What is ONDC - Open Network for Digital Commerce?

Increased use of the internet and consumer demand led to the rapid growth of e-commerce shopping sites in India. Today, the market segment is dominated by a few players, which gives less exposure to small sellers and traders. In order to democratize e-commerce sector and benefit the seller ecosystem in India, the government has launched the Open Network for Digital Commerce (ONDC) initiative. 

ONDC is a non-profit Section 8 company. The rollout of ONDC will enable local shop owners across categories like food, mobile, grocery, etc., to display their products/services in search results of any app.

The company was established by the Department for Promotion of Industry and Internal Trade (DPIIT) of the Government of India which supports small merchants and mom-and-pop stores to enable easy access to technologies developed by large e-commerce companies. In addition, the ONDC initiative also aims to promote an open network for sellers to enable the exchange of goods and services over digital networks.

Currently, ONDC is rolled out in 5 cities, including Bengaluru, Bhopal, Coimbatore, Delhi NCR, and Shillong.

In order to curb the monopoly of big players in the e-commerce market and increase the reach of small merchants, the ONDC initiative was launched by the government of India. Sellers will have access to a larger number of buyers.

With ONDC, the government also aims to end predatory pricing (where the products are offered at low pricing with the intention of driving out competition and creating a barrier for any new entry) in high-margin, high-value products.

Any e-commerce enterprise can get a membership in the network for free. So, here's how ONDC works:

• Buyer & Seller side applications: To connect buyers to the network, the e-commerce needs to build an application or website that will allow consumers to browse products that are on sale on the ONDC network. To connect sellers to the network, e-commerce needs to build applications that will allow sellers to add their products for sale and accept orders on the ONDC network

• Gateway: This is the application that will enable discoverability. All the search requests from the buyer-side application will be broadcasted to the seller-side apps listed on the network

• Beckn-protocol based adapter interfaces: Adapter interfaces, developed by Beckn, are basically open APIs that will enable the exchange of information from various participants

For the sellers:

• The biggest benefit of ONDC is it will make the e-commerce segment more inclusive for sellers and accessible to consumers

• Better discoverability of costs

• Opportunities to connect for value chain services like order fulfilment, logistics, etc

• Consumers will be able to choose a product from any seller using any compatible platform, thus increasing the freedom of choice

• Better service and faster delivery of goods

• Better customer experience

• It will help to standardize the operations like inventory management, cataloguing, order management & fulfilment

• The e-commerce will be able to accommodate more MSMEs as well as small sellers across the country

• The monopoly created by the top e-commerce brands will be broken and lead to a more accessible and healthier environment

• ONDC will also help to improve investments in the e-commerce space

Like UPI, the ONDC is the new network that will boost & democratize the e-commerce segment in the years to come. It is a beneficial network for small businesses that lack the technological expertise as well as resources to compete with the big players in the market.

Sources:

https://www.weetechsolution.com/blog/ondc-explained-how-does-it-work-who-can-join-it

https://economictimes.indiatimes.com/news/bengaluru-news/govt-launches-ondc-an-alternative-to-flipkart-amazon-in-bengaluru/articleshow/94555689.cms?from=mdr

https://www.cnbctv18.com/business/ondc--decoding-the-new-digital-kid-on-the-block-15348991.htm

https://www.livemint.com/companies/news/what-is-ondc-india-s-project-for-an-open-e-commerce-network-11654097068290.html