Great products create their own market

At its core, technological innovation follows a pattern: identify a scarcity, create abundance in that dimension, and in doing so, reveal new scarcities previously hidden or irrelevant. This cycle propels markets forward in ways that traditional demand-response models cannot explain.

For instance, when YouTube dominated long-form video content, TikTok identified a scarcity: short-form content was underserved, and creating videos was still a complex task for many users. By simplifying content creation, they capitalized on an unmet need, onboarded millions of users spending hours on the app daily, and made a huge business.

In our context, while the rest of the world continues to see consolidation among major e-commerce players, India is experimenting with an ONDC model that distributes power across a network of participants. This approach would create innovation that closed ecosystems cannot match, challenge the conventional wisdom around platform economics, and have the potential to alter consumer behavior like UPI did fundamentally.

We often assume that successful technology companies build products that satisfy market demand. But as we’ve witnessed in the aforementioned examples, the most transformative companies don't just solve current problems; they actively create new consumer behaviors that didn't previously exist. This adaptation to a ‘new normal’ would have been difficult to predict before the technology existed.

The key insight here is that behavior follows possibility, not the other way around.

Abundance can’t exist without unlocking new scarcities

There’s a fascinating paradox at the heart of technological progress: each solution that creates abundance in one dimension inevitably reveals or generates scarcity in another. These newly exposed limitations then become the targets for the next wave of innovation.

Let’s look at how with the help of Airbnb.

When Airbnb was getting started, their biggest obstacle was a lack of trust. The idea of staying in a stranger’s home was seemingly absurd. Airbnb tackled this by normalising host reviews, secure payments, and an experience-driven narrative of travelling.

But as trust grew, a new scarcity emerged: the number of available properties. Airbnb then scaled aggressively and allowed anyone to list their home and host guests via Airbnb. This ensured an abundant supply to meet the demand. Today, staying in a stranger’s house is as normal as booking a hotel.

On the other hand, while TikTok fueled the explosion of short-form content, it also intensified parasocial relationships with creators, ultimately leading to a scarcity of genuine connections (which we explore further here).

The technology-behaviour cycle

In hindsight, what emerges is a fascinating meta pattern in how technology shapes, or rather, precedes consumer behavior. This is how we picture it:

UPI is perhaps the most striking example of technology preceding behavior in India. When it was introduced, digital payments were still a novelty for most Indians. Fast forward to today, and India processes over 9.3 billion UPI transactions monthly.

This wasn't a natural evolution of consumer behavior. Technology pushed the boundaries of what consumers thought was possible, and this led to consumers adapting to this new normal.

India’s next behavior shaping innovation

ONDC represents the next frontier in this evolution. ONDC is India’s ambitious attempt to democratize digital commerce. Here are some existing scarcities that ONDC solves:

• The current e-commerce landscape is dominated by a few large platforms that control both buyer and seller access. Small retailers face prohibitive costs and unfavorable algorithms. ONDC democratises this by creating an open protocol where any seller can be discovered and transacted with through any buyer application.
• Today's consumers lack visibility into comparative pricing across platforms. ONDC's interoperable network enables price discovery across the entire ecosystem, which reduces information asymmetry that currently benefits larger players.
• Despite India's rich tradition of local commerce, many small businesses lack digital infrastructure. ONDC provides standardised APIs and protocols that allow even the smallest neighborhood store to become digitally discoverable without significant investment.

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But what scarcities will it address, and more importantly, what new ones will it create?

1. Discovery in an ocean of options: Finding relevant products among countless options will become increasingly difficult due to the paradox of choice. The algorithmic discovery mechanisms that currently exist within closed platforms like Amazon will be fragmented across the open network, which might create a scarcity of efficient discovery features.
2. User experience consistency: When commerce is fragmented across applications, maintaining an intuitive UX becomes challenging. There will be a scarcity of approaches that can provide familiarity and ease of use across the distributed network.
3. Differentiation struggles: In a standardised network where price comparison is frictionless, traditional competitive advantages may erode. Businesses will face a scarcity of effective differentiation strategies beyond price, which will require new approaches to building consumer loyalty.

These emerging scarcities represent not just challenges but significant opportunities for entrepreneurs who can develop solutions to address them. Just as the limitations of UPI spawned innovations in fraud detection, user experience design, and financial services integration, ONDC's new scarcities have the potential to trigger the next wave of commerce innovation in India.

Conclusion

India has shown that it can leapfrog traditional evolutions - just as it skipped landline banking in favor of mobile-first finance.

The UPI revolution demonstrated India's capacity to build a world-class digital public infrastructure that accelerates economic inclusion. ONDC aims to extend this by democratising commerce itself, potentially creating one of the world's largest open digital marketplaces.

The cycle of abundance and scarcity continues its perpetual motion. As each technological wave solves existing limitations, it inevitably creates new ones. The companies that lead the next wave of disruption will be those that look beyond today's obvious problems to the emerging needs that others haven't yet recognised.

In this landscape, foresight becomes the ultimate competitive advantage. The future belongs not to those who solve today's scarcities but to those who can already envision tomorrow's.