ONDC: The UPI moment for Indian e-commerce

Hello, fellow Olio enthusiasts! 👋

Happy Hump Day and welcome to the 26th edition of Weekly Olio - your weekly dose of giggles, wisdom, and a sprinkle of intrigue with our tantalizing thought piece (yes, we're talking about Publisher's Parmesan here). 🤭

If one conducts a Weekly Olio census today, we’d have a larger population than several Polynesian islands put together. Click here for an easy path to citizenship 👇

Today’s Publisher’s Parmesan covers the podcast episode by Prime Venture Partners where they chat with Shireesh Joshi, the Chief Business Officer of Open Network for Digital Commerce or ONDC.

They discuss the idea of ONDC and the need for an interoperable ecosystem for e-commerce. Using examples from the world of telecom and banking, Shireesh illustrates the current state of the e-commerce ecosystem. There are parallels drawn between ONDC and the UPI - India’s real-time payment system.

Exciting, right? 👏

We will come to that, but let’s first start with the curation.

Oh, and before you continue, we heard through the grapevine that some of our recent editions have been banished to the dreaded Promotions tab in your inbox. We're pretty sure they're feeling lonely and neglected there, so we need your help to set things right.

If you want to ensure that you never miss a piping-hot edition of Weekly Olio, all you have to do is click on that little star next to our email address. That way, our newsletters will be delivered straight to your inbox, where they belong.

And hey, if you're feeling really generous, you could even add a heart or a unicorn emoji to make us feel extra special. We won't judge.

Thanks for your help, and keep on reading! 😀

This edition of Weekly Olio is brought to you by Babbel.

Babbel: The Ultimate Travel Accessory for Spring and Beyond

Are you ready to take your language skills to the next level? Babbel offers in-depth lessons on a variety of topics, from business to travel in 14 different languages. With Babbel, you'll gain the cultural knowledge and context you need to confidently communicate with native speakers. Start your language-learning journey and see where it takes you!

Want to showcase your org in a similar way? Hit the reply button and let’s chat ✌

The Quote󠀢 💭

The Tweet 🐦

AutoGPT is a game-changing AI tool that has been around for just a month, yet has already proven to be incredibly powerful. One of the most impressive feats of AutoGPT is its ability to build custom websites in just 3 minutes. So, no more struggling with code or design elements.

But that's just the beginning. AutoGPT can also act as a virtual assistant, taking care of your to-do list and completing tasks for you. Need someone to do research on your behalf? AutoGPT has got you covered.

And if you need help achieving your goals, AutoGPT can act as your "Intelligent Alter Ego," taking the necessary steps to help you succeed. It can even serve as an intern for your company, understanding your database and automatically writing SQL queries while sending notifications to your Slack channels. 👨‍💻

The Infographic 💹

Estimates vary, but there are upwards of two billion websites in existence in 2023.

If we were to rank all of these websites according to their traffic numbers, we would see a classic power law distribution. At the low end, the vast majority of these websites would be inactive, receiving little to no traffic. On the upper end of the ranking though, a handful of websites receive the lion’s share of internet traffic. 🤯

The Short Read 📝

Is modern-day bread even food? - by Samarth Bansal

In today's fast-paced world, industrial bread has become a staple food for many. However, not all industrial bread is created equal. With so many options available, it's easy to feel lost and unsure of which one to choose. But fear not! This guide will provide you with insights into the modern industrial bread industry, from its production processes to its nutritional value. 🍞🥖

So whether you're a carb enthusiast or just looking to make healthier choices, this guide is for you.

Ultimately, awareness is key when it comes to bread consumption. Whether it's understanding the production processes, the ingredients used, or our own eating habits, being informed and mindful can help us make the best choices for our health and well-being. So let's continue to learn and grow in our bread knowledge and make informed choices that nourish both our bodies and our souls. 😋😋

The Long Read 📜

Can India unlock the potential of its youth? - by Financial Times

Over the past few months, the FT’s reporters spoke to ordinary young people coming of age across India to see which way they think things will go.

