Amazon has joined the Indian government-backed initiative for e-commerce that aims to “democratize” online retail in South Asia and challenge the dominance of American retailers like Amazon.
Amazon stated in a Friday statement that it would integrate its logistics network and SmartCommerce. platform to digitize neighborhood stores, to Open Network for Digital Commerce, a non-profit firm set up by India’s commerce ministry in 2021.
“Amazon’s vision and commitment for India is closely aligned with ONDC’s objectives of digitally enabling small businesses, and providing convenience and choice to customers across the country,” said Manish Tiwary, country manager for Amazon India, in a statement.
Amazon’s participation in the initiative, backed by the Indian government, is remarkable because part of the ONDC pitch to date has been that it seeks to disrupt the monopoly of Amazon and Walmart’s Flipkart in the Indian e-commerce market.
ONDC is an “interoperable” network, where buyers and sellers can do business regardless of the app or services they use, disrupting the consumers’ reliance on using proprietary services run by Amazon and Walmart.
New Delhi hopes to duplicate the success of UPI, an interoperable mobile payment network that dismantled the closed-door mobile wallets owned by firms like MobiKwik and Paytm, with ONDC. Paytm is an ONDC participant.
And while it’s the early days of ONDC, the model has many things left to be ironed out, industry executives say.
It’s unclear who bears the responsibility if a customer doesn’t get their order delivered, for instance. And unlike UPI, which saw New Delhi vigorously promote digital payments network, ONDC received very little public praise.
“We are happy that Amazon has a definite roadmap to being a part of the ONDC network and is taking its first step in coming in as the logistics partner in the ONDC network which is a globally pioneering idea established with a view to democratise digital commerce in India,” said T Koshy, MD and CEO of ONDC, in a statement.