August 12, 2023

ONDC - Empowering Digital Commerce Ecosystem

Published By

Eswar Angusamy
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ONDC - Empowering Digital Commerce Ecosystem

The journey of digital commerce in India began in the late 1990s when the internet started gaining popularity. Over the years, several key milestones have shaped the digital commerce landscape in the country:

  • Early 2000s: The Growth of Online Travel Portals During the early 2000s, the growth of online travel portals like MakeMyTrip and Yatra gained prominence. 
  • Mid-2000s: The Rise of Online Marketplaces The mid-2000s witnessed the rise of online marketplaces like Flipkart and Snapdeal. 
  • 2016: Demonetization Boosts Digital Payments In 2016, the  Digital wallets like Paytm, PhonePe, and Google Pay gained immense popularity, 
  • 2017: The introduction of the Unified Payments Interface (UPI), it  completely changed the digital payment landscape in India. UPI revolutionized digital transactions, not only within India but also globally.
  • 2020: The Impact of the COVID-19 Pandemic The year 2020 witnessed a significant shift towards digital commerce it led to a surge in online shopping, hyperlocal grocery delivery, and digital payments, becoming a lifeline for consumers and businesses.

Looking ahead to the future, 2023 holds great promise with the initiation of the Open Network on Digital Commerce (ONDC). This groundbreaking initiative by the Ministry of Electronics and Information Technology (MeitY) aims to revolutionize the digital commerce ecosystem in India and Globally.

In this blog, I will cover the basics of ONDC and its use-cases/benefits.

What is ONDC?

The Open Network on Digital Commerce (ONDC) is a pioneering initiative by the Indian government aimed at creating a unified and inclusive platform for various stakeholders in the digital commerce ecosystem. It seeks to address key challenges faced by businesses, consumers, and government agencies in the domain of data privacy, digital trust, and accessibility.

Key Objectives of ONDC

ONDC is poised to drive economic growth by addressing the challenges faced by buyers and sellers in the digital commerce landscape, leveraging three core attributes:

  • Interoperability: ONDC promotes collaboration among network participants without tying them to a specific platform. This means users can access the network through any buyer or seller app for digital commerce, enhancing seamless transactions.
  • Unbundling: ONDC breaks down complex systems into granular activities or micro services. For instance, in an e-commerce transaction, different entities can handle seller-side, logistics, payments, and buyer-side activities, streamlining the process for greater efficiency.
  • Decentralization: The data availability and control over a transaction are distributed between both buyers and sellers. This decentralized approach empowers consumers, providers, and buyer and seller apps to benefit from accessing a robust and transparent network.

By leveraging these attributes, ONDC fosters a more inclusive, transparent, and efficient digital commerce ecosystem, paving the way for sustained economic growth in India.

Potential benefits of ONDC

The ONDC (Open Network on Digital Commerce) initiative has the potential to transform the digital commerce landscape in India and create diverse opportunities across various sectors. Here's a structured breakdown of the potential benefits of ONDC:

  • Boosting the direct-to-consumer (D2C) ecosystem - Reduced customer acquisition costs and lower buyer and seller app fees could attract sellers to build financially attractive D2C brands.
  • Digitalizing B2B commerce - Retailers could gain access to a broader distribution network, saving time and costs, while direct linkages between retailers and manufacturers could improve margins in sectors like agriculture and construction.
  • Amplifying hyperlocal goods and omnichannel convenience - Digital channels would take the neighborhood market online, catering to hyperlocal demand, while consumers could use omnichannel availability to order products from home after checking them out in a store.

  • Taking financial services further - ONDC's transaction-based data could support innovative offerings, providing businesses with enhanced access to credit.
  • Growing peer-to-peer commerce - The decentralized network would enable peer-to-peer commerce among consumers, peer sellers, and self-employed professionals.
  • Making logistics efficient - Once digitalized, the entire supply chain could improve price visibility, and higher delivery volumes could bring down logistics costs.
  • Taking India to the world - India's digital commerce infrastructure could promote cross-border trade via marketplaces, enabling MSMEs to become discoverable by global consumers and businesses.

The journey of digital commerce in India has been marked by significant milestones that have shaped the landscape and revolutionized consumer behavior. From the early 2000s with the growth of online travel portals to the rise of online marketplaces and the transformative impact of demonetization and the Unified Payments Interface (UPI), digital commerce has seen remarkable progress. However, the true potential of digital commerce in India lies ahead with the initiation of the Open Network on Digital Commerce (ONDC) in 2023. 

This pioneering initiative by the Ministry of Electronics and Information Technology (MeitY) is set to revolutionize the digital commerce ecosystem, opening doors to diverse opportunities across various sectors.

By embracing ONDC, India can position itself as a global leader in digital commerce, promoting cross-border trade and empowering MSMEs to reach a global audience. The future of digital commerce in India is bright, with ONDC playing a pivotal role in shaping a digitally inclusive and empowered economy. As we move forward, it is essential for all stakeholders to embrace the potential of ONDC and collaborate in unlocking limitless opportunities for India's digital commerce ecosystem.