16 April 2024 : Daily Answer Writing

Q1) Even though e-commerce sector is decentralizing global business environment, its potential is marred by several factors. Discuss and analyze the role of Open Network Digital Commerce (ONDC) in effectively countering these factors.

(250 Words/15 Marks)

Digital or electronic commerce can be defined as the process of buying or selling products online with limited human intervention. E-commerce sector is reshaping the global business environment.

However, the potential of digital commerce sector is marred by several challenges, such as:

  1. Anti-competitive practices:
  2. a) E-commerce websites often promote a product from a particular company to the detriment of other producers/products.
  3. b) Predatory pricing/deep-discounts run the risk of marginalisation of retail sellers of these products.
  4. c) Monopoly of few may lead to high commission charges.
  5. Supply chain gaps:
  6. a) Lack of supply chain integration leading to delayed arrival of products.
  7. b) Variations in return to origin (RTO) rates across cities.
  8. c) High delivery charges and lack of proper courier service also ail the segment.
  9. d) The quest/competition to capture the market space has compromised the security of delivery partners.
  10. Limited participation from MSMEs:
  11. a) Existing platforms do not find adequate participation from small retailers, kirana stores etc.
  12. b) The large segment of cottage industry, village industry, handlooms etc., suffer due to exclusion from online platforms.
  13. Cyber security: The big data generated about personal preferences of the shoppers is liable to be misused at the hands of corporates.
  14. Consumer side:
  15. a) Limited penetration of internet has limited the reach of e-commerce segment.
  16. b) Digital illiteracy, digital divide, the absence of content in vernacular language etc., limits the consumer experience

Establishment of an interoperable open network in the form of ONDC (Open Network for Digital Commerce) can tackle the factors marring the potential of e-commerce by:

  1. It will help in enhancing the volume and value of e-commerce transactions by amplifying geographic and socio-economic coverage.
  2. Promotes Competition:
  3. a) The ONDC network will enable the display of products and services from all participating e-commerce platforms.
  4. b) It will limit preferential treatment for selected sellers, and also help to end predatory pricing.
  5. Freedom of Choice:
  6. a) It is expected to make e-commerce more inclusive and accessible for consumers.
  7. b) The ONDC will provide equal opportunities to all marketplace players, including consumers.
  8. c) It moves from a platform-centric model to an open network.
  9. Small businesses can use ONDC-compatible applications without having to pay deep commissions to aggregator platforms.
  10. Economic growth:
  11. a) Businesses will benefit from transparent rules, lightweight investment, and lower costs of digital presence, inventory and business acquisition.
  12. b) Economic development and livelihood creation opportunities across the value chain e., logistics, packaging, final-mile delivery, etc.
  13. c) Enable increased trade of locally manufactured goods in India, thereby multiplying investment and production of MSME.

The pandemic has highlighted the importance of digital (contact-less) commerce. ONDC can further unlock the potential of e-commerce by making it more transparent and inclusive


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