All about ONDC

In very short, ONDC seeks to do for e-commerce what UPI has done for digital payments. It aims to “democratize" digital commerce and truly disrupt it to become an open network. Currently, digital e-commerce markets are closed and platform-centric wherein buyers and sellers need to be on the same platform to carry out a transaction. This current model stifles innovation, creates significant barriers to entry for new players, and creates a gap between online demand and the local retail ecosystem. As a result participation in e-commerce is well below its potential and has a tremendous opportunity to grow manifold.

What is ONDC?

The Department for the Promotion of Industry and Internal Trade (DPIIT) in the Ministry of Commerce and Industry is building an Open Network for Digital Commerce (ONDC), designed to curb digital monopolies and standardize the on-boarding of retailers on e-commerce sites. ONDC is envisaged to make digital e-commerce to an open network by moving it away from platform-centric models like Amazon and Flipkart & enable more sellers to be digitally visible. The transactions will be executed through an open network. The new system is supposed to empower merchants and consumers by breaking the silos that exist today and make it easier for even a smallest retailer to be discovered. It will eventually touch every business, from retail goods and food to mobility.

How will ONDC work?

ONDC does not require that buyer and seller must use the same platform/application to do a business transaction. Instead, it is a network-centric model where, so long as platforms/applications are connected to this open network, buyers and sellers can transact irrespective of the platforms/applications they use.

The ONDC is still a work in progress and the minor details are getting built every day. Once a retailer lists its products or services using the ONDC’s open protocol, the business can be discovered by consumers on e-commerce platforms that follow the same protocol. A consumer searching for the product can see the location of the seller and opt to buy from the neighborhood shop that can deliver faster compared to an e-commerce company. This will promote hyper local delivery of goods such as groceries, directly from sellers to consumers & bring in sustainability.

Key points to note are ONDC is not a platform or application but only an open network. Also it does not take on an intermediary or regulator role. It is also not a medium to help digitize businesses.

Pilot in progress

ONDC is currently live in a limited beta trial in Bangalore and in 83 cities in alpha stage across the domains of Retail, Logistics and Food & Beverages. It went live in Bangalore on September 30th with 16 pin codes. There are 18 network partners live as of now some of whom are Dunzo, IDFC First Bank, Kotak Mahindra Bank, Paytm, PhonePe, among others. The network aims to reach around 100 cities, 30 mn sellers and 10 mn vendors by the end of 2022.

This blog has been summarized from the content available on the ONDC website