ONDC vs Amazon: Which is Better for Sellers in India?

Confused between ONDC and Amazon? Let’s clear your confusion today. Let’s move to the basics now. Have you ever thought about how Amazon works? We know Amazon as an online store where companies store their products in warehouses.

Amazon handles marketing, shipping, and returns, making shopping convenient for us. The speciality of Amazon isn’t the product itself but its scale. Its strategy is simple: first, to get as many users as possible by offering products at cheaper rates, provide free shipping, and allow every company to list its products. More users mean more data, and the power of data is massive . Usually, a small number of sellers control platforms such as Amazon, selling a diverse range of products. They take advantage of economies of scale by buying items in large quantities at reduced rates and subsequently providing discounts to consumers. This approach enables them to provide competitive pricing and draw in a larger customer base. Nevertheless, it frequently results in a limited variety in the market, as smaller sellers find it challenging to rival the pricing and market presence of these major sellers.

Now, let’s look at the basics of ONDC. ONDC, which stands for Open Network for Digital Commerce, is like a big digital marketplace proposed by the Government of India. Its job is to make online buying and selling easier and fairer for everyone involved – like businesses, customers, and government regulators. It's a place where businesses can show their products, customers can shop, and regulators can make sure everything is going smoothly. ONDC wants to use smart technology to make sure things are safe, fair, and transparent for everyone using it. So, in simple terms, ONDC is like a big digital mall where everyone can do business safely and easily.

Confused between ONDC and Amazon? Let’s clear your confusion today. Let’s move to the basics now. Have you ever thought about how Amazon works? We know Amazon as an online store where companies store their products in warehouses.

Amazon handles marketing, shipping, and returns, making shopping convenient for us. The speciality of Amazon isn’t the product itself but its scale. Its strategy is simple: first, to get as many users as possible by offering products at cheaper rates, provide free shipping, and allow every company to list its products. More users mean more data, and the power of data is massive . Usually, a small number of sellers control platforms such as Amazon, selling a diverse range of products. They take advantage of economies of scale by buying items in large quantities at reduced rates and subsequently providing discounts to consumers. This approach enables them to provide competitive pricing and draw in a larger customer base. Nevertheless, it frequently results in a limited variety in the market, as smaller sellers find it challenging to rival the pricing and market presence of these major sellers.

Now, let’s look at the basics of ONDC. ONDC, which stands for Open Network for Digital Commerce, is like a big digital marketplace proposed by the Government of India. Its job is to make online buying and selling easier and fairer for everyone involved – like businesses, customers, and government regulators. It's a place where businesses can show their products, customers can shop, and regulators can make sure everything is going smoothly. ONDC wants to use smart technology to make sure things are safe, fair, and transparent for everyone using it. So, in simple terms, ONDC is like a big digital mall where everyone can do business safely and easily.

Now let's understand this through an example: In the city of Agra, a shopkeeper named Rakesh has an electronics shop. Some years back, it used to be so crowded that finding a place to stand was difficult, but today it is empty. Hardly anyone comes here, and when asked about the reason, Rakesh said his business had a huge impact because of the arrival of big tech giants like Amazon and Flipkart. Nowadays, everyone prefers to buy things online. These companies offer huge discounts to attract more customers. They come to the store, compare the prices online, and go back. This is not only Rakesh's story but the landscape of our whole country, India.

[source: Medium]

Today, thousands and lakhs of retailers are suffering from this situation. But do these retailers have no option but to sacrifice their profit margin and sell on these online platforms? Should retailers like these give up in front of companies like Amazon and Flipkart? The answer is NO! The solution to this problem is ONDC.

It provides a level playing field for small retailers, empowering them to compete effectively in the digital marketplace.

Now, let’s see the key differences between Amazon/Flipkart and ONDC:

ONDC is platform-independent, unlike Amazon or Flipkart. Amazon and Flipkart are established e-commerce platforms operating in India, whereas ONDC is a proposed digital infrastructure aimed at regulating and standardizing e-commerce transactions within the country. One key difference lies in ownership and operation. Amazon and Flipkart are private companies owned and operated by their respective parent organizations, while ONDC is proposed as a government-led initiative, indicating potential differences in governance, oversight, and objectives. This government oversight in ONDC could potentially ensure fair competition, consumer protection, and regulatory compliance, offering greater transparency and accountability compared to privately-owned platforms like Amazon and Flipkart.

