ONDC: Democratizing E-Commerce In India

ONDC is a tech-based initiative to enable E-commerce through an open protocol based on open-source specifications. It aims to facilitate the rapid adoption of E-commerce and also boost and strengthen the growth of startups in the country.

ONDC has huge potential for the micro, small, and medium enterprises (MSME) segment. According to the McKinsey report, only around 6% of all MSMEs (around five to six million), actively sell on e-commerce platforms. This base is likely to shoot up six to seven times to 30-40 million by FY30, because of what ONDC offers. It’s true that E-retail has been out of reach for the majority of sellers, especially from small towns and rural areas. ONDC aims to change this by leveraging open-source protocols to prevent monopolies and provide equal opportunities to all sellers and buyers, even small kirana shops, allowing for fair competition and a larger pool of sellers, giving buyers better choices and pricing. 

Sellers can list their products on the ONDC platform, and buyers can access these products from various E-commerce platforms through a unified interface. 

What ONDC Offers

  • Sellers: ONDC provides sellers access to more buyers, higher discoverability of business and products at lower costs, and simplifies the process of managing inventory and order fulfillment, leading to reduced operational costs for sellers.  It also offers wider options for value chain services like logistics to support business growth and gives greater autonomy by providing sellers multiple choices for being digitally visible.
  • Buyers: Access to more sellers and thus more products across various E-commerce platforms. This enables enhanced service levels and faster deliveries leading to better customer service and an increased scope of innovation.
  • Tech Platforms: ONDC provides a standardized platform that allows for seamless integration with various E-commerce platforms, logistics providers, and payment gateways. This streamlined integration process results in reduced onboarding costs for new partners and faster time-to-market for new products and services. ONDC offers new opportunities for startups to drive innovation.

By utilizing open-source protocols for product cataloguing, vendor matching, and price discovery, ONDC can curb predatory pricing, deep discounting, and inventory-owning practices, resulting in a level playing field. This fosters greater digital visibility and reach for businesses across the E-commerce network, ultimately providing greater opportunities for all.

Transforming the landscape

Like UPI has revolutionized payments, ONDC has the power to transform the MSME sector. Small businesses from across sectors such as grocery, mobility, fashion and lifestyle, hospitality, and others are likely to leverage the reach of ONDC and increase the penetration of E-commerce from about 4% to 25% by 2024 by onboarding 900 million buyers and 1.2 million sellers. The platform will also add US$ 48 billion to the country’s GDP by 2027. Thus, ONDC has the potential to revolutionize the shopping experience in India from both buyer and seller perspectives.