The ONDC project aims to raise eCommerce penetration from the current 8% to 25% in the next 2 years.
Minister of Commerce & Industry – Piyush Goyal has said this project will democratise digital commerce and give a fair chance to smaller eCommerce players. So what is the ONDC project and should you be looking forward to it?
What is the meaning of ONDC?
The full form on ONDC is – Open Network for Digital Commerce. It is a public non-profit company established by the Department for Promotion of Industry and Internal Trade (DPIIT) of the Government of India to develop a model of open eCommerce.
The ONDC is backed by the government to provide a platform that is freely accessible. It; aims to democratise eCommerce by moving from a platform-centric model to an open network model for the buying and selling of goods and services.
What is the objective of ONDC?
In one line – The ONDC wants to disrupt the monopolisation of marketplaces and democratise digital commerce.
Marketplace aggregators have been known to-
- Indulge in predatory pricing
- Unfairly promote certain sellers over others
- Provide delayed monetary returns
- Impose high commission rates
Directly selling to customers or the DTC eCommerce sector is expanding rapidly around the globe. In India, this sector is expected to touch $400 Bn by 2039, growing at a CAGR of 19%.
Seeing this as an opportunity, the DPIIT decided to launch the ONDC project. The project wants to bring sellers, customers and logistics providers together on a single platform.
Commerce and Industry Minister Piyush Goyal has said that the ONDC will ensure small business owners get an equal opportunity to trade with big firms, protect their own businesses and also serve customers with modern ways of the delivery system.
Chaired a meeting of the Open Network for Digital Commerce (ONDC).
Deliberated with the members of the board & experts on how the initiative will democratise digital commerce & move it from platform-centric model to an open-network model. pic.twitter.com/RQLQFaGUjm
— Piyush Goyal (@PiyushGoyal) August 13, 2021
The ONDC project has plans to onboard 3 Cr sellers and 1 cr merchants. In the next 6 months, the ONDC project will expand to 100 cities.
How does the ONDC project work?
Imagine you have an app that is a collection of useful apps. Through this one app, you can browse other apps and meet their respective customers.
Well, that is exactly what ONDC is. It is a network that connects buyers, suppliers, payment and logistic providers to each other.
There is no ONE owner of the network (unlike one owner of eCommerce marketplaces).
This sketch will help you visualise it.
- The network will enable buyers and sellers from a wide variety of industries to list their companies on the platform exposing them to digital consumers across the country.
- The seller app will be responsible for onboarding sellers. The seller app doesn’t need to worry about generating demand. The inventories of the sellers will be published in an open API format.
💡 Open API: An Open API is an application programming interface that is public to software developers anywhere.
When a buyer (or the buyer-side app) has a requirement, they can send out a query on the ONDC platform. The seller selling that particular product or service will receive a notification prompting them to then respond to the buyer.
If you are in the service business, it’s important to know that service providers will be rated by users which will be visible across the network.
CEO of the ONDC project – T. Koshy, has written about the ambitious plans they have for the ONDC project in a LinkedIn post that you can find here.
Has the ONDC project been launched?
The ONDC project is currently in its pilot phase. The Indian government kicked it off on the 29th of April. 5 cities – Delhi NCR, Bengaluru, Bhopal, Shillong & Coimbatore, were part of this “pilot” phase.
Anil Agarwal, the additional secretary to the DPIIT has these expectations from the pilot phase –
“With this pilot phase, we want to learn as to how this rolls out in the real life environment where you actually make payments, do the deliveries, cancel orders and how refund works. Once these lessons are known, we would create a playbook, which will be a set of standards.”
Currently, 7 companies have adopted ONDC protocols and are building their ONDC-compatible applications. (have onboarded the ONDc platform)
- 5 sellers
- 1 buyer
- 1 logistics platform
The platform plans to add 150 retailers in five cities during the pilot phase
The ONDC project has already received funding close to INR 255 crores from public and private organisations. Banks like State bank of India, ICICI Bank and HDFC Bank have also funded the ONDC project.
Related read: How to sell products online: Your complete guide (2022)
How will small businesses benefit from the ONDC project?
Once the ONDC project goes live to the public in August, small businesses are going to get a chance to showcase their products on the open network.
Here are some (of the many) benefits that the network promises-
- The platform will potentially curb the dominance of eCommerce marketplace giants
- The nature of the open network gives you access to a much larger audience
- You are not restricted to the mercies of one owner’s monopoly
- It will follow a hyperlocal model where the small local brands will be shown first. This is especially beneficial if you want to sell food online
- The buyer and the seller will not be under the control of the same authority.
- Online sellers will have access to their own customer data allowing them to make informed business decisions
- There are no middlemen – The sellers directly connect to the consumers
- The platform allows sellers to expand their catalogues, gain access to advanced logistics solutions, and also give the buyers more options
- Since it’s an open platform, smaller brands have a better chance of establishing their brand presence
- Since it is a multi-layer chain, there will be different providers for different services.
The network will allow changing providers if there is dissatisfaction with any particular service. This creates a fair competitive playground where everyone strives to perform to their best
Where does Instamojo come into this?
Well, for starters, the ONDC is currently in an extremely experimentative phase. The benefits that the ONDC project promises are mainly –
- Bigger audience
- A fair chance at getting more customers
- Having full control over your own business
Well, guess what – Instamojo offers these and MORE. Not only that, more than 20 lakh businesses have already experienced the magic.
And not only that, but once ONDC expands, you will need to join a platform that hosts sellers to be part of the ONDC network. Instamojo is gearing up to be a promising contributor to the network down the line.
But why wait? Start selling today from your own eCommerce website today at absolutely no cost.