But the over-reliance concentration on the platforms raises concerns of risk and exclusion. Platforms are increasingly recognizing and addressing such concerns. The Open Network for Digital Commerce (ONDC) envisaged by the Government of India aims to address such concerns by promoting unbundling and interoperability in the e-commerce ecosystem through open e-marketplaces. It aims to remove private platforms from the center of the value chain and democratize e-commerce through a decentralized facility-driven network, in which participants provide diverse services that range from marketplace services, logistics and warehousing to aggregation, white-label selling Till date. e.t.c.
It works in theory. However, the potential risks and unintended consequences, challenges of feasibility and scalability, need to be considered. For example, ONDC makes network participants responsible for managing the order life cycle, including customer and vendor onboarding, catalog management, order management, invoicing and reconciliation, warehousing and inventory management, logistics, customer support, returns management, payment are, but are not limited to these. , among other things.
While more clarity is needed, it may require some network participants to reach out to other players in the e-commerce value chain offering specialized services. To ensure on-demand availability of such services, they may need to offer attractive terms, eventually turning some network participants into centralized intermediaries to ensure end-to-end transactions. Managing the entire order life cycle requires scale and smaller network participants may be left with no choice but to arrange with larger participants. A fully decentralized network seems impossible.
Further, ONDC envisages that a buyer and seller need not be on the same application to find each other, but will have the ability to connect through different apps enabled and certified by ONDC. However, it would also be possible for a network participant to simultaneously play the role of both buyer and seller, while providing advanced options to other network participants. While this may put end-to-end integrated players and niche players on the same footing, it could mean that transaction and payment flows vary with the role of network participants, creating ambiguity. Applicable laws may also vary with the roles played by players in the ONDC ecosystem. This also requires clarity.
Furthermore, the success of ONDC is dependent on participation and adoption by a wide range of participants, and through them, traders on the one hand and buyers on the other. While the open nature of ONDC may make this possible, this nature also leaves open the possibility for suspicious elements to join the network, ostensibly as service providers, vendors or consumers. The decentralized nature of the network can make it difficult to lay them out. This can make setting accountability difficult and complicate grievance redressal, which can reduce overall trust within the network.
A related problem is the role and structure of the ONDC itself. Incorporated as a not-for-profit company, it is owned by private sector institutions, most of which are likely to act or be interested, directly or indirectly, as network participants. This could lead to a conflict of interest, as ONDC’s decisions may lead to the exclusion of other voices by its large shareholders that need to be heard.
ONDC is also expected to provide services like a registry for listing of network participants, payment processing etc. It is also likely to charge user fees for authenticating and operating network participants and their applications. It will also develop rules and code of conduct in consultation with network participants, and may eventually grow into a self-regulatory organization.
It is not clear whether consumers and traders, who are the ultimate beneficiaries of the ONDC project, will have any role in its governance or rule-making processes. Without adequate clarity, checks and balances and accountability, many of its roles may come into conflict with each other, and result in vulnerable stakeholders at a disadvantage.
ONDC will also act as a facilitator of dispute resolution among its participants. However, as per the current plans, this transaction will happen without seeing the data. It is unclear how ONDC will handle this task and handle complaints from consumers and merchants, which will be critical for the smooth functioning of this network and building trust. Overall, it appears that ONDC may be compromising consumer and business interests in its pursuit of momentum.
While there remains significant ambiguity regarding its design and methodology, some clarity is likely to emerge as ONDC network policies are developed. Entities in the e-commerce ecosystem should actively engage with ONDC to achieve greater transparency and integrate accordingly.
These are the personal views of the authors.
Aparajita Srivastava and Amol Kulkarni are partners at Ikigai Law and Director (Research) at Cuts International, respectively.
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