T Koshy, managing director and chief executive officer of the Open Network for Digital Commerce gives insights into the transformative initiative’s journey, vision and potential
New Delhi: The Open Network for Digital Commerce is headed by T Koshy, its managing director and chief executive officer. An IIM Bangalore alumnus, Koshy was part of the founding team of National Security Depository Limited (NSDL) and served as an Executive Director. He has also marked a remarkable stint at Ernst & Young leading key digital transformation initiatives.
He has played a key role in several transformative digital initiatives including the UID project of India, Pension Systems in India, the development of the Tax Information Network and the formulation of IT strategy and IT architecture for the implementation of Goods & Service Tax in India. He has also assisted the World Bank with pension transformation projects and has served as a member of the Securities & Exchange Board of India (SEBI) committees.
As the spearhead of yet another historical transformative initiative, Koshy gives insights into ONDC’s journey and vision.
Tell us about the journey of ONDC in the last year.
In January last year, we started with grocery and food with about 1281 transactions in the whole month. This January, we saw six and a half million transactions across retail and mobility. Last January, we had some 5600 merchants, and today have more than 300,000, service providers in the system. People were buying from a few pin codes of Bengaluru and for the last two months, every day, we see somebody buying from 600 cities in the country.
In the last couple of months, we added fashion, beauty and personal care, home decor, wellness products and many more. Many farmer-producer organisations have joined ONDC giving original farm products from honey to millets and millet biscuits.
So, the diversity on ONDC has increased and the growth has happened because of this broad basing. We believe a similar trend will continue.
Probably by the end of this year, we may see 50 million transactions a day because we are adding several products and seeing a large number and variety of merchants and sellers joining.
Which other categories are you planning to add?
In the mobility segment, which is ride-hailing, we would see ticketing being added to more metros. We have just started B2B in a small way and we expect to have a broader participation there. Then, we announced getting into financial products which are credit insurance and mutual funds and are currently fine-tuning them. So, the next couple of months will see many such things.
Our ultimate dream is that every product or service which is catalogueable will be visible on ONDC. And we will see different kinds of buying applications helping their customers buy whatever is relevant for them.
Can you elaborate?
If you are a seller on ONDC, and you make your catalogue visible on the network, any enterprise which gives an interface for the buyer will be able to discover you.
Every business can decide what they want to offer their consumers in addition to their core service. If a business has a buyer interface on ONDC, they can offer their clients food, groceries or more because the sellers are already visible in the network through somebody else. So Paytm is offering payment services as well as food, fashion, gift cards and whatever else it may want to offer. They can decide whether they want to offer all products across ONDC or only limited products.
Similarly, Ola is offering food from more than 75,000 restaurants to its clients.
You saw big enterprises like Hindustan Unilever and ITC making their product visible on the network. And some small pharma producers coming.
In all these cases, the businesses don’t have to go and tie up with all the sellers individually. The sellers are independently coming.
They will be able to give complementary products without the hassle of tying up with so many sellers.
Network participants will get more merchants onto the network and charge to make them visible. If they overcharge, somebody else will do the work because irrespective of which platform you come onto, you are still visible to all the buyers. That is the beauty—it is making it possible for a broad cross-section of sellers to come and buyers to benefit from it.
How is ONDC helping e-commerce penetration in rural areas?
The penetration of e-commerce in India is only about 7% to 8% on the buyer side, and 2% to 3% on the sell side. Now, with the diversity of products available, it is also possible for a diversity of buyers to benefit but you need to have that kind of buying application. In fact, we are expecting some smart buying applications that focus on the rural market. They will even give assisted commerce like our old public call booths or PCOs in small villages, which will be kiosks where local people who are not tech savvy will come for assistance. But this won’t happen overnight. It is going to take a few years for this to mature. But we have the right model in place. With a possibility for broad participation, collectively this ecosystem will be enriched, With ONDC’s diversity, everyone can coexist.
Does ONDC primarily support hyperlocal commerce?
It depends. Suppose you are a grocery retailer. Then it makes sense to be hyperlocal. Nobody will buy aata from Chandigarh to Delhi. So such a retailer will design his serviceability to say 5 kilometres.
As a buyer, if I want to buy aata I know from where I’m making the request. I will only look at those shops which are in the serviceability area. However, if I am looking for fashion, it can come from anywhere. Sellers can decide whether they want to limit the area of operation to only their town or all of the country.
What about the logistics of deliveries?
A reasonably big seller may have a tie-up with a logistics player. Small sellers may not have it. The network enables such sellers to stitch a deal with a logistics provider on the network because there are many logistics providers as sellers of their service—at the end of the day, logistics is nothing but a service.
So, a small merchant from Moradabad will see offers at the back end and choose the best deal. The software will stitch them together, so the consumer doesn’t have to know all this.
ONDC is about using the big engineering sales of big companies and the business capabilities and aspirations of small enterprises, marrying them together with technology and driving innovation.
Any innovations that you have seen in the recent past, especially in retail?
This is too early. But Ola offering food, and Unilever announcing the empowerment of its kirana network are some things that were never imagined. Another interesting example is that of
NoBrokerHood, which is a gate application. They’re on ONDC and they are now using the network’s capability to help residents buy groceries. It’s already live in Bengaluru. So now tomorrow, they may become more innovative and start sending grocery reminders to residents. They can become the front face for the residents to buy all their normal stuff. These are the kinds of innovations that are happening.
What is going to be the focus for ONDC in 2024?
New ideas have their own build-up time. So, our focus is now to build up. And while ONDC gives everybody the same opportunity, everybody does not have the same capability. So, we will be working with ministries and other collaborators for the training and enablement of people and businesses.
