Commerce

Elevator Pitch

Problem

Over 10 million small vendors excluded from digital commerce.
Low 5.2% penetration of digital commerce.
Most sellers have poor online visibility.
Large players dominant in e-commerce.

Solution

  • ONDC provides tools for building open e - commerce networks that enable sellers and their services to be easily discoverable on the network.
  • Network is interoperable, open-source -designed to allow new apps to be built on top-, and decentralised -data belongs to buyers and sellers.

Big Wins

  • Greater access to e - commerce for small businesses.
  • Efficient and cost effective.
  • Reduces transaction fees and other associated costs to access platforms. 
  • Reduces over-reliance on large, closed aggregator platforms.
  • More choice for consumers.
  • Greater productivity for suppliers.
  • Greater innovation for developers and entrepreneurs.

Implementation :

Milestones

  • During the pandemic 2020, consultations started with small sellers and the hyper local supply chain. Ministry of Commerce formed a committee to explore the potential for open digital commerce and an advisory council (experts with prior experience).
  • ONDC was launched in September 2020 by the Department for Promotion of Industry and Internal Trade of India as a non-profit private organisation with investment from public and private sector, including the National Stock Exchange and the Reserve Bank of India.
  • The Quality Commission of India, formed of associations of Indian businesses, invested to incubate the network with open-source software, open specifications, and the Beckn protocol.
  • Pilot phase was launched in April 2022 in five cities with the private sector, and banks very active in expanding the network.
  • Restaurant management platforms were key to onboarding food and beverage brands.
  • ONDC has more than halved commissions of the selling price from big platforms.
  • Attracted 5 seller apps, 1 buyer app and 1 logistics provider app in the food and beverage sector.
  • Microsoft has joined the industry working group as a provider of sellers toolkits and social commerce.
  • Oracle - a provider of reputation indices, has joined the working group too.
  • Amazon works with ONDC. to digitalise convenience stores; in February 2023 Amazon announced integration of its logistics network with ONDC.
  • Google and Meta support ONDC in generating greater platform awareness, with a key communications role for Whatsapp.
  • Uber signed a MoU to integrate with ONDC.

Challenges

  • Onboarding challenges with a few participants have surfaced, who come with diverse expertise and portfolio of products/services.
  • Data privacy concerns are persistent about the anonymized data that can be re-identified.

Successes

  • Operational in 80 Indian cities and 4.7 million cumulative transactions (November 2023).
  • 30,000 business-to-business transactions every month.
  • Fast growth in mobility and food.
  • First cross-border transaction between ONDC and the Singapore network Proxtera in 2024.

Next Steps

  • Expectation that ONDC can increase penetration from 5% to 35% of the Indian online retail market over the next two years has been given a major boost with major platforms such as Amazon, Google, Meta, and Uber exploring integration with the open network.
  • Grow the network with inclusion of more platforms and broaden network capabilities.
  • Develop tools to accelerate onboarding of network participants.
  • Widen the ecosystem to enroll more businesses and industries.
  • Further improve network rules and compliance and automate network policies.
  • Strengthen registries, certifications, gateways and grievance redressal.
  • Greater access to e-commerce for small businesses
  • Efficient and cost effective
  • Reduces transaction fees and other associated costs to access platforms  
  • Reduces over-reliance on large, closed aggregator platforms
  • More choice for consumers  
  • Greater productivity for suppliers
  • Greater innovation for developers and entrepreneurs

NETWORK GOVERNANCE :

  • Regulator
  • ONDC Council has put in place a set of rules and codes of conduct for network participants
  • Grievance Management:
  • ONDC has a four-step formal Issue and Grievance Management process, which starts with two internal steps, namely an automated issue resolution and, if this fails, the involvement of dedicated ONDC Grievance Redressal Officers
  • If the grievance cannot be resolved internally, redressal is outsourced to external Grievance Redressal Officers. If they too fail to resolve the issue satisfactorily or in a timely manner it can ultimately end up in a court with the appropriate jurisdiction.
  • Data Policy:
  • Transaction data resides only with the buyer and seller applications and is not be visible to ONDC. ONDC does not store or view transaction data
  • Data security and credibility at transaction level
  • Users’ personal identifiable information and sellers’ competitive trade data are protected from third-party access
  • Provides anonymized performance metrics enabling informed policymaking and network robustness

Open Network for Digital Commerce

Learn More

Source: Preliminary research carried out by Cambridge University, JBS. Please note that use cases are evolving.

is a collaboration between

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  • Cambridge Judge Business School,
    University of Cambridge,
    Trumpington Street, Cambridge,
    CB2 1AG, UK
  • E-mail : innovation-prosperity@jbs.cam.ac.uk
  • Cambridge Judge Business School,
    University of Cambridge,
    Trumpington Street, Cambridge,
    CB2 1AG, UK
  • E-mail : innovation-prosperity@jbs.cam.ac.uk
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