Open Network for Digital Commerce (ONDC) project

Open Network for Digital Commerce (ONDC) project

Subject: Economy

Context:

The Government claims that ‘as UPI is to the digital payment domain, ONDC is to e-commerce in India.’

Details:

ONDC is incorporated as a private non-profit (Section-8) company to establish the public digital infrastructure needed to expand access to India’s e-commerce ecosystem – pegged as a US$200 billion opportunity by 2027.Now in its pilot phase, ONDC has been rolled out in five cities – Delhi NCR, Bengaluru, Bhopal, Shillong, and Coimbatore. It will be expanded to 100 cities by October 2022.

ONDC was incubated by the Department for Promotion of Industry and Internal Trade (DPIIT) at the Quality Council of India.

ONDC goes beyond the current platform-centric digital commerce model where the buyer and seller have to use the same platform or application to be digitally visible and do a business transaction. Thus, it is an alternative to platform aggregators like Amazon and Walmart-owned Flipkart, who have thus far monopolized India’s e-commerce landscape.

ONDC is to be based on open-sourced methodology, using open specifications and open network protocols independent of any specific platform. The ONDC platform will allow buyers and sellers to connect and transact with each other online, no matter what other application they use. ONDC is not platform-centric, and its objective is to match the online consumer’s demand with the nearest available source of supply. Consumers can thus find any seller, product, or service via any compatible application or platform – offering real freedom of choice.

Thus, sellers and consumers would be able to use any compatible application of their choice for the exchange of information and carrying out transactions over ONDC.

ONDC shall not mandate sharing of any transaction-level data by participants with ONDC. Will work with its participants to publish anonymised aggregate metrics on network performance without compromising on confidentiality and privacy.

Example:

Suppose a seller X is registered on platform A, while the consumer is registered on platform B, the consumer can directly purchase products of seller X without registering on platform A from the ONDC

What are the potential benefits of ONDC?

• For sellers:
  • Access to more buyers
  • Better discoverability of products and cost
  • Autonomy in terms because of multiple choices for being digitally visible
  • Lower cost of doing business
  • More options for value chain services like logistics and fulfillment
• For Buyers:
  • Access to more sellers and therefore more choices
  • Better service and faster deliveries due to access to hyper-local retailers
  • Better customer experience

What is ONDC not?

• A government regulatory body
• A super aggregator application or a platform
• A central intermediary
• A medium to help digitize business

What does ‘open source’ mean?

To make a process or a software ‘open source’ implies that the technology or code deployed for the process is freely made available for everyone to use, redistribute, and modify.

For instance, while the operating system of iOS is closed source (it cannot be legally modified or used), the android operating system is open source, making it possible for smartphone manufacturers, such as Samsung, Nokia, Xiaomi, etc., to modify it for their respective hardware.

ONDC aims at fostering open networks developed on open-sourced methodology, using open specifications and network protocols, and independent of any specific platform.