Whitespaces in ONDC
Learnings from the newly released report by Kalaari Capital
Hello, 👋
In this post, we will talk about three whitespaces in the present-day ONDC ecosystem which are highlighted by Kalaari capital report (ONDC: Commerce Without Boundaries - A Report By Kalaari Capital). These are multilingual and multi-modal consumer interfaces, integrated value chains, and AI-driven cataloging and inventory management. These were there in the earlier reports too but Kalaari weighing upon these increases their importance.
If you are new to the idea of ONDC, I suggest reading our older posts first. Check them out at the ONDC series.
Garvit Sahdev enjoys understanding ideas that shape our world. The Thoughtful Tangle is an initiative to share this journey and experience with his friends who love to do the same. He selects one idea and dives deep into it to understand its basics, relevance, impact, and opportunities around it.
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Kalaari talked about three whitespaces: multilingual and multimodal consumer interfaces, integrated value chains, and AI-driven cataloging and inventory management. AI-driven cataloging and inventory management are located on the supplier side, multilingual and multimodal consumer interfaces are located on the consumer side, and integrated value chains hover over all nodes of ONDC.
Now, let us first talk about the integrated value chain.
Integrated Value Chain
I was smiling when I read this part of the report because, in my first startup, we had the same vision for Digital Product Passports (DPPs). We will talk about that someday.
Let us first understand the words. A value chain is like a step-by-step process to make a product or service and deliver it to customers. Each step adds some "value" to the product or service, which is why it’s called a value chain. These steps can be executed by single or multiple business entities.
Now, when we say integrated it means these steps are connected. Connection here means that these steps can talk to each other, share information, record transactions, etc. Now, this connection drives wider data gathering and processing which drives better decision-making at each step leading to overall value chain efficiency.
Building an ONDC-based integrated value chain is a two-step process. First, we digitalize every step. Second, we connect them using the open protocol architecture of ONDC.
“The concept of Integrated Value Chains holds transformative potential within the ONDC framework. By digitizing each step in a product’s lifecycle—ranging from sourcing and manufacturing to logistics, retail, and post-sale services—ONDC enables small and large businesses alike to participate in a seamlessly connected digital commerce ecosystem. This whitespace offers massive opportunities for startups and founders to build solutions that tackle inefficiencies by collaboration, and leverage the rich data generated by these chains to create entirely new markets and businesses.”
- Kalaari Report
The report discusses a few use cases based on integrated value chains. First, real-time pricing, quality certifications, and availability status for raw material sourcing; second, optimizing production schedules based on real-time demand signals from across the ONDC; third, fluid, real-time view of stock levels across the entire value chain; and fourth, transparent tracking of certifications and compliance.
Now, with integration and digitalization, there will be a lot of value chain-wide data that can be utilized for making better business decisions. The report discusses a few uses of this data: first, predicting market trends based on transaction patterns; second, sophisticated arbitrage detection and price optimization tools; third, real-time insights into inventory levels, supply bottlenecks, and demand forecasts; fourth, understanding micro-market dynamics; and fifth, better lending models based on actual business performance rather than traditional metrics.
So, basically by bringing all the data of different steps of the value chain to a single place, we can make more precise decision making. And this precision makes the whole chain more efficient bringing better products to customers, at cheaper prices.
Multi-lingual and Multi-Modal Consumer Interfaces
Let’s quickly understand words. Multi-lingual means supporting operations in multiple languages, for example, you can upload your product portfolio in Kannada. Rural buyers from Assam can see the same product description in Assamese.
Multimodal means using different input mediums to engage with the digital platform, for example, you can search using voice/text/image, etc.
Now, the e-commerce revolution in India is limited by the diverse nature of our country. Businesses from rural areas find it difficult to sell their products online in English. The same is the case with buyers. India has 22 official languages and only 10% of people can speak English.
ONDC’s main goal has always been to democratize e-commerce in India. With this goal, multilingualism and multi-modality on both seller and buyer sides become a necessity. There are business opportunities in this too.
Kalaari has identified four opportunities which are — voice-first commerce platforms, vernacular search engines, multi-modal input systems, and language translation infrastructure. These are opportunities because once you implement them more sellers will start selling and more customers will start buying. Business will grow and people will pay you for making them grow.
AI-driven cataloging and inventory management
Cataloging is when you create a digital copy of a physical product using its pictures, prices, description, etc. Right now, every e-commerce platform has its format and guidelines for catalogs. Most businesses do it manually. There is no active translation between different languages, and there are high chances of mistakes. These challenges make the whole catalog management process slow and costly.
For ONDC, we can create only one standardized catalog which can be easily accepted by all participating consumer apps. With AI, it will be easier to transform different formats of the catalog into a standardized one. AI will make this process quicker and less error-prone. With ONDC and AI, we will be seeing super easy digitalization of physical products. Either the existing companies will start offering this feature or new startups focused on this layer will emerge.
Inventory management is when we try to maintain stocks of different kinds of products for aims like minimum capital allocation, maximum order fulfillment rate, etc. This is quite digitalized in all modern companies but with value chain integration there are opportunities for more precise and real-time management. Again this could be an additional feature for existing firms in the space or a new opportunity for startups.
I strongly believe that after UPI, India’s ONDC will show a new way to the world for doing digital commerce. This will provide ONDC-based startups with a global opportunity to shine.
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