They heard stories of a new generation’s dreams unfolding. Some had jobs that didn’t exist just a decade ago, but now do thanks to new investments or technological advances. Others were struggling to find work in an economy that still does not employ nearly enough of its women or create anything like enough jobs.

These stories tell a bigger one of an India on the cusp of sustained economic takeoff, but fighting to break through the challenges — some old, many new and unexpected — which are holding the country back.

Publisher’s Parmesan 🧀

ONDC: The UPI moment for Indian e-commerce

Disclaimer: This content was originally published by Prime Venture Partners as a podcast, edited and republished as an article here.

Shireesh Joshi, Chief Business Officer, ONDC chats with Gaurav Ranjan, VP Investments, Prime Venture Partners.

Gaurav: Hello, everyone. Welcome to this new episode of Prime Ventures Partners Podcast. I’m Gaurav, your host. And today I have a special guest with me, Shireesh Joshi, the Chief Business Officer of ONDC, Open Network for Digital Commerce. Over the next 40, to 45 minutes, we’ll try to learn from Shireesh what ONDC means, and what we have for sellers, buyers, and ecosystem participants on the ONDC network. But before we get into that, Shireesh, we’d love to know a little bit about you. I was checking a profile and you have been with corporates for two decades now: FMCG companies, and telecom companies. So how did the switch to ONDC happen? If you could just share a little bit about your own professional journey and the transition to ONDC?

Shireesh: Sure. So my professional journey began in the FMCG industry. I worked for Procter & Gamble. And that spanned India, Taiwan, and Southeast Asia. The responsibilities over there included healthcare, laundry and cleaning products. So three categories. That spanned about 12 years. From there, I moved to China and I was working with PepsiCo on their food business, for seven years out of Shanghai. Then I came back to India and I was the Chief Marketing Officer for Airtel for three years. So I got into services for the first time. And then I was the head of the strategic marketing group at Godrej for five years. That was at a group level, not with an individual company. So there were a variety of projects and engagements with various businesses. So, that was really a multi-business experience.

So there’s a fair bit of product segments and categories that I’ve been exposed to over the years. After Godrej, I was on my own independently as a consultant. And so that got me involved with another set of businesses that I had not been part of. And one of the sounding out calls came from ONDC around the middle of last year saying, “Hey, this is what the government is after. You’ve been in consumer and retail businesses all these years. Why don’t you let me know what you think.” And so I was sounded out. And that, “If you have the capacity, then we would like you to also work with us.” So it began with a consultative conversation. But it so happened that my consulting projects were drawing to a close and this was heating up, one thing led to another, so I joined this full-time. So that’s the brief history of my time, if you will, and how I got here.

Gaurav: Great journey, so far. Great. So moving on ONDC. ONDC, stands for Open Network for Digital Commerce, and a lot has been written about it, and said about it, but we’ll love to learn from you, in short, what ONDC stands for, what are some of the common misconceptions, what it is, what it not. And then you can further deep dive from there.

Shireesh: Right. So the most important notion to understand about ONDC is the idea of an unbundled interoperable world in eCommerce. That’s a very different world from what people are used to today. And based on my experience of eight months of briefing about ONDC, even after talking about it, the gravitational pull of the eCommerce that we’re used to is so strong that even the interpretation continues to be in terms of the way eCommerce is today. So, that takes some time. And I think your viewers should invest time to let that sink in. Now, here are a few thought experiments, right? Which bank do you have your bank account in?

Gaurav: With HDFC.

Shireesh: Okay. So you have HDFC, I have one account with Citibank. Now imagine if I were to send you money from Citibank to HDFC, and the requirement was that I have to open an account in HDFC, get an HDFC chequebook and only then would I be able to pay you money. Imagine if that were the case, now that’s not, but imagine if that were to be the case. Or what telephone operator are you on?

Gaurav: I’m on Airtel.

Shireesh: You’re an Airtel, and so am I. But let’s say you were on Airtel and I was on Vodafone. And if I had to call you, and imagine if the requirement was that I can’t call you from Vodafone, I have to take an Airtel SIM and only then be able to call you.