[source: Medium]

Today, thousands and lakhs of retailers are suffering from this situation. But do these retailers have no option but to sacrifice their profit margin and sell on these online platforms? Should retailers like these give up in front of companies like Amazon and Flipkart? The answer is NO! The solution to this problem is ONDC.

It provides a level playing field for small retailers, empowering them to compete effectively in the digital marketplace.

Now, let’s see the key differences between Amazon/Flipkart and ONDC:

ONDC is platform-independent, unlike Amazon or Flipkart. Amazon and Flipkart are established e-commerce platforms operating in India, whereas ONDC is a proposed digital infrastructure aimed at regulating and standardizing e-commerce transactions within the country. One key difference lies in ownership and operation. Amazon and Flipkart are private companies owned and operated by their respective parent organizations, while ONDC is proposed as a government-led initiative, indicating potential differences in governance, oversight, and objectives. This government oversight in ONDC could potentially ensure fair competition, consumer protection, and regulatory compliance, offering greater transparency and accountability compared to privately-owned platforms like Amazon and Flipkart.

Another notable difference is in terms of marketplace structure. Amazon and Flipkart operate as centralized platforms where sellers list their products for consumers to purchase directly from Amazon and Flipkart. ONDC, on the other hand, aims to establish a decentralized unified digital marketplace that provides a standardized platform for all participants. For example you can sell food on Zomato and choose the delivery partner as Dunzo, basically the seller app can be different , buyer app can be different whereas logistics can be handled by a different partner company, potentially streamlining operations, reducing barriers to entry for small businesses, and fostering a more inclusive and competitive e-commerce environment.
ONDC charges a commission of 5-8%, significantly lower than the 25-35% commission levied by Amazon and Flipkart. This reduced commission rate on ONDC translates to increased profit margins for sellers, offering them a competitive advantage in the e-commerce landscape.

To summarize, the advent of ONDC represents a possible transformation in the Indian e-commerce industry. While Amazon and Flipkart have dominated the market with their established platforms, ONDC presents a government-backed initiative focused on promoting fair competition, reducing commission rate, data privacy, and inclusive growth. By offering a standardized platform, prioritizing consumer interests, and leveraging advanced technologies, ONDC aims to empower small businesses, protect consumer rights, and drive economic progress in India's digital economy. It provides a ray of hope for retailers like Rakesh and countless others, offering them a viable alternative and an opportunity to thrive in a competitive e-commerce environment.

Are you looking to revolutionize your online selling experience?

At SellerSetu, we provide you with a quick, affordable, and seamless way to go live on ONDC and unlock endless opportunities to sell your products online.

If you want a demo or have any questions, please reach out to us using the contact form below.

Another notable difference is in terms of marketplace structure. Amazon and Flipkart operate as centralized platforms where sellers list their products for consumers to purchase directly from Amazon and Flipkart. ONDC, on the other hand, aims to establish a decentralized unified digital marketplace that provides a standardized platform for all participants. For example you can sell food on Zomato and choose the delivery partner as Dunzo, basically the seller app can be different , buyer app can be different whereas logistics can be handled by a different partner company, potentially streamlining operations, reducing barriers to entry for small businesses, and fostering a more inclusive and competitive e-commerce environment.
ONDC charges a commission of 5-8%, significantly lower than the 25-35% commission levied by Amazon and Flipkart. This reduced commission rate on ONDC translates to increased profit margins for sellers, offering them a competitive advantage in the e-commerce landscape.

To summarize, the advent of ONDC represents a possible transformation in the Indian e-commerce industry. While Amazon and Flipkart have dominated the market with their established platforms, ONDC presents a government-backed initiative focused on promoting fair competition, reducing commission rate, data privacy, and inclusive growth. By offering a standardized platform, prioritizing consumer interests, and leveraging advanced technologies, ONDC aims to empower small businesses, protect consumer rights, and drive economic progress in India's digital economy. It provides a ray of hope for retailers like Rakesh and countless others, offering them a viable alternative and an opportunity to thrive in a competitive e-commerce environment.

Are you looking to revolutionize your online selling experience?

At SellerSetu, we provide you with a quick, affordable, and seamless way to go live on ONDC and unlock endless opportunities to sell your products online.

If you want a demo or have any questions, please reach out to us using the contact form below.