The Journey of ONDC: From Concept to Reality

ONDC, or Open Network for Digital Commerce, is not just another actor in the e-commerce ecosystem. It is a new protocol that seeks to transform the digital economy and bring change to the Indian market. By using open specifications and network protocols, ONDC allows for engagements between the consumer, technology platform, and retailer, irrespective of the platform the consumer/retailer uses. It is one of the most ambitious undertakings of the government – a process that seeks to provide equal opportunities for every player in the market, from small-scale local shops to large corporate entities, thus altering the face of digital trade in the country.

The origins of ONDC can be dated back to the Indian government's pilot of a robust digital public infrastructure that has been considered to transform the e-commerce sector. The ONDC network was launched in December 2021 to democratize the market and ensure that no single company dominated and controlled it completely. The concept is an open network aimed at an unbundled and interoperable environment for convenient transactional processes across diverse systems.

This vision stemmed from the idea that activism in digital commerce could help make that marketplace accessible to all, helping to grow the economy in the process. As a marketplace that even the smallest sellers can use to sell to customers worldwide, ONDC aims to disrupt the traditional e-commerce landscape and boost the economy's growth and digitalization.

ONDC functions under the frameworks of 'unbundling' and 'interoperability.' Unbundling means dividing a common commerce transaction into the separate components that include discovery, ordering, payments, and fulfillment so that various systems can be integrated. Interoperability, on the other hand, is the extent to which various systems – or indeed organizations – can communicate with each other (inter-operate).

ONDC establishes standards that ensure that all the members in the network can effectively work on these unbundled parts. For instance, a seller with access to ONDC can select one provider for discovery while selecting another provider for payment and another for fulfillment. This flexibility enables sellers to select the appropriate services rather than being constrained to one marketplace's provision. It also improves efficiency and cuts costs due to the modular design, and it benefits end-users in the form of an improved buying and selling experience.

Overall, ONDC has a far-reaching effect on the Indian entrepreneurship ecosystem. By creating linkages and weaving a network of opportunities, ONDC helps small businesses and individual entrepreneurs to go beyond the limitations of their city or region and become available for the entire country and even for the whole world. This has consequently resulted in increased entrepreneurship and has greatly boosted the Indian economy.

For instance, a small handicraft seller in a remote village in Rajasthan can now sell his or her products directly to customers in big cities like Mumbai or Delhi, or even in other countries through the ONDC. This has not only expanded the circles of customers for the seller but also helped them earn more and improve their quality of life. ONDC has brought democratization to e-commerce, thus helping countless small businesses adapt to the new economy.

The effect of ONDC can be seen through its astronomical growth figures. By May 2024, ONDC had registered 8.9 million transactions in the retail and ride-hailing segments, indicating a 23% month-on-month growth. Orders from retail customers rose to 5 million in May from 3.59 million in the previous month, with a daily record of 200000 transactions. Grocery and food delivery categories recorded over 1 million orders for the first time.

This government-backed network now has 535,000 sellers, of which 84% are small sellers. The CEO of ONDC, Thampy Koshy, said that ONDC aims to achieve 40-50 million monthly transactions by the end of 2024. The statistics above indicate the increase in ONDC's popularity and adoption, proving it is set to revolutionize the Indian e-commerce market.

ONDC has outlined the standard APIs that facilitate effective interaction between the e-commerce systems and applications. These APIs are the basic components through which different systems are connected and the flow of information is made possible. This standardization makes it possible to have all the participants within the network to be able to convey their message effectively irrespective of the platform that they are using.

ONDC is an intermediary layer between the buyers' front-end commerce applications, such as Amazon, Flipkart, etc., and the sellers' front-end commerce applications. It offers a common network for buyers and sellers to engage in business and exchange information and goods. This middle layer provides the various stakeholders in the transaction with the required information and services, thus increasing the efficiency of the e-commerce process.

ONDC provides interoperability by defining a protocol through which sellers can publish their product catalogs to multiple buyers, enabling a unified and seamless shopping experience. This ensures that product information, prices, offers, and other necessary details are accessible to buyers across various platforms. It consolidates this information and provides it to the customers in a single window so that they can make a comparison of the products available in different platforms. This way of data collection increases the level of trust and helps the buyers to make correct decisions.

The ONDC protocol employs a robust authentication measure to enhance the security of transactions and protect users' information. Specifically, "ed25519" algorithm generates a set of keys (private and public) for signing and verifying requests. This standard security protocol builds confidence among buyers, sellers, and service providers, ensuring that all activities within the network are secure.

ONDC allows for the connection with other delivery services which means that the buyer and the seller can choose another service provider if the one they have chosen is not available. This flexibility increases the order fulfillment rate and makes it easier for the users of the website. This means that through the multiple delivery options, ONDC guarantees that buyers get their goods at the right time irrespective of the platform they are using.

The management and sustainability of ONDC are also important aspects that define its further development. ONDC is a non-profit initiative under the Department for Promotion of Industry and Internal Trade of the Government of India, and the organization's main goal is to introduce e-commerce to everyone. The organization's governance structure is put in place to enhance accountability, transparency, and sustainability.

The ONDC governance structure comprises the following; regulatory authorities, technology solution providers, platform owners, and service providers. This makes sure that everyone has a say and that everything is done in a group. The governance structure is put in place to protect the rights of all the stakeholders and make the network work for everyone's benefit.

ONDC is focused on sustainability and has taken several measures to ensure the sustainability of the network. These include digital literacy, SMEs, and innovation. Through the promotion of sustainability, ONDC seeks to foster a digital economy that will be mutually beneficial to all stakeholders and enhance overall economic development.

ONDC plans to accelerate and even support the growth of startups in India. It aims at enabling startups to grow together by providing efficient and affordable e-commerce solutions through the use of the open protocol. Having learned about the vision and mission of ONDC, it is safe to say that the future of this organization is bright.

ONDC wants to expand and grow to even greater heights. And by the end of 2024, ONDC envisions having onboard 30 million sellers through several hundred seller-side platforms. The expansion will enhance the scope and effectiveness of the network through which more small businesses will be in a position to engage in the digital economy.

One key factor for ONDC's future success is its focus on constant innovation and technology improvement. The network also includes compatibility with new technologies and future improvements to reflect the latest industry trends. This focus on innovation ensures that ONDC remains at the forefront of the digital commerce revolution.

ONDC's focus on inclusiveness and access is an essential part of its mandate. It seeks to narrow the digital divide by providing e-commerce accessibility to small businesses and rural areas. By creating a language and culturally sensitive platform, all participants in the digital economy can benefit from the ONDC.

The evolution of ONDC from its conception to the present has been quite interesting. It has revolutionized India's e-commerce industry and opened up opportunities for a more inclusive and sustainable digital economy. Looking to the future, we can anticipate that ONDC will remain an active player and promoter of the development of the Indian e-commerce market.

The achievements of ONDC are clear evidence of the fact that collaboration, innovation, and inclusion work wonders. With the help of ONDC, e-commerce has been democratized and everyone has equal opportunities in the Indian digital market. As a solution that embodies sustainability, transparency, and improvement, ONDC is ready to drive the digital commerce revolution and make a long-lasting positive change in the Indian economy.

The future of retail in India is promising, and ONDC is one of the key players driving this change. As the network expands, it will remain a powerful force in developing e-commerce, supporting small businesses, and boosting the economy. It is not merely another platform; it is a revolution toward a digital economy that is open, accessible, and equitable for everyone.