ONDC: The UPI of E-commerce in India

India's digital market has been characterized by closed platforms, creating significant barriers to entry for new players and limiting innovation. However, a new platform called the Open Network for Digital Commerce (ONDC) is set to change this narrative. Launched in September 2021, ONDC aims to transform India's e-commerce landscape using open protocols and open-source specifications.

ONDC: The UPI of E-commerce in India

What is ONDC? 

ONDC is an open network that enables buyers and sellers to transact irrespective of the platforms or applications they use. Unlike the current model of e-commerce, where buyers and sellers need to be on the same platform to carry out a transaction, ONDC is a network-centric model. It eliminates the need for a central intermediary, enabling e-commerce expansion and broad-based innovation. ONDC is not an application or platform, nor is it a regulator. It is a market and community-led initiative designed to enable e-commerce growth in India.

Why is there a need for ONDC? 

The current model of e-commerce in India stifles innovation and creates significant barriers to entry for new players. This situation creates a gap between online demand and the local retail ecosystem, limiting e-commerce participation. ONDC offers a solution to this problem by creating an open network that enables buyers and sellers to transact without the need for a central intermediary. This approach eliminates the monopoly in India's e-commerce space and offers more affordable options for consumers.

Who is behind this initiative? 

ONDC is a government-led initiative aimed at creating an open network for digital commerce in India. The Ministry of Commerce and Industry is spearheading the project, with support from other government bodies such as the National Informatics Centre and the Department for Promotion of Industry and Internal Trade.

Why is it useful for Indians? 

ONDC is useful for Indians as it offers a more affordable and accessible e-commerce platform. ONDC's food ordering service is currently live in several cities, including Bangalore and Delhi, and offers significantly lower prices compared to Swiggy and Zomato. While Swiggy and Zomato charge a 25-30% commission from restaurants on every order, ONDC charges only a 2-4% commission. This lower commission allows restaurants to offer better prices to customers. Additionally, ONDC is currently running a promotion offering discounts to early users, making it even more appealing to Indian consumers.

All the challenges 

While ONDC offers many benefits, it also faces several challenges. One of the main challenges is the need to onboard multiple platforms and applications onto the network. This process is time-consuming and requires collaboration between the government and private sector players. Another challenge is the need to ensure that the network is secure and reliable, with robust data protection mechanisms in place.

The End Notes 

ONDC is a game-changer for India's e-commerce industry. Its open network approach offers more affordable and accessible options for consumers while fostering innovation and competition in the sector. While there are challenges, ONDC's potential to transform India's e-commerce landscape is immense.