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Large companies may corner big share of business on ONDC: Bernstein, ET Retail


Companies with a significant user base may have a natural advantage and end up cornering a large share of business on the government-backed ecommerce marketplace, the Open Network for Digital Commerce (ONDC), research analyst firm Bernstein has said in a report released on Tuesday.

Customer-facing apps termed buyer apps currently active on ONDC include Paytm, Magicpin, Mystore, and Spice Money among others.

Customer acquisition costs will be lower for such apps, and fintech companies can also present direct interventions such as lending to customers to keep them engaged on the platform, it said. There will be fragmentation on the seller apps front, with a host of vertical-specific and horizontal ones emerging, it added.

Seller apps are merchant-facing apps on ONDC.

The report also noted that no one (network participant) is currently discussing monetisation and are “focusing more on trying to get a foothold in the network and become relevant”.

Open Credit Enablement Network (OCEN), if paired with ONDC, will perhaps present a large-scale credit opportunity to the merchants on the platform, the report said. The buyer side apps – the fintech ones – may try monetising the opportunity by offering to lend to the customers.

Eventually, “it is likely that fintech will be perhaps the most essential part of the monetisation opportunity on ONDC – more than one can earn through the commission’s route”, the report remarked.

It also spoke about the opportunities that business-to-business trade offers to logistics companies on the network.

There are various use cases here – one being a retailer procuring products from a distributor, the other is the inputs that a business may require (raw materials, food ingredients for a restaurant etc.), and the third is the procurement of products from a business (say furniture or office supplies for an office etc.), the report said.

On the logistics opportunity that ONDC offers, Bernstein said given the hyper-local nature of logistics companies, smaller city-specific or region-specific players can emerge.

“It will be tough for tiny players to thrive, and at best, these are perhaps the last-mile fleet providers, in our view, as a part of a larger logistics platform. With B2C remaining a relevant opportunity and ONDC presenting a significant digitisation scale-up, logistics players’ overall opportunity is set to increase,” it said.

  • Published On Jul 19, 2023 at 08:24 AM IST

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