Now if this is how things were to operate, then we would’ve said telecom is not interoperable because it requires both parties to be in the same operator. Banking is not interoperable because it requires both parties to be in the same bank because only then can interaction take place. Or imagine if you and I had to have the same email client. If you were on Yahoo, I could not send you from Gmail. Or if you were an Outlook, I couldn’t send you from Hotmail. So if that were the case, we would say it’s not interoperable. Now that’s not the case, thankfully. And so it doesn’t matter which bank you are with or which bank I am with, whether it is IMPS or UPI or NEFT, I can send you money because the banking system is interoperable.

Likewise, telephone systems are interoperable because if it wasn’t, imagine the nightmare when making international calls. I would need a Japan SIM to call somebody in Japan and a German SIM to call somebody in Germany and so on and so forth. That would be an absolute nightmare. So these services, since the time we’ve known them, have been interoperable. In contrast, eCommerce, since the time we have known, has been completely the opposite. And so the ability to appreciate that a buyer and seller can be two completely different places and still be able to have a transaction that runs as smoothly as if they were on a single platform, that’s an idea that takes getting used to.

So now let’s first imagine what’s inside a platform. So we think of complete services that have end-to-end eCommerce solutions as a platform. There is buyer-side activity on that platform. The idea of searching for a product, adding to a cart, making payment, receiving, tracking information, filtering and sorting by rating or price, however, that’s the buyer side activity. That’s what you and I do when we go shopping on any of these platforms.

What’s not visible to us is these seller side activity, unless you happen to have a selling business that I didn’t know about, you would not see it. And so that’s the place where sellers are uploading their catalogues, updating their inventory, and receiving order information processing. That’s a different set of activities. That’s the seller side activity. And then once an order is placed, there are fulfilment activities, the storage, warehousing, delivery, et cetera, that’s the third leg of the activity.

Now platforms do all these things inside the confines of their solution. And so these components talk to each other in a proprietary language. Because it’s a proprietary language, there is no interaction across platforms. So if I, as a buyer on one platform and discover that the seller I want to buy from is on a different platform, I cannot transact. I will have to go and register on another platform as a buyer, and on that other platform, I’ll be able to transact. Or if I happen to know the seller, I will tell him, “Hey, why don’t you come and join this one because I’m here and buy it?”

So eCommerce requires both parties to be in the same app, in the same platform to be able to transact. Now, imagine if we separated these, that these did not require to be done inside a single organization. So there is one entity that is doing only buyer services, that is helping with the search, adding to cart, making the payment, et cetera, and we actually know this. So when we travel to a different city and we stay in a hotel and we call the bell captain or the concierge, he’s a buying application. So if you tell him that, “I want to eat local food, I want to buy some local handicrafts, and I need a taxi,” I’m asking him to get me three services, none of which he provides, none of which he onboards.

So depending on what I’ve asked for, from whatever directory or whatever resources, he’ll look up and he’ll say, “Okay, I’ve ordered you a cab,” based on whatever my requirements are. I need an open-top Jeep or I want a Sedan or an SUV, whatever my requirements, so he’ll find this solution. And then he will also find a solution for the restaurant because he doesn’t know me perfectly. He’ll say, “Here are 10. I’ve shortlisted 10 for you. They’re all close by, all well rated. Here are the specialities,” and you can make your pick. “And then there are these solutions for handicrafts, this is a store that sells local handlooms, this one sells so on, and so forth.” So he’ll give me a few options.

Now, if I’ve been a regular frequent visitor, then he knows me. So, “Welcome Mr. Joshi. What are you looking for this time?” And because he’s dealt with me, he’ll be able to give me a sharper response. And he has no interest other than to satisfy me. Depending on what I’ve asked, he will modify the solution to make sure he pleases me because I’m his customer, and I will keep coming again and again. Now this is an important behavioural departure from the eCommerce systems. An eCommerce platform has loyalty to both sides because they have on-boarded buyers and they have on-boarded sellers. And their purpose of existence is a profit motive. They are a business and their motivation is profit. And so to achieve profit, sometimes I will do things that are pro-customer because I want to grow my customer base, I want customers to feel happy. There are other times I will do something that is pro-seller because I want my sellers to also be satisfied.

