ONDC – Open Network for Digital Commerce

Aims to disrupt the Platform E-commerce model and bring in inclusiveness for the small traders in India and globally

The Open Network for Digital Commerce (ONDC) is a path breaking, first-of-its-kind initiative globally that aims to democratize e-commerce – starting with India and then the rest of the world. This has been lauded as the UPI moment for e-commerce and has a larger vision for scale and inclusion for the small traders, kirana stores and entrepreneurs of our country.

In this short backgrounder Mr Koshy writes for Voice&Data explaining the core focus of the Open Network for Digital Commerce (ONDC), its main objective and what it will achieve for our country.

ONDC has been established as a not-for-profit company with the ambition to democratise and fundamentally revolutionise how digital commerce is conducted in the country. This construct is different from the platform model, where all the various functionalities are vertically integrated within a centralised entity - to a decentralised format where different functions involved in an end-to-end e-commerce transaction can be performed by different entities.

ONDC has launched alpha in 80+ cities across India and beta launched in Bengaluru with other cities in the pipeline to launch over the upcoming weeks.

In this decentralised model, buyers and sellers are at either end of the value chain, and network participants (buyer apps, seller apps integrated with ONDC) provide them with buyer and seller platforms to integrate with the network. The ONDC network enables communication across these buyer and seller apps through a gateway ensuring that all buyers interfacing with an ONDC-enabled buyer app will be able to access all the sellers (and their products) across all ONDC-enabled seller apps and vice versa.

For example, if you are trying to buy a bar of soap online, today you are either restricted to sellers who are integrated with the platform you are buying online from, or have to physically go to the local store you are acquainted with.

With ONDC, you will be able to see the entire universe of sellers that are selling soap irrespective of the platform they are integrated with. This universe of sellers could also include your local store, who will find it easier to come online.

Currently MSMEs have to extend significant effort (time and money) to onboard onto an e-commerce platform and are, often, bound to its policies given limited alternatives and high cost of switching. With ONDC, these barriers will be reduced as more seller applications will be able to access the buyer universe through the network, and create an environment of healthy competition and innovation across the seller applications which will benefit the MSME’s.

Since its incorporation, ONDC has launched alpha in 80+ cities across India and beta launched in Bengaluru with other cities in the pipeline to launch over the upcoming weeks. We have 20+ participants already ‘live’ on the network with over 600 in the pipeline in various stages of integration.

Alpha and beta testing have allowed us to iteratively improve the network experience and process, and we welcome further feedback from buyers and sellers transacting on ONDC on how to continue improving their experience.

In the upcoming months, we will be rolling out additional domains (e.g. fashion, electronics, B2B etc.) and enabling additional functionality (e.g. ONDC score, catalogue as a service) on ONDC, which will continue to grow, strengthen and build trust in the ecosystem.

There is a tremendous amount of excitement around ONDC in particular around the significant value that will be unlocked when the digitally unaware and smaller traders are enabled, which requires ecosystem participation beyond just ONDC. Support in digital onboarding, inventory management, logistics coordination etc. will also become critical value chain factors in determining the success of these players, and we look forward to ecosystem-wide innovation and engagement to generate creative solutions to enable their participation and success in digital commerce.

The ONDC network enables communication across these buyer and seller apps through a gateway ensuring that all buyers interfacing with an ONDC-enabled buyer app will be able to access all the sellers (and their products)

For example, the One District One Product (ODOP) initiative is in the final stages of integration with ONDC and will be going live with their products on the network in the near future.

With ongoing state government support, a number of other initiatives like ODOP across the nation, which promote the ability of smaller traders and artisans to market their products nationally and eventually internationally, will also be joining ONDC in the upcoming months. This will not only allow artisans, weavers etc. to market their products digitally but allow customers all over India (and eventually the world) to access and appreciate indigenous products.

As we continue to grow, ONDC is expected to increase the penetration of e-commerce in India by fostering innovation in the digital commerce value chain, reduce barriers to entry for MSMEs and small traders/artisans, and enhance buyer and seller interoperability across platforms.

Ultimately, there will be a paradigm shift in the way the digital commerce value chain will evolve giving rise to new types of players and innovations that will redefine the way ecommerce is seen in India and globally.

By Thampy Koshy