Open Network for Digital Commerce (ONDC) for eCommerce in India: What, Why, How & Beyond…

ONDC — Open Network for Digital Commerce was launched in 20 cities in April 2022 as a digital initiative to reduce the monopoly of aggregator platforms by bringing buyers and sellers closer. 

Since then, there has been a lot of activity and discussion on ONDC, with big names from banking, eCommerce, logistics, and other domains joining the platform. Backed by the government, ONDC is an open-source digital platform to facilitate eCommerce transactions in India. 

Before we dig deeper, let's examine why ONDC is becoming India's priority. 

Some Context on the eCommerce Situation

eCommerce was the Starkid that everyone wanted to befriend for the better part of the last decade. 

The poster boys for the Indian digital growth story — Flipkart, Snapdeal, Shopclues, and even Amazon, were all seen as the next-gen idea that would digitize millions of Indian bazaars across the country. 

Soon, sellers were flocking to launch on Amazon, Flipkart and similar marketplace platforms. 

Amazon now has more than a million sellers in India — an explosive growth since 2013, when it started with 100 sellers in India. 

There were case studies about how sellers earned millions on Amazon and how Y was able to build a home and fulfil their dreams, thanks to eCommerce platforms like Amazon. 

All was hunky dory till the real face of eCommerce marketplace platforms slapped every seller right in the face. 

In a congressional hearing, Amazon’s Jeff Bezos admitted to spying on top sellers and launching their line of products. And that was like the last nail in the coffin. 

Everyone started voicing concerns about the problems of selling on eCommerce platforms — discriminatory pricing models, unhealthy competition, and predatory commissions. 

The Indian government was already working on launching its draft eCommerce policy. Situations as above just hastened the entire process around it. 

But platforms kept exploiting the loopholes, leading to a growing trend of launching Shopify-based D2C brands in India. 

But finally, it seems India has found its guiding light — Open Network for Digital Commerce (ONDC).

What is ONDC? 

ONDC is the government's answer to the growing monopoly of select eCommerce and aggregator platforms in India. Like UPI for payments, ONDC plans to integrate all digital commerce activity on a single platform. 

Launched on April 29, 2022, ONDC is currently running on a pilot basis in 21+ cities with 30+ platforms already integrated on ONDC. According to Shireesh Joshi, CBO — ONDC, the ONDC network will have real customers by next month. The government plans to add 100+ cities to the ONDC network by the end of 2022. 

But what is ONDC, exactly? And how will ONDC work? Will it end the monopoly of behemoths like Amazon & Flipkart? 

Well, that's for time to tell. But for now, ONDC is envisioned as a platform that incorporates everything associated with online buying and selling — logistics, inventory, discovery, payments, dispute resolution, and more. 

Think of it like an interconnected network of eCommerce platforms, like Google. As a buyer, you can search for a product and see listings from Amazon, Flipkart, Snapdeal, or other websites on a single platform. It's just like Google Shopping snippets but better. 

It will give a level playing field to small businesses and local merchants and make it easy for buyers to discover products, compare prices, and make an informed decision. 

And the best thing — platform commission for sellers will be capped at 3% per sale, a sharp downgrade from approximately 30% commissions that platforms charge from third-party sellers. 

This means more choice, easy discovery, and affordable rates, for buyers and more control and better profits for the sellers. 

ONDC aims to become the D2C hub for small businesses and unorganized sellers in local bazaars across India — which accounts for 80% of the total retail sector in India. 

If executed well, ONDC can connect the digitally excluded business/retail segment and add transparency and better control to eCommerce operations in India. 

Backed by the government and conceptualized by Nandan Nilekani, ONDC will create a level playing field for small family businesses against big tech businesses like Amazon, Flipkart, and others which control more than 60% of the Indian eCommerce industry.

How will ONDC work in India? 

ONDC is not another platform, mobile app, or aggregator platform like millions of others already operating worldwide. 

Technically, it’s an open protocol — a set of rules, specifications, and code to facilitate connections between buyers, technology, and sellers. Just like UPI, ONDC is an open network. 

You might use an app like PayTM, Google Pay, or PhonePay, but the UPI technology is independent of the control of these apps. 

ONDC is based on the Beckn Protocol that helps create and power an open, decentralized ecosystem for various use cases. In this case — a decentralized ecosystem for almost any exchange — retail commerce, food delivery, logistics, healthcare, and more. 

Here’s how it will work: 

Buyers can see multiple listings from platforms like Amazon and Flipkart on a single screen. Amazon will bid for visibility on the Flipkart platform, Flipkart would be able to integrate into any other platform, like eBay, and buyers will be able to pick and choose the product from sellers that offers them the best deal. 

The core of ONDC lies in transparency, fluidity, and connectivity — no restrictions due to platforms for buying, selling, logistics, payments, and even more. 

