ONDC’s challenge is onboarding stakeholders, expanding the market: T Koshy, CEO

CEO of ONDC, T Koshy

The challenges the Open Network for Digital Commerce (ONDC) currently faces is the expansion of its market segments and finding a way to get sellers of different sophistication levels to become part of the network, ONDC CEO T Koshy told Moneycontrol in an exclusive interview.

“ONDC has no issues in terms of tech or design. Our challenge is expanding our market. The biggest challenge that ONDC and its ecosystem partners face is onboarding sellers of different sophistication levels and having good systems in place, not just in terms of technology but also order execution,  packaging, delivery, returns, refunds, etc.,” Koshy said.

ONDC is working towards digitising and supporting grassroots-level entrepreneurs and local retailers and making them a participant in India's e-commerce revolution. It is working on providing digital literacy while making participants aware of its benefits.

“The penetration of e-commerce is only 5-6 percent. Sellers number only 2-3 percent (of total sellers). All of these people can be onboarded to ONDC. But the rate at which they come to us varies with their level of sophistication. We wish to give equal opportunity to those who do not have the capability,” he says.

The platform is thus working with various government departments like agriculture, IT, MSME (micro, small and medium enterprises), CBDT  (Central Board of Direct Taxes), and NABARD (National Bank for Agriculture and Rural Development) to bring on board people from varied backgrounds.

Expand e-commerce penetration to 25 percent

With players of different segments on board, ONDC hopes to grow e-commerce penetration from 5 to 25 percent in the next few years, says Koshy.

“The industry will have to go through a learning experience to make this other segment (people not aware of / conversant with e-commerce) digitally literate and empowered,” Koshy adds.

Elaborating on how ONDC plans to expand its consumer base, Koshy says that while the platform is not working with any targets, it wishes to reach over 900 million people in the next few years (how many).

“We are working towards this by onboarding various buyer applications such as Paytm and PhonePe, who are bringing their own consumer segments to us. We are working on expanding the market to include everyone accessing the internet — which is 900 million people at the moment,” he adds.

“This is a journey and the next few years will be crucial. We will have millions of sellers. The digitally mature will come in first and others will take their time. Any transformation that has happened has taken time, take UID (Unique Identification) for example, which started in 2011-12,” he explained.

Speaking about the growth of e-commerce on the platform, he said that while ONDC was seeing about 30 transactions a day in December, the number grew to 150-200 transactions a day in March. It has now crossed 500 transactions a day.

“In mobility (auto, taxi bookings) we started really slow but it suddenly saw a boom. We now have over 80,000-90,000 transactions a day,” he says.

Not trying to take away customers

ONDC is not trying to take away customers from giants such as Amazon and Flipkart, but is working on building its own customer base, Koshy clarified.

“We are not looking to take away customers from others, but are looking at getting a broader cross-section of people to participate,” he added.

The platform will expand its base through various buying-side applications that are joining it. “Organisations joining us have their own strategy. For example, PhonePe has said they are coming up with an exclusive application to get their customer base on board the ONDC network. Ditto with Paytm. Tomorrow, when banks go live, they will bring their own customer base. Different enterprises will have different strategies and they will bring people into a common market,” Koshy said.

Also read: India’s ONDC is one year old. Here's a status check