India lines up banks, others for e-commerce scheme to take on Amazon, Walmart

Altex Industries

01/06/2022 15:23

By Munsif Vengattil and Nupur Anand
    NEW DELHI, June 1 (Reuters) - India's scheme to break Amazon
 AMZN.O  and Walmart's  WMT.N  dominance of its e-commerce
sector, by establishing its own open network, has begun lining
up banks and other key players needed to move it forward,
sources familiar with the matter said.
    Some of India's biggest banks are in discussions about
setting up "buyer platforms" to let their customers place orders
for goods and services over the Open Network for Digital
Commerce (ONDC), which the Indian government soft-launched in
April, the sources told Reuters.
    The success of the network, which would promise equal access
to all online sellers and buyers regardless of their size, is a
priority for Prime Minister Narendra Modi, who faces pressure
from small businesses for action against the outsized influence
of Amazon and Walmart's Flipkart in India's e-commerce.
    Policymakers in other countries as well are looking at ways
to rein in big tech companies' dominance of online purchases.
 urn:newsml:reuters.com:*:nL1N2RA0P2
    "The approach theoretically is to make all the different
building blocks, like sellers and buyers of an Amazon,
inter-operable with a Flipkart," said ONDC Chief Executive T.
Koshy in an interview.
    Koshy said he had held talks with banks, venture capitalists
and telecoms companies, but declined to name them or to comment
on how far the discussions had progressed.
    Indian e-commerce was worth more than $55 billion in gross
merchandise value in 2021 and will grow to $350 billion by the
end of this decade, according to government estimates. Amazon
and Flipkart control more than 60% of that market, which now
accounts for about 8% of consumer purchases in a country of 1.35
billion people.
    ONDC aims to cover at least 100 cities and towns by August,
with a target of signing up 900 million buyers and 1.2 million
sellers in five years.
    Bank of Baroda's  BOB.NS  chief digital officer, Akhil
Handa, said his bank was in talks about the project but it was
too early to talk about specific use cases.
    "This certainly has the potential to be the next big thing,"
he said.
    State Bank of India  SBI.NS , Axis Bank  AXBK.NS , Punjab
National Bank  PNBK.NS , ICICI  ICBK.NS , HDFC  HDBK.NS , Kotak
 KTKM.NS  and IDFC First  IDFB.NS  are among other lenders in
discussions with ONDC to set up buyer platforms, three sources
familiar with the matter told Reuters. They spoke on condition
of anonymity because they were not authorised to speak to the
media.
    The banks did not immediately respond to requests for
comment.
    The platforms would allow the banks to drive use of their
cards, loans, and other services, the sources said.
    The banks and other financial institutions had already
committed to a combined initial investment of 2.55 billion
rupees ($32.8 million) in the project.  urn:newsml:reuters.com:*:nL3N2WQ4HZ
    While the project is moving forward, however, there were
doubts whether it would diminish the presence of Amazon and
Flipkart.
    "The network is not about every small player colluding to
make a big company like Amazon irrelevant," said Pranav Pai,
managing partner at 3one4 Capital which invests in start-ups.
    "Factors like loyalty and trust for Amazon's fulfilment
services will still play a part in consumer choices online."
    Amazon and Flipkart did not respond to requests for comment.
    Venture capital firms Accel and Sequoia are also in talks
about potentially investing in start-ups that would join ONDC,
one of the sources said. Telecom firms Bharti Airtel  BRTI.NS 
and Vodafone Idea  VODA.NS  are in discussions on how they could
utilise the platform, two of the sources said.
    The firms did not immediately respond to requests for
comment.
    Reuters reported last week that Google was also in talks
with ONDC, while Paytm  PAYT.NS , India's leading fintech
company, had already joined.  urn:newsml:reuters.com:*:nL2N2XJ07V

    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
What is ONDC, India's new open e-commerce network?   
 urn:newsml:reuters.com:*:nL4N2XM2HM
    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
 (Reporting by Munsif Vengattil in New Delhi and Nupur Anand in
Mumbai; Editing by Krishna N. Das and Edmund Klamann)
 ((munsif.vengattil@thomsonreuters.com;))