuring that there is no vendor or technology lock-in for any component, with the help of opensource technology (even when the use of proprietary solutions was absolutely essential, as in the case of biometric deduplication and authentication, a plug and play architecture ensured this vendor neutrality), the solution that was linearly scalable by design based on open source technology stack helped in making Aadhaar highly cost competitive. UIDAI brought in private sector participation to establish national-level enrolment capacity, and crucially there was no cost to the citizen as the cost of enrolment was borne by the government. The payment to the enrolment agency by the government against successful enrolment helped in the enrolment agencies being outcome-focused and result-oriented. Government’s thrust to UID-based benefit distribution created a demand-pull leading to UID penetration of more than 95% of the population in a short time.

The UID project proved that a Digital Public Infrastructure can drive dramatic transformation in benefit distribution as well as in service delivery. The next big initiative in this direction was UPI for broadening the adoption of digital financial transactions.  The unbundling and interoperability of the building blocks of customer interface for payments and receipts using QR code while the funds being held and transacted by the banks helped to create a very cost-effective fintech ecosystem that could spread across the country, and helped adoption of this method by merchants and consumers across all segments of society. The Demonetization provided a significant demand surge, positioning India to account for over 40% of the global volume of financial transactions.

New Kid on the block

Building on the foundation of these successes, we have ventured onto a new initiative to solve a problem that is challenging both developed and developing countries equally. The problems of a few large tech platforms using proprietary technology hijacking the market in many domains like consumer goods, food distribution, ride-hailing, travel and tourism etc., which in turn leading to business practices that are not in the best interest of the business enterprises (especially small enterprises) and consumers.

The initiative was triggered by the COVID pandemic. DPIIT Ministry of Commerce and Industry) wanted to find a solution to the supply disruption of everyday needs impacting the consumers and small merchants. A Steering committee, established with participation from both the government and the private sector deliberated and decided that the solution should not be a stop-gap arrangement in times of pandemic; but a solution that will transform commerce to address the challenge of exclusion of small businesses and the limitation of choices to the common consumers. This forum was expanded to have eminent members like Nandan Nilekani,  R S Sharma, Adil Zainulbhai, Anjali Bansal, Dilip Asbe, Suresh Sethi, Kumar Rajagopalan, Pradeep Khandelwal and Arvind Gupta with Anil Agarwal, the then JS in DPIIT as the coordinator and now continue as the advisory council. Later, Anurag Jain joined this council with Sanjiv JS DPIIT coming in as the coordinator. ONDC being the latest initiative in the DPI world in India let us delve deeper into how the solution was shaped and how it is proceeding.

In every business transaction, there are two sides. One is the payment for goods or services by the buyer(s), and the other is for making the inventory visible in the digital market by the seller(s) and searching for, choosing of, and contacting for products/ services by the buyers.

UPI took care of the payment side. ONDC is now attempting to do the same magic in the products/ services side by democratising commerce through the un-bundling of building blocks of commerce and making them interoperable to create an Open Network instead of walled gardens of platforms

Challenges Galore

In the case of UIDAI, while the biometric deduplication and authentication for the population of India, was a technological challenge that had no existing solution, which was solved by the brilliant team of UIDAI,  the process requirement for onboarding is relatively straightforward and funded by the government with no cost to the person being enrolled.  In the case of UPI, we have only one SKU (i.e. the money) to be exchanged, and that too digitally. The user interface can be really simple to handle and harmonised for this single SKU. The entities providing end-user interfaces are only a handful and the money is handled by a well digitised and highly regulated banking sector.

When it comes to commerce involving products and services, the challenges are multi-fold. SKUs are in millions, belong to diverse categories of goods and services, ranging from street food to laptops, and from auto-hailing to credit and insurance.

