Will a new open-source marketplace revolutionise direct to consumer platforms?


Shopify’s sacking of 10,000 employees last week, the equivalent of 10 percent of its workforce, has left questions, if not holes, in the future of DTC platforms, where soaring costs, supply chain bottlenecks and a slowdown in consumer spending is hampering sales.

For many small fashion businesses, advertising on Instagram and Facebook is no longer enough to build a community at speed to find customers. Cost of acquisition has soared this year, and targeting audiences has become less easy after Apple’s opt-out of tracking services.

Online spending surged during the pandemic, but it has since waned as the war in Ukraine and global inflation continues to impact consumer spending. DTC subscription services like Shopify have seen a drop in market cap in 2022, with the market underperforming and companies such as Allbirds, Hims and Hers, Peloton, Revolve, StitchFix, Warby Parker, and Wayfair all posting «significant losses, margin contraction, or both, in earnings reports over the past year,» said CNBC.

A new marketplace vision

A new marketplace currently being trialled in India, may well be the next chapter and retail revolution for brands, sellers, suppliers and consumers. Called the Network for Digital Commerce (ONDC), it is an initiative aimed at promoting open networks for all aspects of exchange of goods and services over digital or electronic networks. This includes supply chain, deliveries and customers.

According to the Financial Times, the goal of ONDC, which was launched in 100 cities in India, is to bring 30 million sellers and 300 million shoppers on to its network by the end of 2024.

By using open-sourced methodology, open specifications and open network protocols independent of any specific platform, the platform wants to make the entire chain of exchanging goods and services as simple as the protocol for exchanging emails and making payments.

Providers and consumers would be able to use any compatible application of their choice for exchange of information and carrying out transactions over ONDC, making e-commerce more inclusive and accessible for consumers.

How it works

Once a retailer lists its products or services using the ONDC’s open protocol, the business can be discovered by consumers on e-commerce platforms that follow the same protocol. A consumer searching for a product can see the location of the seller and opt to buy from the neighbourhood shop that can deliver faster compared to an e-commerce company.

This new way of operating could be retail’s new era of selling and buying, and as the Financial Times underscored, empower millions of small neighbourhood merchants while taking on the platform giants like Amazon and Shopify. Most importantly, ONDC’s aim is to democratise digital commerce.

Article sources: Financial Times, Press Information Bureau India, Mint



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