And there are times when I may prioritize my own needs about both of them and say, “Where is it that I can make the maximum margin or maximum money?” And I will promote that activity. And because I have a captive relationship, I can influence that promotion without any repercussions. So, that’s the behaviour in a closed platform. Now in an open platform, things change dramatically. And so the parallel I will give is, think about websites and people who are building and publishing websites and people who are browsing through browsers. Now, if I am building a website, I will build it on Wix or WordPress or something, and I will publish it. I don’t need to go and register on Google Chrome to say, “Hey, Google Chrome, I want your users to see me.” And I won’t go separately to register on Firefox and say, “Hey, Firefox, I want your users to see me.”

It’s an open network. Once I’m published, I’m visible to the entire universe. And so the people who are reading or looking for websites can search through whichever browser they choose, and it doesn’t matter which browser they choose, they will be able to find me. So it doesn’t matter where I published, and it doesn’t matter where this searcher is. That’s the open network. And when they see my website, it’s a seamless experience. You don’t feel that I’m using a browser made by one company, and this website is deciding on the services of another company and they’re connected to some connectivity. It’s still a smooth experience. That’s how eCommerce will become under ONDC.

Now, once you unbundle, it does an important thing. Once you unbundle, then it does not require one party to do all the business processes. Which means that if, let’s say, I am an entity and you mentioned Mygate, right? And so let’s take Mygate as an example. Mygate has households that are registered with them, so they have a user base. The app is already downloaded on the phone. So if Mygate were to become ONDC compatible, all they have to do is shop on ONDC as a button. So in addition to letting a driver in or a cabin or a guest in, there’s also a shop on ONDC. And so all the households that have a Mygate app, with the next update of the app, they’ll be able to shop on ONDC. Mygate does not have to find the sellers, somebody else will. So you and I, with HDFC bank, let’s say HDFC bank takes all the MSMEs and enterprises that have accounts with them, and HDFC goes and tells them, “Hey, I will enable you to do eCommerce. I’m anyway doing your accounting, give me your catalogues and I will make your catalogue visible.”

So now a buyer on Mygate has entered items one by one. A company that makes them, who has an account with HDFC and is now able to know ONDC will respond. And so on the Mygate application, this household will see all the sellers of hand towels and soap, et cetera, and will add to select and shop. So their shopping experience is exactly as it is on an eCommerce platform. Now, what is the incremental effort for somebody like Mygate? So the incremental effort for somebody like Mygate is only some technical resources for a bit to make Mygate, ONDC enabled. And that’s it. Now for that incremental effort, they now have an eCommerce revenue stream. Same time, what is the incremental effort for HDFC? They already have these as clients. They already have their accounting. All they’ve got to do is now enable their catalogue. Once they’ve enabled their catalogue, then they have a transaction revenue stream that they’re also earning from.

And the experience is as smooth as a browser, browsing websites when they’re on two completely different entities. So, that’s what gets unleashed. And because of this now, many people will become part of eCommerce without having to provide a complete solution. So you have banks that will become part of it, and you have telecom players that will become part of it. You have services like Mygate that will become part of it. You’ll have social media companies that will become part of it. You have messaging applications that will become part of it. All of them will become part of this. Plus they’re very, very small players. Companies that do point-of-sale software, do all the billing at a store level, they have maybe 5,000 stores at their clients, but if they make their billing software ONDC compatible, those 5000 retailers are visible on the ONDC network and any shopper can buy from them.

And so in this fashion, you democratize participation. You allow many parties to participate and thereby enable many models of eCommerce. So you alluded to the idea of models. Because it is a mix-and-match model, depending on what the buyer's requirements are and what the seller’s conditions are, you can have a mix-and-match model.

Gaurav: Got it. Great. That is a very detailed overview of ONDC, and how different participants on the buy side and sell side can benefit from it. While it makes a lot of sense for the buyer-side apps and the seller-side apps to be part of the network, the real value will be driven by the consumers transacting on the platform. So the question that a lot of people have here is, for any eCommerce transaction or for any eCommerce platform, there are three core pillars, selection, pricing, and convenience. And for an end customer, this is very important. So today they find all these three in any of the platforms, centralized platforms that they’re transacting in. So what is it that will make them move from these platforms to say, a Mygate or any other buy-side app? What are the incentives for customers, in short?

