ONDC will propel the growth of the e-commerce market in India

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The Open Network for Digital Commerce (ONDC), often referred to as the UPI (Unified Payments Interface) of e-commerce, has a bold vision to democratize digital commerce in India. Looking ahead, ONDC has set ambitious targets for the next five years, aiming to attract a staggering 900 million buyers and 1.2 million sellers onto its shared network. The network's ultimate goal is to achieve an impressive gross merchandise value of US$48 million during this period.

This, if achieved, will result in a significant growth rate in the Indian e-commerce market. Since its launch, the shared network has made a lot of buzz in the e-commerce space in India. ONDC has experienced an increase in transactions across the board. Although the firm had not disclosed the exact number, the volume of orders for the brands that joined the shared network has been increasing consistently since January 2023. In terms of the daily retail order volume, the shared network crossed 35,000 in July 2023.

• Much of the orders are coming from two Tier I cities, namely Delhi-NCR and Bengaluru, contributing 11,000 and 7,000 respectively. Other cities like Mumbai, Hyderabad, and Pune are contributing orders in the range of 2,500 to 3,000. By the end of the year, ONDC is targeting 200,000 transactions a day in India.

With the growth potential of ONDC and its widening presence in the Indian e-commerce market, several players have joined the network and many more are showing their interest in becoming a seller on the platform.

Dunzo, the Reliance Retail-backed e-commerce firm, joined the shared network as a seller app in H2 2023. The move will enable small and medium-sized enterprises in India to gain access to ONDC’s wide network of buyers. This, in turn, will support their business growth from the short to medium-term perspective.

In the initial 45 days, Dunzo is planning to onboard 20,000 merchants across food, pharma, grocery, and other essentials. In the first two weeks on the shared network, Dunzo is recording 3,000 grocery orders, and its merchant partners have also experienced a growth of three times on the platform. This is a clear indication that the ONDC platform has the potential to drive significant growth for SMEs in India over the next three to four years, which have long suffered by the high growth of e-commerce giants like Amazon and Flipkart.

Alongside Dunzo, Mensa Brands also announced that the firm is featuring three of its brands on various buyer-side apps of ONDC. Initially, the firm is expanding the availability of its smart wearable brand Pebble, which will be followed by other brands across fashion, electronics, and gardening.

• The firm has launched some of its leading brands like Villian, Priyaasi, and MyFitness, enabling shoppers to access its products through popular platforms like Paytm, PhonePe-backed Pincode, Craftsvilla, and Mystore.
• Some of the other direct-to-consumer brands like boAt, WoW, and SleepyOwl have also registered on the platform, as part of their distribution strategy to leverage new growth channels.

Going forward, more brands across homecare, consumer durables, beverages, packaged food, and edible oils, are expected to join the shared network. The growing presence of businesses across industry verticals will further aid the growth of ONDC, which will subsequently bring more shoppers into the e-commerce landscape from the short to medium-term perspective in India.

To further support small businesses in India, enabling them to accelerate their growth, ONDC is known to commence trials for B2B purchases of Indian products in the Emirates and Singapore in H2 2023. The network is drawing a series of initiatives that will promote small Indian businesses in terms of exports.

There is a lot of growth potential that ONDC can unlock both in the B2C and B2B segments in India. With the rising middle class and increased disposable income of Indian consumers, ONDC is well-positioned to transform the e-commerce landscape over the next five years, while accelerating the growth trajectory of the market.

Based on PayNXT360’s estimates, the B2C E-Commerce market in India is expected to grow by 10.75% on an annual basis to reach US$107.3 billion in 2023. From 2023 to 2027, the industry is projected to grow a compound annual growth rate (CAGR) of 8.68%, during which the gross merchandise value will increase from US$96.9 billion in 2022 to reach US$149.7 billion by 2027. This clearly indicates that there is plenty of headroom for growth in the B2C e-commerce market in India, and PayNXT360 expects ONDC to play a major role in the Indian e-commerce growth story from the short to medium-term perspective.

To know more and gain a deeper understanding of the B2C E-Commerce in India, click here.