Online Network for Digital Commerce (ONDC), a government-backed e-commerce interoperability programme, is designing an online dispute redressal (ODR) framework based on a NITI Aayog proposal.
Over the next six to eight months, it also plans to enlist third-party players to resolve disputes through an ODR platform.
“We are trying to develop a framework for ODR and then establish a platform for ODR. Although it cannot guarantee dispute resolution, the platform will make resolution much simpler and an enabling feature of the ONDC architecture,” ONDC CEO and managing director T Koshy said.
The ODR framework would be based on the NITI Aayog proposal and the draft would be ready in one and half months or two for feedback from stakeholders.
“In six-eight months’ time, an ODR platform should be up and running,” he added.
ONDC has been seeded by the government to create an interoperable e-commerce network. This is being done by breaking down the e-commerce value chain into multiple types of network participants—the so-called buyer-side platforms, seller-side platforms, logistics platforms and software gateways that will connect all of these service providers.
It seeks to prevent monopolies—where a handful of platforms have access to all sellers, giving them pricing control—and monopsonies—a few platforms that have access to all consumers and hence controlling terms of trade—taking hold in the e-commerce sector.
How will grievance redressal work?
At present, e-commerce grievance redressal is largely a two-step procedure. A customer flags issues with the platform from where the purchase has been done and then the platforms, which cater to both buyers and sellers for every transaction, try to resolve matters based on their redressal frameworks.
If the customer is still unhappy, she approaches a consumer court.
The ONDC system will introduce another layer to expedite grievance redressal. It will be the seller-side platform that will be responsible to resolve grievances in the first instance. If that is not done, the customer can proceed to a third-party online dispute resolution platform vetted by the network that will work based on its grievance redressal framework.
“Of course, there will be some cost associated even with ODR as in the case of any dispute resolution process and a reasonable part of it may have to be borne by the consumer,” said Koshy.
In 2021, e-commerce platform Snapdeal had run a pilot for a similar mechanism with ODR platform Sama. Nearly 240 cases, where consumers expressed their interest in exploring a reconciliation process, were covered under the project.
Of these, a comprehensive dispute resolution was achieved in nearly 130 cases, a 54 percent success rate.
Cracking the returns policy
One of the biggest issues in e-commerce is dealing with returns. According to industry insiders, 30-40 percent of merchandise sold on these platforms is returned. For instance, a customer may order multiple jackets just to check the size and try them out and return two of the three jackets delivered.
This has a knock-on effect on the sellers. Their payments are held for the next 15 days or 20 days as the e-commerce platforms wait for any grievance raised by the customer.
As the percentage of returns is high, sellers have to take their wares back even when they may not be at fault. On the other hand, e-commerce platforms also try to recoup high costs of customer acquisition and returns by levying high commissions on sellers.
ONDC will allow seller apps to provide purchases on the entire spectrum–no returns, limited returns and full returns.
Customers will be able to choose at the outset what kind of return policy they want and will only be shown results adhering to the choice.
In the case of purchases with no-questions-asked returns or refunds, payments to the seller will be made only after a necessary lock-in period for customer returns.
But won’t limited or no returns hurt the user?
“If consumers don’t like the terms of the transaction as notified by the seller like a no returns policy or not COD policy, they may not buy from that particular seller. Ultimately, customer choice and competition will determine winning models,” said Koshy.
According to him, all services on ONDC will evolve along the lines of card networks, where participants offer different levels of services based on what a customer can afford and wants.
Another important feature of the ONDC architecture would be a reputation ledger of all service providers on the network. It would be updated continuously based on customer reviews and is expected to be more transparent, as none of the intermediaries would control it.
“Seller apps with no captive buyers, but with a responsibility to ensure good customer service to attract the buyers, will have to put in checks and balances to ensure that their sellers treat the end customers in a fair and transparent fashion, failing which their network-wide reputation will suffer and may be rejected by buyers,” said Koshy.
The competition among multiple platforms would make it a self-correcting model in the long run, he said.