Hindustan Unilever (HUL) has announced its commitment to facilitate the onboarding of approximately 1.3 million kirana stores onto the Open Network for Digital Commerce (ONDC) established by the central government. This initiative aims to empower these stores to effectively compete with e-commerce platforms and fast-service grocery retailers.

The move is an extension of HUL’s internal ordering app Shikhar, which facilitates direct orders for small neighborhood stores. Representing about a third of HUL’s sales from local retailers, Shikhar underscores the company’s prominent position as the country’s largest packaged consumer goods firm. Notably, in the preceding year, HUL made history by becoming the first fast-moving consumer goods (FMCG) company to integrate with ONDC through its multi-brand direct-to-consumer platform, UShop.

“We realised that retailers need to service orders directly instead of HUL doing it through UShop. That’s the real democratisation of ecommerce,” said Kedar Lele, executive director, customer development for HUL. “With Shikhar, they have come half way and are beginning to order on their own. In the future, 1.3 million retailers could become available on the ONDC network and buy not just HUL products but anything that the retailer sells.”

Lele mentioned that HUL functions as a “digitalization agent” or a supportive team, guiding neighborhood retailers to compete effectively with the leading players in the e-commerce industry, particularly in the realm of hyper-local services.

To begin with, HUL is piloting the initiative through an integrated module in Shikhar known as the Shikhar Seller app. This application allows neighborhood kirana stores to go live on ONDC, presenting an opportunity to sell their complete product catalog online. Currently, the pilot phase is active in New Delhi and Bengaluru, encompassing 60 outlets, with plans for a gradual nationwide scale-up.

“This is the right time in our belief to start enabling because as ONDC starts growing, is the time when the retailer starts plugging into it. And with that momentum, we will be able to service the retailer as well and they will be able to hold on to their share of business, which otherwise will become difficult for them,” said Lele.

ONDC stands as an openly accessible and inclusive platform with the goal of democratizing e-commerce. Its purpose is to empower small merchants by providing them access to advanced technologies and improved business mechanisms. Currently, out of approximately 12 million mom-and-pop stores in India, only a meager 0.12% are technologically enabled. Furthermore, e-retail constitutes only 4% of the expansive $800 billion retail market in India. ONDC seeks to address these gaps and enhance the digital presence of small businesses in the country.

Joining the open network presents an opportunity for retailers to operate within an e-commerce ecosystem that functions without pre-determined barriers, as emphasized by experts.

“ONDC ensures a level playing field for digital retailers of all sizes, granting visibility and democratising the digital commerce landscape. Sellers enjoy the freedom to set their terms and conditions, register once for discoverability and retain high profit margins without commission deductions. Direct connections with buyers eliminate intermediation risks and third-party charges, boosting profitability,” said T Koshy, managing director, ONDC, adding that the network also offers services such as logistics and enhanced analytics, enabling retailers to optimise operations and enhance overall business performance.

HUL boasts the most extensive retail network coverage among FMCG companies in India, distributing its products to nine million kirana stores. Last year, Unilever, its parent company, hailed its Indian unit as a digital and innovation powerhouse, as numerous local technological and digitization initiatives like Shikhar gained adoption in various developing nations.