These require different user interfaces for different products/services for different kinds of buyers, and complex business processes for order processing, inventory management, packaging, warehousing, logistics and grievance handling for sellers, which necessitates their own nuances of rendering of information and handling information flow. The sellers come from different domains some well-regulated, some partly regulated and some entirely non-regulated. No regulatory mandate to participate or no “demonetisation” to create business compulsion or no linked benefit delivery to encourage adoption,

One Step at a Time

So ONDC is taking a step-by-step approach. With the help of endorsement from the Government, particularly by the Commerce Minister and DPIIT, leading banks and financial institutions chipped in the necessary capital to establish a not-for-profit company with the necessary flexibility and agility to respond to the fast-changing  requirements of digital commerce; that with a global-first solution architecture. FIDE Foundation with Nandan Nilekani, Pramod Varma and Sujith Nair as founders gave the foundational protocols and continued guidance. A powerful Advisory Council and a Board with appropriate participation of government, investors and independent members provide strategic direction and ensured unblemished governance.

Being a network, there is no central platform to be established by ONDC. The network would succeed only if we can create a vibrant ecosystem. It is a classical chicken-and-egg dilemma. Unless there is wide participation of merchants and service providers, it is not exciting for the customers; and unless there is a wide customer base on the network, there is no incentive for the sellers to come aboard 

More importantly, this is an idea that has never been attempted anywhere in the world. To encourage adoption, we needed to demonstrate that such cascaded flows, stitching services provided by multiple entities, will in reality  work seamlessly with end-to-end security of data.

ONDC being a network there was no central system to be built and tested by ONDC for the potential users to check out. We had to have some entities coming forward to develop seller apps and onboard merchants, buyer apps and consumers to try out orders, and Gateway and Registry to link these.

With a few entities like Protean, PayTM, Loadshare, Gofrugal, DIGIIT, Growthfalcon and Sellerapp, who were willing to bet on this idea and develop a minimum viable product and convince a few sellers to onboard, ONDC team went about demonstrating that this is a Network that can deliver its promise. This was our alpha testing phase that was kicked off in five cities across the county within five months of the company's incorporation. While the ultimate goal of the network is to cover the entire gamut of catalogable products and services, ONDC commenced alpha testing with the challenging domains of Food and Grocery. 

Six months later, ONDC launched beta testing in Bangalore with Grocery, Food and Mobility and after streamlining the processes among the participants and merchants in the first couple of months, we started reaching out to the consumers in Bangalore to try out the network. lowly and steadily, we managed to have more merchants and service providers, and a few customers testing out the network with around 40 to 50 transactions a day.

While this proved that we can have transactions in an unbundled network, we have a long journey ahead to have a critical mass of merchants and consumers in the network to make it sustain, and grow and to achieve the original objective of democratisation of digital commerce.

Unite and Conquer

One of the key elements of our early strategy was to have a few anchor partners in the domains we launched, then gradually scale transactions and publicize on a regular basis our principles, our aspiration, our roadmap and our progress. We had support from the Minister, the ministry, government, industry, startup ecosystem, philanthropic agencies and developmental institutions endorsing us, and the press giving us visibility and encouragement for the baby steps forward. This challenged us and is helping to convert fence-sitters one by one.

15 months on, we have grown from 800 merchants and 1200 orders in a month to 400,000 merchants, 8 million orders in a month across 800 cities, with  month on months steady improvement in penetration, usage and all key performance parameters with respect to order fulfilment and delivery. Though we had started with grocery, food and mobility, we have gradually added many more domains such as electronics, fashion and apparel, health and wellness, beauty and personal care, home and kitchen, credit, insurance, agriculture input and output etc and many more like B2B procurement, home and urban services, entertainment ticketing, multi-modal transportation and the list goes on.

ONDC’s ultimate vision is that every catalogable product/ service will be on the network, with innovative buyer interfaces helping diverse user segments access and choose what is relevant for them.

