Revolutionizing Hyperlocal Logistics: How ONDC is Disrupting the E-

Commerce Industry
The logistics industry has come a long way in the past few years. With the rise of e-
commerce and online shopping, logistics has become an integral part of our daily lives. The
industry has been growing at a steady pace, and the pandemic has only accelerated this
growth. However, the logistics industry is not without its challenges, especially in the
hyperlocal space. Hyperlocal logistics refers to the delivery of goods within a small
geographical area, typically within a few miles. This type of logistics requires a high level of
coordination and efficiency, which can be challenging to achieve. However, with the
introduction of the ONDC (Open Network for Digital Commerce), this is about to change.
ONDC is an initiative to build an inclusive digital commerce ecosystem in India that expands
digital commerce as a channel for all transactions between consumers and providers,
includes all providers of products and services, builds multiple rails to connect supply and
demand, and unlocks innovations across the ecosystem. ONDC could be the world's first
such digital commerce ecosystem, putting participants on an equal footing and powering a
faster-growing digital economy. Early ONDC pilots have focused on hyperlocal grocery and
online food delivery, but the network has the potential to offer diverse innovations.
Let’s look at how such an ONDC enabled platform works from a consumer point of view.
When a consumer searches for a product on their preferred buyer app, the app relays the
search query to a gateway that searches the ONDC registry for relevant sellers. The apps
fetch product availability from their respective sellers and relay the information to the buyer
app, which displays the most relevant results. The seller may fulfil the order on its own or
use a logistics service discovered via the network. Network services maintain the list of
participants and uphold sustainable practices. ONDC has built its presence in key categories
such as grocery, online food delivery, home décor, and mobility, with pilots in five major
cities in 18 months.

Now, let’s discuss how ONDC can transform the logistics industry in India

Lowering Logistics Costs

One of the significant benefits of ONDC is that it can bring down logistics costs by enabling
growth in e-commerce and creating opportunities for new players in untapped markets. This
can ultimately reduce costs and unlock India's informal economy. By bringing more players
into the logistics industry, the ONDC can create a more competitive market, leading to better
pricing and more efficient logistics services.

Improving Price Visibility and Transparency

ONDC can improve price visibility and transparency across the value chain by improving
price discovery for shippers and fleet operators. It can also improve the visibility of location,
asset use, and loading status for trucks and establish a robust rating mechanism. This will
create a more transparent and efficient market, which will benefit all players in the logistics
industry.
Improving Demand Aggregation

ONDC can improve demand aggregation by enabling delivery personnel to work across
sectors,
increasing
their earning
potential
and batching
delivery
orders
across
multiple
sellers,
leading to
cost
reductions.
This can lead
to better
utilization of
resources
and Figure 1 Source: democratising-digital-commerce-in-india-april-2023-KPMG

ultimately lead to cost savings.

Creating Avenues for Value-Added-Services

ONDC creates avenues for value-added-service (VAS) players to expand their services and
differentiate themselves in the market by integrating backward to become a seller app. This
will create a more diversified and robust logistics ecosystem, which will benefit all players in
the logistics industry.

Digitalisation of Transaction History

Digitalisation of transaction history can benefit players in the road transport value chain by
enabling faster and more efficient payment processes and facilitating working-capital
financing for various logistics players. This will lead to a more efficient and streamlined
logistics industry.
Access to Credit for SMEs

SMEs could gain easy

access to credit for
logistics, and insurers could
factor additional data such
as truck ratings into their
models for accurate and
efficient pricing. This will
create a more favorable
environment for SMEs in
the logistics industry.

Facilitating Seamless,
Multimodal Deliveries

Figure 2 Source: democratising-digital-commerce-in-india-april-2023- KPMG

ONDC could facilitate
seamless, multimodal deliveries through several logistics providers, offering buyers a wider
range of delivery options and maximum efficiency. This will lead to a more efficient and
streamlined logistics industry.

Creating New Opportunities

The ONDC will create new opportunities for logistics and delivery service providers by
addressing challenges such as low profit margins and inefficient processes. This will create a
more competitive market, leading to better pricing and more efficient logistics services.

Providing Real-Time Data

The platform will provide the government with real-time data on the e-commerce industry,
enabling informed policy decisions and a more favorable environment for its growth and
development. This will create a more favorable environment for the logistics industry in
India.
In conclusion, the ONDC is a promising solution for the logistics industry in India. It has the
potential to bring about significant changes in the logistics industry by creating a more
competitive market, leading to better pricing and more efficient logistics services. It can also
create a more diversified and robust logistics ecosystem, which will benefit all players in the
logistics industry. The ONDC can transform the logistics industry in India, and its benefits will
be felt by all players in the logistics industry.