According to Nandan Nilekani, ONDC will democratize digital commerce and transform the Indian eCommerce industry from a platform-centric model to an open network with cross-platform and cross-company integration and interaction. Like you use Google for searching anything and get the results. 

It's a big leap ahead of the current system, where eCommerce predominantly depends on aggregator-based platforms and startups. Buyers won't have to search, visit, or transact through multiple apps to find the best deals, prices, or products after the ONDC rollout. 

With over 10 million online shoppers in India and millions of local sellers, ONDC can be an excellent solution for facilitating the next level of digital transactions and sales revolution without having to look beyond the local geography. This will also boost the hyperlocal commerce model while reducing the problems associated with platform dependency, supply chain, and more. 

Read More: Digital Business Cards for ONDC - What is it?

Benefits of the ONDC network 

The applications and usefulness of a solution like ONDC in India are immense. For starters, ONDC may finally bring all small offline businesses, like local Kirana stores, online — Just like UPI made them accept online payments. 

Today, we rarely see a local shop without a QR code on its counter. 

ONDC will empower all such small businesses and give them an edge over prominent eComm players because of their personal connection and years of relationship building. 

We saw how startups like Blinkit and Grofers failed miserably in hyperlocal, quick delivery space. Neighbourhood shops can easily replicate their model successfully. JioMart was successful to some extent in replicating this model during the COVID-19 lockdown for grocery deliveries. ONDC can further fuel this revolution. 

Today, there are no companies in the 10-minute grocery delivery category anymore.

Blinkit sold to Zomato.

Ola killed Ola Dash.

And now, finally, Zepto has stopped promising 10-minute groceries.

— Praveen Gopal Krishnan (@peegeekay) August 6, 2022

Because we know well that small local shops can deliver anything — from medicine to milk to groceries within minutes, thanks to their proximity to residential areas. 

And that's not all; buyers too will get several benefits because of ONDC in India, including better prices, product discovery, and informed buying. 

ONDC Current Status: Who is joining ONDC? 

ONDC has almost 200 active sellers in the grocery, food & beverages, and logistics segments. In the coming months, ONDC will focus on urban mobility, banking, travel and hospitality, the Agri sector, apparel and fashion, beauty and personal care, consumer electronics ecosystems and onboard relevant startups. 

According to reports, ONDC is communicating with 200 companies for onboarding on the network in the coming months. 

Some companies already on the ONDC Network 

More Companies That Confirmed Their Presence on the ONDC Network 

• Snapdeal (Source: Inc42)  
• Microsoft (Source: The Hindu Business Line) 
• Grab (Source: Inc42) 

Reports also suggest that FMCG brands like ITC, Unilever, and Dabur are in talks with ONDC to onboard the platform. Even Shopify has shown interest. If that happens, all D2C brands using Shopify Stores in India will automatically be onboarded on the ONDC platform in India. 

Seems like a great opportunity to start a Shopify Store in India. Isn’t it? 

For more details and see a complete list of ONDC Network Participants, check the official ONDC website.

Industry News & Trends in Favor of ONDC

• CAIT Supports ONDC — Inc42  
• Sequoia, Softbank Advise Startups to Join ONDC Network — Inc42
• ONDC Likely to Add 17 More Platforms to Its Network — Inc42

FAQs about ONDC India

How will ONDC impact small businesses in India? 

ONDC provides additional visibility, low commissions on online sales, and a compelling growth opportunity for small businesses in India. Any local business can launch its operations online, accept orders, cater to buyers, and increase its sales without having to deal with the predatory pricing strategies of big online platforms. 

What is the official ONDC website for ONDC registration in India? 

The official ONDC website for ONDC registration is https://ondc.org/. You’ll get all the information, onboarding steps, and more details on the ONDC network in India. 

What is the official launch date of the ONDC network in India? 

ONDC was established by the DPIIT Government of India on December 31, 2021, to democratize online commerce opportunity in India. The pilot phase of ONDC was launched on April 29, 2022, in five cities — New Delhi, Bhopal, Shillong, Coimbatore, and Bengaluru. By August end, the ONDC network is expected to be operational in 100+ cities. 

What is the commission charged from sellers on the ONDC network? 

ONDC network will charge a flat 3% commission rate on successful orders. This is a relief from current aggregator commissions, which exceed well above 30% for third-party sellers listed on eCommerce and aggregator platforms in India. 

Wrapping up

ONDC is genuinely a powerful initiative on the part of government thought, with small businesses at the heart of it. Though it seems complex in practical application, the ingenuity of connecting local Indian merchants and businesses on a single network with low commissions seems like a good change. 

If you are thinking of starting your online journey, the time and this opportunity are ripe enough to grab. So, what are you waiting for? 

Create a Free Business Card to digitize your business and start Leveraging ONDC today. Read More: 

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• 5 Reasons to Have a Digital Business Card for Your Business

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