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written by | September 8, 2022

What is ONDC - Open Network for Digital Commerce

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One of the major cornerstones of India's current progress has been the rapidly increasing digital economy. Three of the biggest publicly accessible internet platforms worldwide are from India: The biggest network for unique digital identities i.e., Aadhaar, the biggest infrastructure for digital payments i.e., Unified Payments Interface (UPI), and the largest forum for immunizations i.e., Co-Win. Recognizing the promise of the internet, the Indian government established the Open Network for Digital Commerce (ONDC) as a possible rival to Walmart and Amazon.com in the nation's rapidly expanding e-commerce industry. 

Did you know?

In comparison to the worldwide average of 64 %, India has the highest adoption rate of fintech at 87 %. 

Background of ONDC 

Shortly after the first phase of COVID was announced in April 2020, the concept for ONDC was formed and has been actively debated since then. During this period, it was discovered that it was difficult to provide vital supplies beyond confinement zones. Therefore, a shift from scaling what succeeds in e-commerce to scaling what works was deemed necessary. 

To democratise e-commerce in India and provide alternatives to commercial e-commerce sites, ONDC was established as a private, non-profit corporation on December 31, 2021. 

The Department for Promotion of Industry and Internal Trading of the Quality Council of India served as the incubator for ONDC. A 9-member advisory group gave the government advice on the steps that needed to be taken to develop and hasten the deployment of ONDC. 

Meaning of Open-Source Software 

A program or piece of software is said to be "open source" if the technique or source code used to create it is publicly accessible for anyone to use, share, and change. As an example, the iOS operating system is closed-source. Conversely, because the Android mobile operating system is open source, smartphone makers may customise it to work with their own hardware. 

Also read: Meaning of Business Communication - Types of Business Communication & Why Business Communication Is Important

What is Open Network for Digital Commerce (ONDC)? 

ONDC is a non-profit organisation whose network will make it possible for all registered e-commerce portals to have their goods and services shown in search results for all of the platform's applications. A consumer shopping for a Bluetooth headset on Amazon, for instance, would also receive results from Flipkart on the Amazon website if both Amazon and Flipkart integrated their systems with ONDC. 

In order to democratise the digital economy, ONDC is a pioneering endeavour on a worldwide scale. Equal opportunities shall be offered by the ONDC to all participants in the market, including customers. It switches from a platform-centric paradigm to an open network, where both the buyer and the vendor must utilise the very same network or application in order to be visible online and conduct business. 

It is independent of any particular system and is built on open-sourced approach, employing open standards and open network protocol. It is an impartial platform that, similar to the Unified Payments Interface, would establish open-source standards for vendor matching, pricing discovery, and cataloguing. 

Current status of ONDC 

Five cities—Delhi NCR, Bengaluru, Bhopal, Shillong, and Coimbatore—have received the ONDC rollout. Currently, the activities are concentrated on supporting real-time transactions for restaurants and retail establishments. Later on, the open network will include more domains like travel and communication. 

By October 2022, 100 cities and towns all over India will have ONDC installed, based on the results of the pilot program and once the network has stabilised. The objective is to support 10 million retailers and 30 million sellers online. 

Key stakeholders in ONDC 

20 public and commercial entities have officially committed ₹ 2.55 billion (US$ 33.34 million) in investments. Banks from both the private and public sectors have increased its stake in ONDC. An estimated 80 businesses are attempting to integrate market participants with the ONDC platform

Significance of ONDC 

  • Promote E-Commerce: 

It will assist in increasing both the number and value of e-commerce operations. According to government projections, India's e-commerce business would reach US$ 350 billion by the end of just this decade, from a gross merchandise valuation of more than US$ 55 billion in 2021. With ONDC, this goal appears to be much more attainable. 

Also read: Perfect Food Truck Business Plan to Start Your Successful Food Truck Business

  • Encourages Competition: 

The government claims that because the current platforms operate in monopolies and are strictly regulated, many smaller businesses are shut out. Over 60% of the e-commerce market is currently under the hands of Amazon and Flipkart. However, by displaying goods and services from all partner e-commerce platforms, ONDC will decrease  competition and encourage innovation by start-ups. 

Additionally, it will restrict the chances for some merchants to gain special treatment. Major e-commerce enterprises frequently face accusations of giving customers special treatment. Additionally, it will help put a stop to predatory pricing, particularly for high-margin, high-value goods. 

  • Freedom of Choice: 

It is anticipated that it would increase consumer exposure to and inclusion in e-commerce. By employing any compatible program or platform, they might possibly find any vendor, item, or service, expanding their range of options. 

  • Cost Savings for Sellers: 

Instead of being constrained by certain platform-centric regulations, ONDC would allow small firms to utilise any ONDC-compatible apps. This will offer small companies several alternatives for acquiring the tools they need to operate and be found on the network without being forced to pay aggregator platforms a hefty fee. 

  • Investment Attracting: 

Companies are anticipated to gain from clear regulations, easy investment, and cheaper start-up costs. Additionally, it is anticipated that both the duration to market and the time to scale would be significantly shortened. All of these will aid in luring more investment into the e-commerce industry. 

  • Aid in Diplomacy: 

A new kind of international diplomacy is starting to take place on the internet platforms. Worldwide attention is focused on India's identification and payment infrastructures. India just made the Co-Win platform available to interested nations. 

