While still in what could be termed its infancy, the Open Network for Digital Commerce (ONDC) is already growing by leaps and bounds since it was officially rolled out on 31st December 2022. As it gains momentum, marketers say the GoI initiative is expected to significantly change D2C marketing strategies in India.

According to the Press Information Bureau of India, as of 24th May 2023, ONDC has expanded over 236 cities of India and has approximately 36,000 sellers and over 45 network participants. According to the Ministry of Commerce, ONDC is flourishing with weekly 13K+ retail orders (avg.) and 36k+ mobility rides per day.

Potent Potential

According to a Mordor Intelligence report, the Indian D2C market size was estimated at $55 billion in 2022. With an expected CAGR of 34.5 per cent during the 2022-2027 period, the total addressable D2C market in India is forecast to hit $100 billion by 2025.

Ritika Taneja, Head of E-Commerce, GroupM India, says that overall, ONDC has the potential to revolutionize D2C marketing in India by empowering brands and providing them with more opportunities for growth and success.

“ONDC empowers D2C brands by providing them with more control in e-commerce, reducing their dependency on a few e-commerce platforms. With ONDC, D2C brands can reach previously untapped markets and increase their visibility and consumer awareness across the country. This allows D2C brands to develop more targeted marketing strategies based on consumer preferences and behaviour, resulting in increased sales and customer retention,” she says.

Menaka Menon, National Strategy Head, DDB Mudra Group points out that, as a platform ONDC is designed to level the playing field, more so for small businesses who typically take some time to ramp up their services.

“In the case of D2C brands, while this will definitely enable access to a larger customer base, whether the platform is geared to help them with the initial awareness and trial objectives with the specific target group they're catering to, remains to be seen,” she says, adding, “These brands have typically accessed their early adopters through digital & social media marketing, and getting initial trials and feedback is an important first step before enabling end user access at scale!”

Indeed, Vishal Jacob, Chief Transformation & Digital Officer, Wavemaker India, believes that as ONDC scales both on reach and consumer adoption brands both big and small will benefit in multiple ways.

“Brands will be able to access consumers from anywhere – brands will be able to tap into markets earlier unserviceable due to distribution challenges. This in turn will also have an impact on the way a brand views its D2C marketing stack,” says Jacob, adding, “D2C brands that have an offline leg and who want to go omnichannel will also be in a position to power offline distribution partners with incremental business.”

Capital Gains

Taneja observes that ONDC has already attracted an impressive lineup of brands, including legacy brands, owing to the numerous advantages such as expanded reach, cost-effectiveness, data-driven insights, direct customer engagement, and adaptability.

The platform has onboarded players in the e-commerce, payments, and utilities sectors with partners as diverse as Amazon, PayTM, IRCTC (for rail passengers to purchase items) to hyperlocal brands. Just this past weekend, quick delivery app Dunzo entered the ONDC ecosystem with the aim of bringing on 20,000 sellers in food, grocery, pharma, and other essential categories over the next 45 days.

Jacobs asserts that another potential benefit of the ONDC is bringing down the CAC (Customer Acquisition Cost) significantly as it’s helping you reach customers at scale.

“By leveraging buyer apps user base and targeting capabilities, the brands could have a significant advantage of precision targeting. The buyer side apps are also evolving on the marketing capabilities and have started working with brands on how they can help make their stores/catalogues more discoverable,” he says.

Categories such as electronics, fashion items, and smartphones, which are significant drivers of online sales across marketplaces, are yet to gain substantial traction on ONDC. Meanwhile, hyperlocal deliveries of food and grocery are experiencing the most traction, showcasing the platform's potential to cater to specific market needs and offer convenience to consumers.

“As ONDC continues to grow with more categories, brands, and sellers joining the platform, I foresee a diverse and thriving ecosystem catering to various consumer preferences and requirements,” says Taneja.

Takeaway

Highlighting the fact that there are several components that will go into establishing a cohesive open network for D2C in the country, with brands like Khadi having recently come on to ONDC, Unny Radhakrishnan, CEO, Digitas India, says “This intermediary layer (between buyer side and seller side) is now completely disaggregated; there could be a lot of innovation happening, as different companies come up with different solutions to different aspects of the business. So, while it is early days,  I think it's still a significant thing for a country like India, and will have an impact on the business.”