How India plans to reinvent e-commerce

How India plans to reinvent e-commerce

India wants to create a new kind of public utility: an Amazon killer.

Success – or even a decent attempt – would represent an existential threat to the expansion plans of US Big Tech abroad. It can also be a model for other developing countries that want to exploit the potential of e-commerce, digital payments and other online services without giving the keys to a few big tech giants.

Just over a month ago, the Indian government’s Open Network for Digital Commerce, or ONDC, went live in Bengaluru, the country’s technology hub. ONDC is an interoperable network that aims to help small retailers replicate the reach of private e-commerce platforms – i.e. loosening the grip of and Walmart-backed Flipkart. It will enable the display of products and services from all participating e-commerce platforms in search results across all apps on the network.

All this comes as India has been pursuing aggressive antitrust cases against major US tech companies, including Meta Platforms, Google and Amazon.

The jury is still very much out on how successful ONDC will be. But the network’s launch sends strong signals about how India, which boasts the world’s second-largest population of internet users, wants to grow its internet economy: It prefers a competitive, decentralized model built on top of digital public goods.

It is quite different from the American model centered on natural monopolies, which often fuel advertising revenue, or from China’s highly censored and protected model.

Morgan Stanley sees ONDC as, potentially, a significant threat to established brands and to platforms in sectors such as travel agencies and food delivery. The bank says over 30 companies are in active discussions to align with ONDC, including Reliance Retail, Paytm and Google.

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The cornerstone of this vision is the India Stack, a set of software tools developed by government agencies and non-profit organizations, which aims to unlock the potential of secure identity verification, e-commerce and payments for the population as a whole.

One example: over 90% of India’s population has now registered for Aadhaar, the biometric identity verification system that is a key component of the India Stack, according to the Indian government. By 2019, around half had already linked their bank account to their ID, which can then be used to make digital payments through India Stack’s Unified Payments Interface, according to the International Monetary Fund.

That, the IMF notes, has in turn helped facilitate the rise of new companies like Jio, the telco that has significantly expanded data access across India. Other India Stack elements include the Open Credit Enablement Network, which aims to codify a common set of credit standards for borrowers, lenders and fintech intermediaries.

To be sure, a successful open architecture for e-commerce faces major challenges. People buy from platforms like Amazon, in part because the company invests in trying to ensure that the products are legitimate and arrive in good shape and on time. When things go terribly wrong, customers have various forms of recourse, including the courts. Building that kind of accountability and trustworthiness into an open-access, decentralized platform can prove quite difficult.

But success would pose a major threat to the business model of dominant US-backed digital commerce companies such as Amazon – especially if parts of the India Stack are then exported to other major developing countries wary of US tech giants’ influence.

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India Stack and ONDC are watching closely – both for technology investors and their critics in government and civil society at home and abroad.

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