Friday, June 14, 2024

The ONDC Revolution: Transforming India’s Kirana Stores in the Digital Era

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Ankit Narayan Singh
Ankit Narayan Singh
Ankit Narayan Singh is Co-founder and CTO, ParallelDots, a leading global retail artificial intelligence research group headquartered in the US with a major development center in India. The company collaborates with leading CPG manufacturers and retailers worldwide, specializing in Image Recognition.

ONDC has emerged as a transformative force that set to revolutionize the core of India’s retail – kirana stores – by fusing tradition and technology. This groundbreaking initiative introduced by the government, aimed at establishing a digital platform that fosters transparency and inclusivity for all stakeholders in the retail ecosystem.

In the dynamic landscape of India’s retail sector, a revolutionary force is sweeping through, set to redefine the traditional kirana stores that hold a special place in the hearts of communities across the nation.

This transformation is spurred by the Open Network for Digital Commerce (ONDC), a government initiative with the potential to reshape the future of these beloved neighborhood stores.

Unveiling the ONDC

The Open Network for Digital Commerce is a groundbreaking initiative by the government, aimed at establishing a digital platform that fosters transparency and inclusivity for all stakeholders in the retail ecosystem. Its primary goal is to empower small retailers, particularly the kirana stores, to not just survive but thrive in the digital marketplace.

According to McKinsey, the ONDC could be a game-changer, propelling digital consumption to five times its current level, reaching a staggering $340 billion by 2030. The number of digital transacting consumers is anticipated to surge, from 165-190 million to 450-500 million users

during the same period.

Open Network for Digital Commerce (ONDC) is expanding its services to include skill-based offerings such as appliance repair and teaching assistance, broadening its existing range that covers food, grocery delivery, and mobility services. This expansion follows ONDC’s recent announcement of venturing into financial services, encompassing personal and SMB loans, insurance, and mutual funds within its network.

Shireesh Joshi, Chief Business Officer, ONDC, revealed that the decision to enter skill-based services was prompted by numerous requests from organizations and state governments seeking additional categories on the network. Developing the necessary protocol and encouraging network participants to join will be essential for this expansion.

In September 2023, ONDC introduced the ‘ONDC Network Gift Card’ for corporate gifting and employee engagement. To boost engagement further, ONDC launched an incentive program, offering buyer-side platforms bonuses of up to INR 35 lakh per week upon achieving specified order volume targets.

Additionally, ONDC has signed a Memorandum of Understanding (MoU) with the Small Industries Development Bank of India (SIDBI) to onboard small and medium-sized businesses onto its network, which currently boasts 1.79 Lakh sellers or service providers, as per its website.

The Kirana Store: A Cultural Pillar of India

For decades, the kirana store has been more than just a retail outlet; it’s a cornerstone of Indian neighborhoods, fostering personal connections and trust. Despite its cultural significance, these stores have faced challenges in adapting to the digital era, grappling with technological limitations and competing against giant e-commerce platforms.

The ONDC introduces a mix of promises and challenges to kirana stores. On the positive side, it presents an opportunity for these stores to establish a robust digital presence and broaden their consumer reach. Kirana stores, through the ONDC platform, can potentially tap into a larger market and offer competitive pricing, thereby leveling the playing field.

Strategies for Kirana Stores in the Digital Age

To harness the potential benefits of ONDC, kirana stores must strategically adapt. Collaborative models, forming alliances, and providing training for technological integration emerge as viable pathways for these stores to strengthen their market presence and navigate the digital shift.

The impact of ONDC on kirana stores extends beyond the economic realm. It influences local communities and employment dynamics while reshaping consumer behaviors and shopping patterns. Additionally, it holds significant economic implications for small-scale businesses, potentially altering the landscape of entrepreneurship in the country.

ParallelDots has introduced an exceptional product, Shelfwatch, designed to enhance retail execution. This innovative tool adeptly analyzes the merchandising environment for SKU’s, offering actionable insights and establishing a constructive feedback loop. CPG companies benefit significantly, optimizing their perfect store execution.

The Government’s Role in Balancing the Scales

Ensuring a balanced playing field requires a pivotal role from the government. Supportive policies, regulations to maintain fair competition, and initiatives facilitating the digital transformation of small businesses are essential to safeguard the interests of kirana stores.

In the grand scheme of this transformation, a balanced approach is paramount. Preserving the essence of these stores while integrating technology will be key to sustaining the unique charm and functionality of kirana stores. It’s about finding a harmony between tradition and technology, allowing these stores to evolve without losing their cultural significance.

Conclusion: Navigating the ONDC Wave

The impact of ONDC on Indian kirana stores is profound and multifaceted. While it opens doors to growth and enhanced competitiveness, it necessitates strategic adaptation and support for these stores to thrive in the digital era. The convergence of tradition and technology stands as the defining challenge, yet also the defining opportunity, for the future of India’s beloved kirana stores. As the ONDC revolution unfolds, it’s not just about reshaping retail; it’s about redefining the very essence of community commerce in India.

The  writer is the Co- founder and CTO, ParallelDots

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