Shireesh: Yeah. So first of all, one of the opportunities that ONDC presents is the ability to buy all domains from a single application. So today let’s say I’m relocating to a different part of the country, I need suitcases to pack, I need a flight ticket, I need to book a service apartment. Maybe I need to book a cab to the airport. And depending on the destination, let’s say, I want some brokerage services to locate an apartment. Now these are five different requirements. Today, I can’t do them on one platform. So if I go to, let’s say, a taxi aggregated application, I can’t book a flight ticket there. I can go to a travel portal where I can buy a flight ticket, but I can’t find the brokerage services for home renting there. Or if I go to a real estate service provider, I can’t buy suitcases from him.

So today what we call convenience is actually, we have been required as users to register on multiple platforms. We are one individual, but we’ve registered on multiple individual platforms to buy multiple things. And even on those platforms, we can only see those sellers which they have onboarded. So even if I have to buy, let’s say, suitcases, to be sure I’m getting the best deal, I’ll have to maybe check three, or four platforms. And I can check them only if I’m registered on those three, or four platforms. Imagine if through just one application and it could be Mygate, it could be HDFC, it could be something that is not even an eCommerce today. If through that one application I could search for all these products, not only search for each product, but find all the sellers not registered on a specific platform. When I browse and I search for a website, I’m not looking for websites that are registered in my browser, I’m looking for the entire worldwide web.

So consumers for the first time will be able to access the entire universe, which is not possible on the platform. Second, platforms, as I mentioned earlier, have an opportunity to, and they use that opportunity to influence what the consumer sees. So that choice is driven by the platform, it is not driven by the consumer. Now, if I look for a suitcase on one platform and I get, let’s say, 1000 responses, I look for a suitcase on a second platform, I get 1200 responses. I do not know whether the platform that gave me 1200 responses happens to have 200 more sellers, or they have the same number of sellers, but the first platform actually hid 200 from me, or maybe hid 1000 from me. I have no way of knowing. Because the universes are not the same, each one has their own universe. But once everyone is connected to the network, then if I search through Mygate and I look for suitcase sellers and I search through HDFC, and I look for suitcase sellers, they’re accessing exactly the same universe.

So when I see the listing, I can now judge which application is providing me with information that is appropriate. And so back to my visitor, to the hotel question, if that concierge wants to keep me as a customer, that concierge has to make sure that he gives the option that he knows I will be satisfied by. The day I suspect that the concierge is getting a cut, I stop talking to him and I go somewhere else. That’s what happened with buyer applications, the moment the consumer even suspects that the buyer application is fiddling with the order at no cost and at no loss, they can simply switch to a different buyer application and they have access to the entire same set of sellers. So if a buyer application doesn’t do the right thing by the buyer, they will lose them. So, that’s the second very important difference in the platform. And so the buyer experience will keep getting better and better.

Plus because of this unbundled nature, new services will get created. And now I’m only one mind, but 1000s of minds come together and they start exploring an idea thing, which is why in this startup ecosystem, each startup thinks about a different opportunity and finds it. So by no means is this meant to be the universal, the all and all answer. But think of it that, let’s say, in six hours’ time, you’re going from the office to the airport and you discover you left your mobile charger at home. Now, even if you were an express loyalty club member of one of these platforms, you can’t get a 2-hour delivery. It might come tonight, late tonight or early tomorrow morning. Or if you’re in a third location and you’re ordering, they may deliver to your home, they might not deliver to that location.

Now, if I’m going from my office to the airport, what if I could search by the path? So I entered my travel journey and I said, “This my travel journey is an input to buy a charger.” Now that is an experience that can get created, and it is possible because no entity is having to do all the parts. Because if I built an eCommerce platform, I would’ve enabled certain services. Now, as somebody who is able to read GPS signals, who can take my map as input, who then accesses ONDC, writes a code to look at the distance from that travel journey and gives me an order of entry, not by rating, not by review, not by pricing, not by percentage discount, but by proximity. So as more people think about it, they’ll be able to find more solutions.

