Amazon participates in India's pioneering open-source online marketplace initiative
Amazon Joins Forces with ONDC to Democratize Digital Commerce in India
In a significant move, Amazon has announced its integration of its logistics network and AWS-powered small-business services with the Open Network for Digital Commerce (ONDC) in India. This partnership aims to digitally enable small businesses and provide convenience to customers across the country.
The integration is significant because it leverages Amazon’s advanced infrastructure to support and scale the government-backed ONDC, which aims to democratize e-commerce and empower small and medium businesses across India.
Democratizing Digital Commerce
ONDC is designed to reduce the dominance of major e-commerce platforms by creating an open, interoperable network where small sellers can compete on a level playing field. Amazon’s integration provides these sellers access to robust logistics and cloud computing resources that enhance their operational efficiency and service quality.
Supporting MSMEs and Formalization
By using Amazon’s AWS-powered services, small businesses can build digital transaction histories critical for credit, insurance, and financial inclusion, aligning with ONDC’s goal to formalize and digitize the MSME ecosystem across India.
Scaling Reach and Efficiency
Amazon’s logistics infrastructure helps ONDC onboard sellers in tier-2 and tier-3 cities more effectively, facilitating faster deliveries and wider geographical coverage in line with ONDC’s rapid expansion to over 800 cities and 600,000 merchants.
Enabling Technological Advancements
AWS enables advanced solutions such as AI-driven personalized recommendations, stock planning, and dynamic pricing, supporting ONDC sellers to compete effectively in India’s evolving digital retail landscape.
Strategic Synergy with National Digital Goals
Amazon’s participation adds credibility and technological muscle to ONDC, reinforcing government efforts to build an inclusive digital commerce ecosystem akin to how UPI revolutionized digital payments in India, potentially disrupting the current duopoly in e-commerce.
Amazon is investing in countries like India, Brazil, Middle East, Africa, Turkey, Mexico, Australia, and others, with the U.S. remaining its largest market, generating about 69% of its revenue. The rest of the world, including India, is its second largest, with approximately 14%.
ONDC's CEO, T. Koshy, hailed Amazon as taking its first step in coming in as the logistics partner in the ONDC network. Amazon's country manager for India consumer business, Manish Tiwary, reaffirmed Amazon’s commitment to being a catalyst for India's digitization efforts throughout the economy.
Tiwary expressed excitement about mobilizing Amazon's industry-leading infrastructure and technology, including logistics and small business digitization tools, to help ONDC accelerate its objectives. Koshy stated that this is a globally pioneering idea established with a view to democratize digital commerce in India.
Emerging e-commerce markets like India's may be especially enticing to Amazon. Last year, Amazon’s year-over-year revenue growth in the secondary market declined to 10%, down from 38% in 2021. However, less established markets, while requiring investment, are on a trajectory that resembles the company’s previous growth in North America, according to CEO Andy Jassy.
Koshy expressed hope that buyer and seller platforms are onboarded as early as possible. The partnership between Amazon and ONDC is expected to contribute to a more fragmented and democratic Indian e-commerce market, fostering competition, expanding digital inclusivity, and supporting the growth of small businesses.
- The strategic alliance between Amazon and ONDC could potentially disrupt the current duopoly in India's e-commerce market, favoring a more fragmented and democratic landscape.
- Amazon's integration with ONDC provides small businesses access to advanced technology solutions such as AI-driven personalized recommendations, stock planning, and dynamic pricing.
- The partnership aims to formalize and digitize the MSME ecosystem across India, enabling small businesses to build digital transaction histories critical for credit, insurance, and financial inclusion.
- By leveraging Amazon's logistics network, ONDC can onboard sellers in tier-2 and tier-3 cities more effectively, scaling its reach and ensuring faster deliveries and wider geographical coverage.
- The vision is to democratize e-commerce in India, reducing the dominance of major platforms and providing small sellers with a level playing field to compete effectively in the digital retail landscape.
- The integration supports the government's efforts to build an inclusive digital commerce ecosystem, similar to how UPI revolutionized digital payments in India.
