Unbundling is a business process where a set of products or services inside a value chain is broken down to provide better value.

Post unbundling, each product or service can be provided by a different player, who aims to provide the best value to the customer. 

In this article, we will explore, how ONDC will reshape digital commerce by unbundling various products & services in a digital commerce marketplace. 

Open Network for Digital Commerce (ONDC) is a network, which will enable commerce across almost all segments, be it grocery, electronic, food, agriculture items, construction  material, hotel & travel booking, or getting the services of a carpenter. 

It aims to provide an open network for digital commerce that will establish open, inclusive, and competitive marketplaces online, creating choice and opportunity for everyone. 

By unbundling, it will open doors for everyone including the smallest of the sellers located in the remotest parts of a country to ride the e-commerce wave.

How ONDC will change the digital commerce market 

 Till now, as a buyer, you may have used various online platforms. But your choices are limited. You can buy only from the sellers, who are listed on that platform.

Similarly, a seller can only sell to the buyer, who are checking on a platform. So, a seller is forced to get listed on multiple platforms. Otherwise, it loses the risk of being visible to only selected buyers. 

In any commerce transaction, there are multiple players like

 1. Buyer

 2. Seller

 3. Logistic team to deliver the physical goods.

 4. Insurance team, in case of high-value purchase item

 5. Financial groups, which facilitate the payment & wherever applicable, provide  loans to buyers or sellers.

 6. Rating agencies, which can independently rate a product and overall service  delivery quality.

 7. Grievance & Redressal group, which comes into the picture in case of a dispute.

Till now, when you were purchasing an item from a platform, it handles all these tasks.

Though at first glance, it looks good for a consumer over a period, some of these platforms have started certain practices, which may not be good for many players

1. For example, today, for a small seller, it’s very difficult to get listed on a platform.

2. In many cases, that seller has to give money as a commission to the platform owner.

3. In many cases, when a buyer searches for a product on that platform, that small seller is not sure, whether its product will be shown on the first page of the result.

4. So, in many cases, small sellers or sellers from small towns are in a disadvantageous position.

5. As a buyer, you are forced to take all the services, which that platform has tied up with. Buyers don’t get any options. Let’s say, even if the delivery or logistic service is not good, you still have to depend on that.

By unbundling, ONDC will change that scenario. Now all buyers will be visible to all Sellers.

We can compare this with the Internet or e-mail facility.

The Internet is an open network. On the Internet, you can visit any website. Along similar lines, you can send an email to any other person & the other person need not belong to the domain from where you are sending the mail. 

Just like the Internet works on HTTP, email works with SMTP and ONDC works with BeckN protocol.

ONDC is an open network, which is built with beckN protocol

What ONDC will do

An open network like ONDC will unbundle a series of services that would otherwise be  unified on a single platform.

This means that each discrete service like buying, selling, goods delivery, financial assistance to buy a product, etc. can be fulfilled by a separate player.

As each of these players is providing only a service, they need to be good at what they are doing. This will result in innovation and, the best service at a lower cost.

ONDC will enable, buyers and sellers to be digitally visible to each other. They will be able to transact through an open network.

It will empower merchants and consumers by breaking silos to form a single network. This will drive both innovation and scale.

Now any seller—big or small, digitally savvy or not—could participate in an open network without needing to build the entire ecosystem on their own.

 ONDC will spur innovation in all the segments, across all the players. 

For example, we may see innovation in logistic and delivery agencies like delivery by drones to a particular location, delivery along with insurance, delivery & installation of electronic items by the same person, combined delivery of multiple orders with overall lower service charge, etc. 

As all these services are getting unbundled, each player can operate from a position of strength, innovation, and uniqueness.

How unbundaling of value will create new options for consumers 

 1. Sellers , whether big or small, belonging to any place can get registered via ONDC. They need not start from scratch or be digitally savvy to start their business online

2. Once a Seller is listed on the ONDC eco-system, their products will be visible to all the buyers.

3. Various other service people like plumbers, tailors, carpenters, home chefs, etc. can get  listed on the ONDC and their services, offers will be visible to everybody in the ONDC ecosystem. 

4. As there will be better visibility of the digitized inventory, we should see decrease in inventory holding cost and reduced losses due to expiry. This also will result in improved cash-flow along side better working capital.

5. We should see innovative products by various financial service providers to fulfill the needs of the buyer.

For example, a farmer can get a loan while buying items related to agriculture. Loan tenure can be matched with the crop cycle. 

6. We can also see, new financial products related to invoice discounting etc. for the sellers.

7. On similar lines, we will see innovative products from various insurance companies.

8. Rating agencies can come who can provide certificates, badges to various service or product providers based on earlier products delivered.

9. Better discovery & enhanced availability could boost community group buying, which could result in the consolidation of orders served at a potentially lower cost.

10. Today, if you order three items from three different platforms, a delivery person associated with each platform, delivers you separately. Now, based on the customer requirement, these orders can be clubbed together and delivered in one shot.

By unbundling, ONDC aims to bring decentralization, increase utilization of various discrete services, provide interoperability & bring transparency.

All this means that we will see many players joining formal economy. This will further help in overall financial inclusion.

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• Source: https://www.finextra.com/blogposting/25351/how-unbundling-of-value-will-reshape-digital-commerce?utm_medium=rssfinextra&utm_source=finextrablogs