Google is interested in being a part of India’s public e-commerce infrastructure called Open Network for Digital Commerce (ONDC), according to a Reuters report. The Alphabet (GOOGL) unit has seen success from participating in India’s public digital payments system, Unified Payments Interface (UPI).
Amazon (AMZN) and Walmart (WMT) dominate the e-commerce market in India but have been a source of complaints for local retailers. India’s government is attempting to level the e-commerce playing field to enable local small businesses to better compete with foreign giants. It is leaning on the ONDC platform to achieve that goal.
The platform was launched in April and has drawn many participants, including banks. Google is among the many companies seeking to be part of the project, according to the report. Google’s interest in ONDC follows its success in the UPI system, where it ranks as the second-largest payments app by market share.
Can Google Replicate Its UPI Success in the ONDC?
Through ONDC, the government is hoping to reduce the cost of doing online business for small retailers. Those participating providers in the ONDC agree to show shopping listings from other providers in their platform’s search results. The network has been rolled out in a handful of metro areas and is expected to cover at least 100 cities and towns and reach about 40 million sellers by August.
India’s e-commerce industry is forecast to grow from $55 billion in 2021 to $350 billion by 2030.
Wall Street’s Take
Consensus among analysts is a Strong Buy based on 30 Buys. The average Alphabet price forecast of $3,253.80 implies upside potential of 45%. Shares have declined about 23% year-to-date amid the broad market selloff.
Smart Score
Alphabet scores a nine out of 10 from TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform market expectations.
Key Takeaway for Google
With shopping increasingly shifting online, e-commerce is a promising segment for Google. India’s ONDC project could help supercharge Google’s e-commerce efforts in one of the most important digital markets in the world.
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