Interest charge

ONDC will charge merchants 75% less commission than other e-commerce giants

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E-commerce giants like Amazon and Flipkart, which dominate the Indian e-commerce sector, operate on a b2c online business model, which allows professional consumers to buy and sell things online. For the use of technologies and processes, these companies charge a certain amount to retailers, which can be a problem for many small retailers, with less profit.

However, the government-backed Open Network E-commerce Platform (ONDC) will come to the aid of these smaller retailers, charging less commission than the e-commerce giants.

The new e-com platform will only cost A quarter what small retailers pay to e-commerce platforms like Amazon and Flipkart.

Smaller retailers pay around 18-40% of the selling price to Amazon and Flipkart for using their platforms. But at the ONDC platform, they will only have to pay 8-10% of the selling price of the products according to government sources.

A Ministry of Commerce official said that the market would dictate the fees/commissions charged on the platform and not the government.

The manager said, “We have no intention of setting a cap on the commissions charged by the platform, that would be decided purely by market forces.”

IF existing e-commerce platforms such as Flipkart or Amazon want to be part of the ONDC, they will need to bring their sellers and buyers to the platform.

Unlike e-commerce platforms such as Amazon and Flipkart, where buyer and seller platforms are hosted together, the ONDC platform will host buyer and seller apps separately.

So far, none of the major e-commerce platforms have expressed interest in integrating on ONDC.

ONDC beta test

The ONDC – an initiative of the Ministry of Trade and Industry, on Friday, September 30, started its beta testing process with small retailers on 16 PINs in Bengaluru.

Based on open specifications, ONDC will boost small merchant digitization and e-commerce scale and reduce the dominance of big players such as Amazon and Walmart-backed Flipkart.

Three buyer apps – Paytm, Spicemoney and Mystore – were on the platform on the first day of beta testing. No less than 11 vendor apps, which are basically aggregators of small retailers and Kirana stores, were also integrated into the system on day one.