Can ONDC Rescue Startups in the E-commerce Segment

India's online shopping might reach $350 billion by 2030, but small startups face tough challenges with limited budgets and fierce competition.

By Sunil Sonkar
3 Min Read
Can ONDC Rescue Startups in the E-commerce Segment

India’s online shopping scene is about to change a lot, with predictions saying it could be worth a massive $350 billion by 2030. However, amidst the promising prospects, the journey is not smooth for everyone. Starting and growing online is tough for small startups. They find it hard because they don’t have much money and big companies are tough competition. This shows that it is crucial to give everyone a fair opportunity.

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Small startups often struggle with not having enough money when trying to make their mark online. A report from the Ministry of Micro, Small and Medium Enterprises (MSMEs) shows a clear picture. It reveals that out of 100 million small businesses in India only about 5 million are signed up to sell things online. This low usage shows that small businesses find it really hard to use and keep up digital platforms because they cost a lot.

The burden is further compounded by the hefty commissions imposed by e-commerce marketplaces, ranging from 15% to 35% of the cart value. For small startups making just enough money, these extra charges become a big problem. They make it hard for the startups not only to keep going but also to grow online. Also, when you spend money on ads and try to sell things online, it makes things more complicated and harder to make money.

It gets even more complicated because small startups can’t easily get loans that are both official and cheap and that makes things really tough for them. According to a report by Omidyar Network India, approximately 40% of MSMEs in India resort to informal and costly sources of credit, restricting their capacity to invest in essential digital infrastructure, cope with cash flow fluctuations and meet working capital requirements. In rural areas, where many startups are located, the money struggles are even more noticeable. Startups there find it hard to use the internet and digital tools because people might not know much about them, the internet might not be very good and there might be less trust and awareness.

Under such circumstances, the Open Network for Digital Commerce (ONDC) can be a big help for startups in online shopping. If things goes well, it can make things fairer by supporting them with better opportunities. It could make big companies have less control. It can make things more fair for everyone to compete.

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