The industry in general, except for a handful, understands and welcomes this idea of open network. But we need to crack the cold start problem. Therefore, we are approaching this with a dual strategy. We are working with the digitally mature entities familiar with e-commerce to get them onboard and reach across ecommerce-friendly consumers to get the pumps primed. But it is a long journey.

The well-established businesses that are currently operating in a platform-centric world are yet to fully appreciate the dramatic change possible in the distribution channels and supply chains with the freedom an open network offers to the brands and merchants. The corporate bureaucracy, busy with business as usual are slowly realizing the opportunities, and many are seriously evaluating the possibilities, including this in the top management agenda and making it a priority and not just a nice-to-have tick-in-a-box. It is heartening to see established players from the public sector and private sector like SIDBI, NABARD, SFAC, HUL, ITC, Google, Meta, Dominos, Tata, OLA, PayTM, MagicPin, Juspay,Reliance etc. taking definite steps by launching their presence, albeit in pilot scale in comparison with their potential.

In the meantime, we have multiple initiatives to support the mini & small enterprises and to help the unserved and underserved sections of enterprises, entrepreneurs, artisans, weavers etc, who are normally ignored or provided lip-service for PR purposes to become truly ready to embrace, adopt and benefit from the world of digital commerce.

This involves innovation, capacity-building and handholding in areas ranging from selecting and signing-up with a service provider of their choice, developing attractive catalogues, uploading these catalogues with inventories to the network, responding in time to orders, order fulfilment, packaging for delivery, obtaining logistics, responding to queries and so on, so that they are accepted by the extended consumer base the network can offer. 

Many government agencies are excited about the possibilities with the ONDC Network. Ministries like MSME, Agriculture, Textiles, Fisheries and Animal Husbandry from Central  and State Government are doing/developing/ considering projects that can scale nationally. They are also in the process of developing/ launching schemes for their ecosystem, to leverage the network through digitalisation.

Philanthropic agencies like BMGF, TERI. etc have also jumped into the fray to extend processes, technology, and toolsets, and more importantly help them to promote their products/services.

The addition of financial products and services like credit, insurance and investments can be a real gamechanger when it comes to the small business as it can be an avenue for accessing flow-based working capital credits, sachetized insurance and investment driving digital inclusion across the length and breadth of the country.

We are expecting to have participation of of BFSI sector starting with Financial  Products and then expanding their scope to help small and medium scale industry to leverage open network with a robust foundation enhancing digital financial inclusion.

Now that we are getting a decent pipeline of suppliers of diverse products and services, we need a big push to bring the consumer base. Not just existing users; but we need to expand the participation of both merchants and consumers in this world of opportunities digital India offers

Road Less Travelled

While we go through these steps for network and enabling ecosystem development, there are quite a lot of activities that the ONDC team with the active collaboration from the network participants are engaged in, to strengthen the network and to build trust on the network.

These include, but are not limited to:

(i)           continuous evolution of network polices to cover ever-expanding functionalities and domains;

(ii)          continuous evolution of protocol capturing the evolving network policies to help enforcement of processes;

(iii)       network-wide services such as scoring of merchants/service providers, which then becomes a digital asset they can benefit from, as well as acting as a deterrent to unscrupulous merchants, and a protection to the consumers;

(iv)     data lake of non-competitive,    non-business sensitive non-PII data, anonymised   and  aggregated as open data for all participants, to benefit without being an exploitative tool

(v)             SDKs, training and capacity-building material as common assets;

(vi)            developing an ecosystem of enablers and service providers to support small enterprises;

(vii)       enabling big-tech engineering skills on AI and language models to be available as standard offers that can be leveraged by small enterprises to complement their strengths in operation and customer care.

(viii)      enhancing systems and processes for smoother and faster grievance and dispute resolution

Tailpiece

Such roles help ONDC to help the network to continuously evolve as a truly democratic digital marketplace. This is a journey no person has ever made before; where India is playing a leadership role. Come and join hands in this global first quest

 " IF you want to be a pioneer you have to blaze your own trail"