The dismissal of 10,000 employees by Shopify last week, which is equivalent to 10 percent of its workforce, has left questions, if not holes, in the future of direct-to-consumer (DTC) platforms. Direct-to-consumer platforms are struggling to make sales due to rising costs, supply chain bottlenecks, and a slowdown in consumer spending. Advertising on social media platforms like Instagram and Facebook is no longer sufficient to rapidly establish a community and attract new clients for many small fashion firms. This year, the cost of acquisition has skyrocketed, and targeting audiences has become much more difficult as a result of Apple’s decision to opt-out of monitoring services.
The number of dollars spent online skyrocketed during the epidemic, but that trend has now reversed itself as the ongoing conflict in Ukraine and the rising cost of living across the world continue to weigh on consumer purchasing. According to CNBC, companies such as Allbirds, Hims and Hers, Peloton, Revolve, StitchFix, Warby Parker, and Wayfair have all posted “significant losses, margin contraction, or both, in earnings reports over the past year.” This has led to a decline in the market cap of DTC subscription services such as Shopify in 2022. The market as a whole has also underperformed during this time. A new marketplace that is now undergoing testing in India has the potential to be the next chapter and retail revolution for brands, sellers, suppliers, and customers alike. It is an effort that aims to promote open networks for all elements of exchange of products and services through digital or electronic networks. This project goes by the name Network for Digital Commerce (ONDC), and its full name is the Network for Digital Commerce. This encompasses the supply chain, as well as the delivery and the consumers.
The objective of ONDC, which has already been implemented in one hundred cities throughout India, is to get thirty million retailers and three hundred million consumers onto its network by the year 2024, as stated by the Financial Times. The platform aspires to make the whole chain of trading products and services as easy as the protocol for exchanging emails and making payments by using open-sourced methods, open specifications, and open network protocols that are independent of any single platform.
For the purpose of exchanging information and carrying out transactions via ONDC, providers and consumers would be free to utilize any compatible application of their choosing, which would make e-commerce more inclusive and accessible for consumers.
Customers on e-commerce platforms that use the same protocol will be able to find a store after they have listed their items or services using the open protocol that the ONDC provides. A customer who is looking for a product has the ability to see the location of the seller and may choose to purchase the item from a local store rather than an online retailer since the local store is more likely to be able to deliver the item more quickly.
This new manner of doing business may usher in a new age of selling and purchasing in the retail industry. Furthermore, as the Financial Times emphasized, it might provide power to millions of tiny neighborhood businesses while competing with platform giants like Amazon and Shopify. The objective of the ONDC is, first and foremost, to make digital trade more accessible to everyone.
Reference:
. “Will a New Open-Source Marketplace Revolutionize Direct to Consumer Platforms?” FashionUnited, 5 Aug. 2022, https://fashionunited.com/news/business/will-a-new-open-source-marketplace-revolutionise-direct-to-consumer-platforms/2022080549038.
