The UPI Moment In India's Ecomm Market

With the Open Network for Digital Commerce (ONDC), the Indian government aims to make ecommerce more inclusive, bringing small businesses within its ambit. To get there though, its offerings need to be on a par with those of the existing market players.

- Arjun Yadav

If we revisit the issues that have made headlines in the e-commerce space in recent years, three broad concerns come to light that consequently aided companies like Amazon and Flipkart to monopolise ecommerce in India. The first area of concern is the abuse of aggregator superpowers through the inventory model. The second is deep discounting practices, which kicked brick-and-mortar stores out of the race. The third area of concern pertains to anti-competition practices such as imitating products and using algorithms to manipulate search results to influence consumers to buy these products.

According to a Reuters estimate, Amazon and Walmart's Flipkart currently control more than 60 per cent of the market. Monopolies or duopolies are hindrances to establishing a free market, a concept that the government encourages. Post demonetisation, when wallet-based digital payments saw a boom, the government's aggressive push for the Unified Payments Interface (UPI) platform changed the game. A year after that, UPI beat e-wallets in terms of the value of transactions. In May this year, the platform crossed the milestone of Rs 10 trillion worth of transactions, processing nearly six billion payments during the month.

On 29 April, when the government launched the Open Network for Digital Commerce (ONDC), the intention certainly was a replay of the UPI success story in the eCommerce space. Ironically, a day before the launch, the Competition Commission of India (CCI), raided Amazon and Flipkart over unethical practices that were creating a divide between corporate sellers and small businesses on their platforms.