Drivers of Customer Service in ONDC- Points to Ponder

Introduction

In the prevailing model of eCommerce, the same entity provides end-to-end solution as a market place which manages both customer experience and seller interface.  Such an end-to-end solution offer significant influence and control to the platform providers compared to the end points like the seller / buyer. This enables the platform providers to give priority to customer demands which is their natural strategic choice to build and retain an exclusive customer base as their lever for market control. With this prioritisation logic, they may follow a no-questions asked return and refund policy. Sometimes they take this to the logical extreme even if the return request is not on account of the fault of the seller which is possible with the control of the funds and contractual hold they have on the sellers which the economists explain as ‘near monopsony’ power of these platforms. Any loss on account of this is usually borne by the seller. Such selective service also enable significantly big margin for the platforms.

In the end, if there is any dispute with the seller, the existing legal framework forms the basis for the dispute resolution between the buyer and merchant as the merchant is the seller on record and not the platform providing the market place.

ONDC Network

In case of ONDC, with unbundling of the building blocks of the transaction (like seller interface, buyer service, logistics etc) there is possibility for different models to evolve which will suit different segments of buyers and sellers.

A.    Different Business Models with divergent service level offers

 1.     Some Buyer application would like to offer a select service and may offer no-question asked return / refund with then insisting on payment to be routed through them so that the full payment to seller is made only after the necessary lock-in period for customer return.

In this case, the search request and order placement will include these conditions and only offers meeting these conditions will be accepted by the Buyer App and shared with the customer which means the seller has the option to respond to such conditions without being dictated by the intermediary.

2.     In some cases the Seller App (may be a discount store) may offer products with a no or limited return which will be part of if its offer when it returns response to a search by a buyer app and only customers accepting these conditions explicitly will be serviced .

The important point to note is that the ONDC network offers opportunity for sellers offering different price/ service combination and buyers with different price/service preference to come together and transact in a transparent fashion thus creating a healthy and diverse market place which is what we are familiar in any physical market.

B.     ONDC checks and balances encouraging and incentivising fair and responsible business practices

As in the case of the prevailing eCommerce market place, the legal framework still remains the same and there is no different legal framework for ONDC. However, as a community manager ONDC will develop an enhanced set of checks and balances to offer better experience both to the buyer and seller thus reducing the need of legal recourse.

1.     ONDC will onboard buyer and seller apps only after establishing their identity

2.     ONDC has stringent polices on expected behaviour of each NP.

3.     Most of these policies are programmatically enforced

4.     All NPs are onboarded only after their apps / software is tested for their compliance to ONDC protocol

5.     All NPs sign an agreement confirming their commitment to the policies

6.     All seller market places are expected to undertake due diligence on the sellers onboarded by them and expected to watch for their responsible behaviour

7.     ONDC will compute and publish network level reputation and credibility score of platforms and sellers which will act as a strong check on them.

8.     ONDC will monitor and publish record of grievance redressal and dispute resolution performance of each app and seller

9.     ONDC is establishing a framework and platform for Online Dispute Resolution (ODR) following the guidance issued by NITI Ayog for exception handling.,

10. ONDC will suspend/ expel from the network entities with continuous aberrant behaviour

11. The onboarded platforms are required to undertake periodic system and process audits with respect to compliance with network policies and share reports with ONDC

12. ONDC may undertake periodic mystery shopping exercise to monitor performance of participants and share feedback with the entities

 C.     Inherent self correcting nature of ONDC network encouraging healthy and fair market practices.

 1.     ONDC network being unbundled, very often the Buyer app will only have buyer as clients and Seller app will have only sellers as clients (in some cases same entity may have both apps)

2.      With no platform able to have captive buyers and sellers and the buyers and sellers being available as a cohesive pool in the network discoverable and accessible to all buyers and sellers, there will be many buyer and seller apps giving multiple options to the consumers limiting the possibility of the platforms for user-unfriendly measures.

3.     The Buyer app will be forced to have loyalty to the buyers and would have to take extra effort in terms of functionalities and services to retail loyalty and continued support from the buyers. Their services thus will include active follow-up with sellers for grievance redressal and escalating aberrant behaviour by the sellers if any

4.     Seller Apps on the other hand with no captive buyers but with a responsibility to ensure good customer service to attract the buyers, will have to put in checks and balances to ensure that their sellers treat the end customers in a fair and transparent fashion failing which their network wide reputation will suffer and may be rejected by buyers

5.     With multiple platforms offering competing services, there will be possibility for continuous social audits on the practices by the platforms and ONDC will enable publishing of such social audits. This becomes all the more relevant with multiple buyer and seller apps in the market giving strong competition

6.     Even cases where the platforms are providing both buyer and seller apps, each side will attempt to focus on their consumer (buyer for buyer app and seller for seller app) as their own platform offer of sellers for buyers and buyers for sellers will only be a small part of the total available options in the network.

It is clear from the above that Open Network model model by its very nature enable democratization and of the market with broader participation and more competition as against the siloed platform centric model which leads to market concentration and gives rise to possibility of unhealthy practices. Thus we can see this as a "self correcting" market model.

All the above point out to the possibility for a total transformation of the way markets operate impacting big and small players. This transformation will not happen overnight, but over a period of three to five years. The entities readying themselves for this new reality will reap the benefit and the others will pay the price.