In India, a new platform to curb the powers of Amazon, Flipkart | Business and Economy News


He co-founded software program powerhouse Infosys Ltd., grew to become a billionaire and went on to spearhead a colossal authorities program to create biometric identification for India’s virtually 1.4 billion individuals.

Now 66, Nandan Nilekani has another formidable purpose. The high-profile mogul helps Prime Minister Narendra Modi construct an open know-how community that seeks to degree the taking part in discipline for small retailers within the nation’s fragmented however fast-growing $1 trillion retail market.

Its acknowledged goal is to create a freely accessible on-line system the place merchants and customers should purchase and promote all the things from 23-cent detergent bars to $1,800 airline tickets. However its unstated goal is to ultimately curb the powers of Amazon.com Inc. and Walmart Inc.-owned Flipkart, whose on-line domination has alarmed small retailers and the tens of millions of native mom-and-pop shops, known as kirana, that kind the nation’s retail spine.

As the 2 international giants poured a mixed $24 billion into India and captured 80% of the net retail market with aggressive reductions and promotion of most well-liked sellers, the kirana outlets are frightened of an unsure future. Regardless of on-line commerce accounting for nearly 6% of the general retail market, they’re anxious they are going to be ultimately snuffed out, assembly a destiny much like many family-owned companies within the U.S. and elsewhere.

The not-for-profit system, which fits by the unwieldy identify of Open Community for Digital Commerce, or ONDC, seeks to deal with these considerations. By no means tried anyplace else, it goals to permit small retailers and retailers to plug in and achieve the attain and economies of scale of giants. Basically, the federal government would create its personal e-commerce ecosystem for everybody, designed to loosen the stranglehold of firms like Amazon that dictate which manufacturers get entry to prime customers and on what phrases.

“It’s an concept whose time has come,” Nilekani mentioned just lately in a dialog at his personal workplace within the Billionaire’s Row space of Koramangala in Bangalore, dwelling to a few of the nation’s high tech tycoons. “We owe it to the tens of millions of small sellers to indicate a simple option to take part within the new high-growth space of digital commerce.”

A pilot of the not-for-profit, government-run community is about to be rolled out subsequent month to pick customers in 5 cities. Lenders together with ICICI Financial institution Ltd. and state-owned Punjab Nationwide Financial institution and State Financial institution of India have purchased stakes within the entity. A spokesman for Amazon mentioned they’re attempting to higher perceive the mannequin to see if the Seattle-based firm has a task to play. Flipkart didn’t reply to a request looking for remark.

India has develop into a battlefield for some international retail behemoths which are both shut out of China or are struggling to compete with native rivals there. With virtually 800 million smartphone customers, the sheer dimension and potential have turned the South Asian nation into a super testing floor for a lot of firms, together with Google, Meta Platforms Inc. and homegrown giants similar to billionaire Mukesh Ambani’s Reliance Industries Ltd.

Shoppers at a baby store in India
Some small Indian retailers don’t promote on the big e-commerce platforms and have seen gross sales drop within the pandemic [File: Bloomberg]

In his earlier avatars, Nilekani helped the federal government develop the Aadhar biometric ID system, roughly a digital equal of the U.S. social safety program. For many Indians, it’s their first proof of existence. Authorities say it helps scale back fraud and ensures welfare funds attain the fitting individuals. Nilekani additionally helped introduce a funds spine known as the United Fee Interface, or UPI. Utilized by the likes of Google and WhatsApp, it surpassed 5 billion transactions final month.

Employed as an adviser to ONDC final summer time, the salt-and-pepper haired, mustachioed tech czar desires to do for e-commerce what UPI did for digital funds.

However his largest problem can be to make sure the community achieves its objectives. Amazon and Flipkart have dominated the market as a result of their examined know-how lures retailers and patrons to their platforms. The federal government must construct one thing comparable — or higher — if it desires to outdo the dominant e-commerce platforms, mentioned Anil Kumar, chief govt officer of Redseer Administration Consulting Pvt.

“All the pieces hinges on the community bringing on the widest set of patrons, sellers, funds logistics and warehousing suppliers, and so forth,” mentioned Bangalore-based Kumar. “The problem is to standardize and smoothen the expertise similar to returns and refunds for patrons and sellers and to create an open community the place all people wins.”

Nilekani can even be below strain to keep away from the type of controversies which have dogged his earlier initiatives. Aadhar has been below a cloud over knowledge privateness, safety and identity-related considerations. India’s Supreme Court docket is at the moment analyzing a matter linked to UPI, after a lawmaker accused Amazon, Google and Meta’s WhatsApp of collaborating within the system with out a lot scrutiny and allegedly in violation of guidelines.

If profitable, the e-commerce grid may assist tens of millions of small companies go surfing and fear much less concerning the international giants. Amongst these desperate to attempt it out is Kauser Cheruvanthody, 42, one of many house owners of a five-store baby-products chain in Bangalore. He’s by no means offered on-line however a 30% decline in gross sales through the pandemic got here as a shock.

“ONDC may change the sport,” Cheruvanthody mentioned. “I’m able to combat Amazon and others, low cost for low cost.”

Regardless of the challenges, Nilekani is the fitting man for the duty, mentioned Hemant Taneja, managing accomplice at Palo Alto-based enterprise capital agency Basic Catalyst.

“Nandan is understood for his lengthy sport, for organising techniques for enduring change with very intentional pondering on which elements of the financial system needs to be digital public items and which elements capitalism-driven,” Taneja mentioned.

Entrepreneurs similar to Kumar Vembu are enthused by the prospects of an open mannequin. His startup GoFrugal supplies enterprise software program to over 30,000 small merchants and quick-service eating places. He’s now serving to tons of of them combine with the brand new community.

“Till now, small retailers have been bringing a knife to the gunfight,” mentioned Vembu. “Now, we are able to correctly equip them to compete.”

The open community is focusing on 100 cities within the coming months mentioned CEO Thampy Koshy, a former senior accomplice of Ernst & Younger.

Aadhar took 9 years to succeed in a billion individuals on the platform, whereas UPI took 5 years to cross 4 billion month-to-month transactions. Nilekani mentioned he’s optimistic that ONDC might be rolled out a lot sooner as India has been down this highway earlier than.

“We’re charting a brand new course and the purpose is to vary the principles of the e-commerce sport,” he mentioned.

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