Also read: What Is Business Development - Complete Guide on Business Development Strategy for Successful Business

Conclusion: 

It is anticipated that the Indian e-commerce economy would grow to be a $200 billion industry. However, the administration must deal with a number of issues and devise plans to address them. The future is bright for small-to-medium-sized players. Further people will spend more on goods that represent culture and identity, which will lead to more changes in habits and way of life. With the growth of the Indian economy, more of these things must be consumed. Because of this, the retail e-commerce sector will grow as well. Together, these factors will bring an end to digital monopolies within the e-commerce sector. 

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FAQs

Q: What is Open Network for digital commerce or an ONDC project?

Ans:

The platform of ONDC, a non-profit organisation, will allow search results from all networked applications to display goods and services from across all collaborating e-commerce platforms.

Q: Why is ONDC important?

Ans:

The ONDC will aid in reducing the monopoly of large corporations and expanding the market for small business owners. Additionally, it will assist in increasing the number of customers who are accessible to all of the network's vendors. In this manner, the effort will be beneficial to both current and potential customers.

Q: What is open e-commerce?

Ans:

After ONDC is put into place, customers who shop on any application that is associated with the network will be able to examine items from the catalogues of various vendors, including e-commerce platforms, registered local businesses, small merchants, and others, and pick from whom they wish to make a purchase.

Q: What is the future of online shopping in India?

Ans:

Numerous advantages of online buying and selling are provided to both customers and sellers, and these perks are also the drivers of eCommerce's expanding market.  As per IBEF, India's e-commerce market has a total value of USD 38.5 billion as of 2017 and is projected to reach 200 billion USD by 2026.

Q: Which union ministry is associated with the pilot phase of the open network for digital commerce?

Ans:

The Open Network for Digital Commerce's pilot stage was established by the Ministry of Commerce and Industry. It is a ground-breaking project that will help democratise digital trade and increase its prevalence in the nation.

Q: What is the objective of ONDC a new platform for the e-commerce ministry?

Ans:

The Open Network for Digital Commerce (ONDC) is a ground-breaking effort that seeks to democratise e-Commerce, according to the Ministry Of commerce and industry. The ONDC programme seeks to advance open networks for all facets of digital or electronic network-based trade in commodities and services.

Q: Who is developing ONDC in India?

Ans:

It was created by the Department for Promoting Industry and Internal Trade of the Ministry of Commerce and Industry. In the upcoming two years, ONDC wants to raise the penetration of e-commerce in the 1.35-billion-people nation from around 8% to 25% of all purchasing products.

Q: What are the two main categories of e-commerce?

Ans:

The two main types of the most common e-commerce models are as follows: Direct sales of goods and services to customers are known as business-to-consumer sales. Selling products or services to other businesses is known as business to business.

Q: Why is e-commerce different?

Ans:

Although it is practically rare to locate a traditional business that is open 24/7, e-commerce does not operate on a timetable. Customers may purchase anything they want anytime they want on websites that are available throughout the day. Fewer expenses: Running a typical business is less expensive when there is no requirement for a physical location.

Q: How does e-commerce improve market efficiency?

Ans:

The widespread use of mobile devices makes it possible for businesses to contact more people across the world and extend their consumer bases than they otherwise could. Through this marketing route, businesses may access new markets. Improved order efficiency is also possible with e-commerce order management.

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The information, product and services provided on this website are provided on an “as is” and “as available” basis without any warranty or representation, express or implied. Khatabook Blogs are meant purely for educational discussion of financial products and services. Khatabook does not make a guarantee that the service will meet your requirements, or that it will be uninterrupted, timely and secure, and that errors, if any, will be corrected. The material and information contained herein is for general information purposes only. Consult a professional before relying on the information to make any legal, financial or business decisions. Use this information strictly at your own risk. Khatabook will not be liable for any false, inaccurate or incomplete information present on the website. Although every effort is made to ensure that the information contained in this website is updated, relevant and accurate, Khatabook makes no guarantees about the completeness, reliability, accuracy, suitability or availability with respect to the website or the information, product, services or related graphics contained on the website for any purpose. Khatabook will not be liable for the website being temporarily unavailable, due to any technical issues or otherwise, beyond its control and for any loss or damage suffered as a result of the use of or access to, or inability to use or access to this website whatsoever.
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Disclaimer :
The information, product and services provided on this website are provided on an “as is” and “as available” basis without any warranty or representation, express or implied. Khatabook Blogs are meant purely for educational discussion of financial products and services. Khatabook does not make a guarantee that the service will meet your requirements, or that it will be uninterrupted, timely and secure, and that errors, if any, will be corrected. The material and information contained herein is for general information purposes only. Consult a professional before relying on the information to make any legal, financial or business decisions. Use this information strictly at your own risk. Khatabook will not be liable for any false, inaccurate or incomplete information present on the website. Although every effort is made to ensure that the information contained in this website is updated, relevant and accurate, Khatabook makes no guarantees about the completeness, reliability, accuracy, suitability or availability with respect to the website or the information, product, services or related graphics contained on the website for any purpose. Khatabook will not be liable for the website being temporarily unavailable, due to any technical issues or otherwise, beyond its control and for any loss or damage suffered as a result of the use of or access to, or inability to use or access to this website whatsoever.