Now, today, when I want a haircut, there are just a couple of places I know. And the way I do it today is I give them a call, I check if there’s time available, they confirm, and I go and do it. Now, what if I discover that there’s an important meeting that is coming up, I was putting off my haircut for a few days, now I have to go and get it now. How do I find out who else is available and what capability they have? So there are needs that today, because they don’t exist, we don’t think about them.

Gaurav: Yeah, there’ll be new use cases that’ll be built, that we can’t think of today. And it’d be driven, one, by the consumer and the change in consumer behaviour. Second, platforms innovating on top of the network to create new use cases. Great. I mean, one of the points that you mentioned earlier was that Mygate or an HDFC will see this as an additional revenue stream and that will maybe drive customer acquisition on their platform. So, that’s a very good point. I mean, a lot of comparison has been done with UPI. I know the reason for UPI’s success for a lot of participants was the effort they put into building consumer awareness. So do you think the same effort will be required by the seller side and the buyer side apps in the platform? The short question here is who will do the marketing or consumer awareness side of things? Who will take care of marketing, and the consumer awareness side of things on ONDC?

Shireesh: So I think the parallel is valid to the extent that the applications will do a lot of the marketing themselves. But as happened with UPI, UPI itself also have some communication going out. Two big differences, vis-a-vis the UPI situation, first, it required people to download a new application: Google Pay, PhonePe. UPI-compatible applications needed to be downloaded because existing applications had not yet incorporated UPI. That has changed now. So banks have done that. So through the same banking application, you can do UPI payments. At that time, that was not the case. So at that time, first, consumers had to download an application specifically to make this UPI payment. Second, this method of payment was new. The only mobile-to-mobile payment early was mobile wallets that worked very differently.

Again, that was not interoperable, that required both parties to be in the same wallet. So the idea that I’m on PhonePe and somebody else is on Google Pay, and I can still pay them money and it’ll go through, people had a hard time getting to grips with that. They did eventually, but that was new. So the product was new and it required a new application. In the case of ONDC, in most cases you may not even need a new application, whether it is HDFC bank or Mygate, the app already exists. All that I have to do is update an app that I already had. It continues to do what it did for me earlier, and now it is also allowing me to do one more thing. And apps have been doing that. Each of these apps, whether it is a payment app, whether it is Mygate, as they’ve established themselves, they’ve kept adding new and new services.

And how do they let people know? They flag it on their homepage, they have ways of notifying, et cetera. And so they have means by which they do it, and that’s how it’ll take place. The other big, important difference is eCommerce is completely familiar. It’s been present in the country for more than 10 years. So searching for a product, adding to a cart, selecting, and paying, all those are known habits. So for a buyer, this is nothing new to learn. As far as a buyer is concerned, earlier, I was going to platform A or platform B, but now inside some third application, I’m clicking a button and having exactly the same experience. That’s it. So the entry gate is the only thing that is different.

Can't get enough of this conversation? Us neither! Check out the full episode below to satisfy your craving for more insights and ideas (directly jump to 23:15 to continue ahead). 😃 

Wanna know what else we are reading? 🙃

AltReports - a weekly breakdown of alternative real estate investment opportunities

We report on the real estate news that Jim Cramer, CNBC, and the roster of big media talking heads, don’t talk about. AltReports helps you connect the dots, with data, observation, references and reason to better understand what’s happening, what might happen, and why.

That’s all for this week. If you enjoyed this edition, we’d really appreciate if you shared it with a friend, family member or colleague.

We know you really want to share this edition’s link. 😛 Well, we will make it easy for you. Just click on the bubble below.

We’ll be back in your inbox 2 PM IST next Wednesday. Till then, have a productive week!

Peeyush and Mohit

Disclaimer: The views, thoughts, and opinions expressed in the text belong solely to the author, and not necessarily to the author's employer, organization, committee or other group or individual.