Open Network for Digital Commerce (ONDC) is an explicit eCommerce network based on an open protocol. It will facilitate local commerce across domains like grocery, food delivery, restaurant booking and travel, among others, to be enabled and involved by any network-driven application.

The platform wants to generate new business opportunities and reduce online monopolies. This scenario can be achieved by backing micro, small and medium traders and assisting them in getting on digital platforms. It was introduced by the Department for Promotion of Industry and Internal Trade and enabled by the Ministry of Commerce and Industry.

How Open Network for Digital Commerce (ONDC) Works?

The ONDC will deliver equal opportunities to all market players and consumers. An unbiassed eCommerce platform will help set clear policies for cataloguing, vendor matching, and price detection on an open-source platform, such as the Unified Payments Interface (UPI).

So, sellers and buyers can now transact online on the ONDC platform regardless of whether they are involved in any explicit eCommerce business. For example, even if a seller Z is listed on platform C, while the end-customer is listed on platform D, the end-customer can directly buy items of seller Z without being listed on platform C right from the ONDC platform.

What is the Importance of India’s Open Network for Digital Commerce (ONDC)?

ONDC is projected to digitize the complete value chain, regulate operations, stand in addition of more suppliers, offer competence in logistics, and enhance value for end customers.

Once the ONDC gets realized and authorized, all eCommerce players across India will have to run businesses leveraging the same procedures, similar to Android-based mobile devices, notwithstanding the brand.

This scenario would enhance small-sized online retailers and new online business entrants by accompanying equal exploration, operability, and inclusiveness in business operations. It will enable suppliers and end customers by ending the monopoly of massive players like Amazon and Flipkart to steer innovation and revolutionize businesses in retail, grocery, food, mobility and sales of other products online.

Small and medium-sized businesses comprehend to gain from the transparent policies, fewer investments, and a lower rate of business attainments through ONDC. It is projected that the time-to-market and time-to-scale shall be considerably compacted.

Large-sized online shopping companies have complained against ONDC as they have invested funds in R&D and technology. Through their lucrative discounts and marketing of online sellers, Amazon and Flipkart have invested heavily to capture 80% of the total Indian eCommerce marketplace.

Even leading players such as Reliance and Tata have introduced retail platforms and online shopping applications with discounts and offers.

Still, the Indian government is expecting the contribution of all categories of business competitors in ONDC initiatives. Even conventional retailers and merchants will likely accept digital transformations and do not like to be locked out. With around 800 million smartphone user base, India’s appeal to worldwide retailers is even not dismissed.

Who are Significant Stakeholders to the ONDC?

Twenty government and private Indian organizations have invested in this initiative. Public and private sector banks, like Kotak Mahindra, SBI, Axis Bank, HDFC and Punjab National Bank, have contributed stakes in ONDC.

Around eighty companies are working hard to blend marketplace players with the ONDC platform. These companies develop software and applications for online buyers, sellers, logistics, and payment gateways. Meanwhile, leading start-ups like eKart Logistics, hyperlocal delivery company Dunzo, and PhonePe, are in the progression of blending with ONDC.

Paytm eCommerce Private Limited will be pivoting to ONDC as its prime emphasis. Due to this announcement, its investors, China-based Alibaba and Ant Group, will exit over this modification in the company’s business path.

So, as of May 2022, five online seller platforms, one digital buyer platform, and one logistics partner are integral to the ONDC pilot project.