Democratizing Global E-Commerce?
Many small and mid-size enterprises (SMEs) report friction due to inflation and COVID. One way to rise above those headwinds is to expand both consumer and business-to-business e-commerce sales.
But many SMEs don’t have the spend or techno skills to form a winning strategy to compete with the e-commerce big players who dominate the market given their early start, size, and resources—financial and technological.
Enter entrepreneur Nandan Nilekani, the co-founder of Infosys, a global IT solutions provider on track to log $16+ billion in sales this year. He knows a bit about how SMEs can develop winning strategies to face challenges. “I’m increasingly beginning to realize that the way I think about strategy is not whether it will be A or B, but whether you have built the flexibility to do A or B,” he says.
Nilekani’s flexibility approach came into play when he considered the plight of SMEs in his home country of India (initially) and helped him form a successful e-commerce strategy that competes with the two monster players there: Amazon and Walmart’s Flipkart. Nilekani developed Open Network for Digital Commerce (ONDC), an e-commerce mall with many shops instead of just the two giants. The goal in India is in the millions.
How does it work? While shopping search engines such as Google Shopping offer users the ability to compare prices among online stores, results are usually limited to larger e-commerce companies with the budgets and technical know-how to list products and supply data feeds from inventory systems.
Because ONDC functions as a set of standards, it will allow consumers to pick one of many platforms for shopping. Each platform will receive the same product, pricing, and availability information, based on the same set of standards. “ONDC aims mainly to tap millions of small businesses that often lack technological expertise,” says All India Traders, a business group representing almost 80 million small businesses.
Amazon and Flipkart own 60% of India’s $55 billion e-commerce market. Adding millions of shops will triple that. Amazon India has no delivery arm, but by buying a stake in Ecom Express, an Indian end-to-end logistics provider, it will ride the coming growth curve.
The challenges are formidable. One obvious one is financial standardization. Another huge impediment is fulfillment and delivery reliability. Even without immediate success, the impact of the ONDC strategy will not be lost on today’s e-commerce titans. Look for their coming flexibility to find some way to open their networks and infrastructure to more SME vendors, ushering in another explosion in global e-commerce activity.