By Raman Khanduja, Co-Founder & CEO, MintOak Innovations Pvt Ltd
Oct 24, 2022 / 8 MIN READ
Digitization of local storefronts, equal growth opportunity for every business size, and dedicated measures to support small businesses has been long-standing need of today’s business owner.
While your nearby Kirana store has always catered to your household needs, shopping behavior and desires have evolved with time. Technology has enabled shopping across product catalogs with a few thousand SKUs through a variety of sellers. Along with delivery at a preferred timeslot and regular merchant or bank offers, today’s consumers are spoilt for choice. But where does your individually-owned local Kirana or your favorite handicraft store appear on the digital maturity curve for setting up a digital store? The MSME community over the years has endured stiff competition from e-commerce platforms and large modern retailers that have the resources to build robust technology systems and spend on acquiring new customers. The Government of India has a playbook that can solve for the business owner and bring transparency along with ease of managing business operations through a digital network intervention - Open Network for Digital Commerce (ONDC).
An open marketplace enabling the display of products and sales of all participating platforms on the network is a critical move for India to democratize the digital commerce industry, similar to how UPI transformed the payment ecosystem in the country.
Boasting a strong population of MSMEs of over 10 crore small businesses, this sector is a substantial contributor to the Indian economy - adding approximately 30 percent to the country’s GDP, the second largest employment generator with over 11.10 crore jobs. However, this MSME industry was among the worst-hit during the pandemic with about two-thirds of small businesses shut temporarily for more than three months, and about 50 percent suffering a 25 percent decline in revenue, as per a survey by SIDBI.
The pandemic accelerated digital adoption in the country, making India one of the fastest tech adopters across the globe. And among them were small businesses that went digital, grappling amid new technology adoption and questions around survival.
With the digital commerce scenario working out in favor of small businesses in India, a single modulated and regulated platform was required to help MSMEs take their businesses online, to sustain and grow. An open platform where buyers and sellers can transact seamlessly across platforms implies a democratic shift in running a business for sellers and making purchases for the buyer.
Creating a Level-Playing Field for MSMEs
ONDC has the potential to bridge the geographical gap between urban and rural markets allowing sellers the autonomy to choose the multiple platforms they would like to be digitally present, in a cost-effective way to handle demand and customer needs. This will help small businesses reduce the commission charges they normally incur from enlisting themselves on different platforms, and also reduce time spent on managing operations across each. Thus, ONDC will not only help reduce costs but also provide them with a level-playing field to participate in the social commerce market.
Assistance in Full-Fledged Business Management
A small business working in silos will have to take care of multiple aspects of running a business - including warehousing, finding the right logistics partner, customer experience, and payment acceptance. However, one primary benefit of ONDC is interoperability - small businesses on the open network can get access to different entities which helps in saving time and ensuring seamless management of business operations.
Fintechs and Banks to Drive Growth and Innovation
Banks will play a key role in accelerating the penetration on both, the buyer and seller sides of this network, and fintech will empower merchants with robust technology for a smoother adoption of ONDC.
There are 3 crucial ways how this partnership can assist ONDC for MSMEs -
Digital Payments Infrastructure -Firstly, the involvement of banks and fintech comprises multi-fold benefits to the seller and buyer communities. Participation of fintech companies will provide MSMEs with the benefit of accepting digital payments seamlessly across various modes on the platform. This eases out the management of their payment operations in a secure and cost-effective manner.
Large Customer Base - Banks and fintech come with a large customer base for their products and services, who can now be offered e-commerce services, without having to worry about onboarding sellers or service providers since they are already on the platform. This will be beneficial to consumers on one hand, since they are exposed to a wide choice of sellers/product offerings, and the financial service providers on the other hand, given that the seller details are readily available on the network.
Drive Financial Inclusion - MSMEs who transact on the open network will get better credit access based on the data garnered from their transactions on the network. Banks and lending institutions will get first-hand data about businesses, thus making credit approvals more transparent and quicker.
India has yet again set a global benchmark with the launch of ONDC, bolstering our position as the poster child for innovation across the globe despite being a population-heavy nation. Establishing an open network for social commerce will be a game-changer not just for MSMEs in terms of opportunities and growth, but it is India’s next step toward building a self-reliant and independent economy.
Digitization of local storefronts, equal growth opportunity for every business size, and dedicated measures to support small businesses has been long-standing need of today’s business owner.
While your nearby Kirana store has always catered to your household needs, shopping behavior and desires have evolved with time. Technology has enabled shopping across product catalogs with a few thousand SKUs through a variety of sellers. Along with delivery at a preferred timeslot and regular merchant or bank offers, today’s consumers are spoilt for choice. But where does your individually-owned local Kirana or your favorite handicraft store appear on the digital maturity curve for setting up a digital store? The MSME community over the years has endured stiff competition from e-commerce platforms and large modern retailers that have the resources to build robust technology systems and spend on acquiring new customers. The Government of India has a playbook that can solve for the business owner and bring transparency along with ease of managing business operations through a digital network intervention - Open Network for Digital Commerce (ONDC).
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