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