The Open Network for Digital Commerce (ONDC), which is backed by the government, could significantly increase India’s digital consumption, according to a recent report titled “Democratising Digital Commerce in India.” The report suggests that by 2030, the ONDC has the potential to raise India’s digital consumption from USD 60-70 billion in FY22 to USD 320-340 billion, a five-fold increase.
The launch of the report was a collaborative effort between ONDC and McKinsey & Company, who served as the knowledge partners.
The report states that by 2030, ONDC could enable India to have 500 million digitally transacting consumers, a three to four-fold increase from 165-190 million in FY22.
India’s digital retail market presently represents only 7 percent of the overall retail market, with 165 million users. In contrast, digital commerce constitutes 16 percent and 30 percent of the total retail economy in the US and China, respectively.
The report highlights that the primary obstacles in India’s digital commerce ecosystem are the low comfort level with online shopping, a dismally low penetration of business-to-business (B2B) sellers at 1-1.5 percent, and high supply chain costs.
Adding more on supply chain costs, the report read, “Consumers have shown neither the ability nor the willingness to absorb supply chain costs (30 to 100 rupees per order), especially for smaller orders.” It further highlighted that the multiplicative scale of e-commerce can happen only if digital commerce supply chain integrates with distributors, wholesale, shop-led delivery, and more.