ONDC's Open Approach: Making E-Commerce Accessible for All

The Open Network for Digital Commerce (ONDC) has given a new turn to India’s burgeoning e-commerce market and offers an era that will be comparatively fair, impartial, productive, and open. Established in 2021 by the Department for Promotion of Industry and Internal Trade (DPIIT), it aims to strengthen the nation’s micro, small and medium enterprises under the Ministry of Commerce & Industry and follows an open network digital ecosystem model. This deviation from conventional marketplaces is intentionally made to establish pervasive digital selling and ensure equal market opportunities for all businesses, small, large, and established, across the nation.

Since its inception, ONDC has recorded over 68 million transactions, a testament to its rapid adoption and growing popularity. The Economic Survey 2023-24 highlighted this achievement, showcasing ONDC's capability to facilitate seamless digital transactions at scale. In July 2024 alone, the network recorded a staggering 12 million orders, with daily transactions peaking at around 430,000.

This growth trajectory is even more impressive when examining specific segments. The retail category, driven by major players like Ola, Paytm, and Magicpin, saw its monthly transactions nearly triple from 2.1 million in December 2023 to 12 million in July 2024. Such figures underscore ONDC's growing influence and its ability to cater to diverse consumer needs.

One of ONDC's most significant contributions is its ability to ease the financial burden on small businesses. Traditional e-commerce platforms often impose high fees, which can be prohibitive for smaller players. ONDC, however, offers cost-effective benefits that alleviate these financial pressures. This has been particularly beneficial for restaurant partners, who can now operate more sustainably and pass on savings to consumers.

Financial incentives have played a crucial role in ONDC's strategy. By providing these incentives based on order volumes and categories, the platform has been able to fund discounts and offers that attract more consumers. Although ONDC plans to reduce these incentives by up to 75 per cent by the September quarter of 2024, the move is seen as a testament to the platform's growing maturity and self-sufficiency.

ONDC's success is not limited to just one sector. The platform has rapidly expanded to include a wide range of categories, from food and beverages to auto components and accessories. The inclusion of Ess Aay Automotive (Hero Genuine) as a seller in July 2024 exemplifies this diversification. Such expansions ensure that ONDC remains relevant and valuable to a broad spectrum of businesses and consumers.

The platform's growth is further supported by strategic collaborations with various state and union territory departments. Each state/UT has appointed a nodal officer to facilitate engagements, and ONDC has conducted 198 workshops to raise awareness. These efforts have resulted in ONDC signing Memorandums of Understanding (MoUs) with 11 states, onboarding 11 State Emporiums, and integrating 31 state entities and public sector undertakings (PSUs) into the network.

Perhaps one of the most promising efforts of ONDC is the ability to combine financial services with e-commerce. As an online marketplace that is currently engaging with reputed banking organizations such as HDFC Bank, IDFC First Bank, as well as Karnataka Bank and partnering with emerging fintech companies like Fibe, ONDC is establishing a model that integrates commerce with financial accessibility. This pilot for credit disbursement through the network further vindicates ONDC’s vision of building a comprehensive digital economy.

It is important to understand that ONDC was founded with the aim of making e-commerce more accessible to everyone. Hence, ONDC has the potential to level the playing field and promote economic equity by extending the opportunity of digital commerce to small companies. The fact that it is an open-source platform makes it possible for the platform to continue being accessible to all business entities regardless of their size and capital investment.

Such inclusivity has been felt in ONDC through the numerous sellers and service providers it encompasses. By July 2024, the platform was operating with approximately 535,000 sellers and service providers in 1,200 cities for various types of consumers. This wide coverage helps in making sure that all the businesses in India have a chance at participating and growing through digital commerce.

The strength of ONDC lies in its network, as the company has successfully attracted numerous partners and collaborators. It now connects 65 seller applications, 22 buyer applications and 12 logistics service providers. This strong ecosystem ensures that buyers, sellers, and service providers are all integrated under one platform, thus giving a smooth digital commerce experience.

The interaction with different departments of multiple states and union territories has further supported ONDC’s network. Since each state has a nodal officer for state-level events, ONDC has conducted 198 workshops to sensitize and enroll new members. Due to these efforts, ONDC has secured MoUs with 11 states, nine state emporiums, and 31 states, and PSU partners have joined the network.

ONDC's journey is a story of visionary leadership and strategic execution. The platform's continuous innovation and adaptability ensure that it remains at the forefront of India's digital commerce revolution. As ONDC expands its services and integrates more categories, it is poised to become a cornerstone of India's digital economy.

The platform's focus on inclusivity, cost-effectiveness, and strategic collaborations sets it apart from traditional e-commerce models. By providing a level playing field for small businesses and offering consumers a diverse range of choices, ONDC is reshaping the e-commerce landscape in India.

The evolution of ONDC is another inspiring story of the idea and its implementation with the support of the visionary leadership. The sustained reinvention of the network guarantees that the online marketplace is revolutionized in India through a new approach. With ONDC broadening its services and further including more categories, it is set to provide a strong base to the digital economy in India.

The relevance of its approach is based on the concepts of inclusiveness, affordability, and partnership compared to conventional e-commerce systems. With the policy of creating equal opportunities for small enterprises and giving customers a wide selection, ONDC is changing the e-commerce market in India.