ONDC's Shireesh Joshi Says No Red Flags Seen In Beta Testing So Far

"It's still early days. People have chosen without any advertisements," Joshi said while speaking at BQ Prime's Future Today Summit on Oct. 14. "We feel good good that what we have built is playing out as expected."

Since the rollout on Sept. 30, there have been a few hundred orders on the platform, Joshi said. The network is only offering delivery in grocery and food in the test phase.

"So far, it was only open to invited users who knew what to expect," he said. "We are now getting the real orders going. Now, if anybody wants to try, they can try."

ONDC is touted to be the ‘UPI of e-commerce’, offering a platform to buyers and sellers. Joshi said many sellers going digital for the first time are trying to choose their "business balance".

For instance, a seller can choose to only accept money upfront, and while that's safe, someone might not want to buy from them on such terms and conditions, he said. Alternatively, they might wait till the item reaches the customer and they are satisfied with it. Everyone might want to order from this seller but it might be too costly for him, he said.

The balance is somewhere in between, he said.

Joshi said that while ONDC it is not charging anything at the moment, they expect to have a revenue model.

"ONDC is a private sector company. It's a not-for-profit company registered under Section 8, which means that the company is not required to pay dividends and there will be no capital gains. With the funds we have, we expect it can last 2-3 years," Joshi said.

On an ongoing basis, they expect to be a low-cost enterprise and may charge potentially, he said.

The genesis of the platform was in the first wave of Covid-19 when the only mechanism for governments across the world to protect the population was through lockdowns, leading to the question of accessibility of services, he said.

A question cropped up: "Can we create digital infrastructure that allows anyone anywhere to buy essentials from anywhere without requiring physical contact?"

While some wonder whether this platform is the government's way to destroy a monopoly, it's not, he said.

For established players, staying away from ONDC is a huge risk, according to Joshi. "When you join the network, your buyers can buy from another network and your sellers can sell to other buyers. The same assets already built can be used to get more transactions," he said.

When a platform expands, there are additional costs, but here you can specialise in one area and let others specialise in other areas, he said. "You are crowdsourcing e-commerce."

There is a benefit if they join, but there is a huge risk if they stay away," cautioned Joshi.

Joshi attributed the success or failure of a marketplace to its strategy.

Three parties are involved in completing a transaction on the network—the buyer, the seller, and the logistics applications, he said.

Consumers can place orders via ‘buyer apps’ participating on the network or applications/websites that enable consumers to shop from all the sellers on ONDC.

"The buyer application is the buyer's concierge on the network," Joshi said.

It could be a mobile app, a desktop app, a webpage, a messaging app, or any piece of software that can take your input, he said, citing examples of messaging apps like Signal, Telegram or WhatsApp. A bank, a telecom provider or a social media company could all become a buyer application, he said.

The additional capabilities they provide will differentiate them from each other, he said.

Joshi said that scale is now available everywhere, making the size of the entity through which one is connected irrelevant.

Just because there are additional parties does not mean that a transaction will be tougher; it might become more efficient, he said.

According to him, the returns will vary with the terms and conditions set by the seller.

"Whoever has access to the customer has the opportunity to monetise access. Buyer applications will create opportunities to monetise that access as they do today."