India’s e-commerce sector is poised for significant growth, with projections indicating a substantial increase from $46.20 billion in 2020 to $111.40 billion by 2025, demonstrating a Compound Annual Growth Rate (CAGR) of 19.24%. In pursuit of greater inclusivity and accessibility within this sector, the Indian government has recently introduced the Open Network for Digital Commerce (ONDC). This initiative aims to establish open networks for all digital exchange of goods and services, utilizing an open-source methodology, open specifications, and open network protocols, independent of any specific platform.


Benefits and Potential Impact of ONDC:

Diversifying E-commerce Landscape:

  •  ONDC addresses the concern of e-commerce platform dominance, witnessed through the market sway held by a few major players like Amazon and Flipkart. These platforms have faced allegations of favoring certain sellers and undermining others. The ONDC approach disrupts this monopoly, offering a balanced marketplace.

Empowering Small Businesses:

  • ONDC’s core principle is to democratize digital commerce, affording equal opportunities to both large and small merchants. Unlike the current platform-centric model, ONDC allows small businesses to utilize any ONDC-compatible application, thereby evading restrictive platform-centric policies.
  • Kirana stores and small businesses stand to benefit substantially, as they can streamline their operations like cataloging, inventory management, and order fulfillment. This simplification enhances their discoverability and ability to conduct business through digital channels.

Enhancing Consumer Choice:

  • ONDC grants consumers the freedom to explore diverse sellers, products, and services through any compatible platform. This promotes healthy competition and facilitates access to local businesses, ultimately contributing to competitive pricing and a broader range of choices for consumers.

Holistic Sector Development:

  • The adoption of ONDC is anticipated to digitize the entire value chain of digital commerce, optimizing operations, including logistics, and encompassing suppliers. This integrated approach aims to enhance overall consumer value, while also contributing to the industry’s growth.

Challenges and Considerations:

Competition with Established Players:

  • A key challenge for local sellers lies in competing with the quality, reach, and resources of established e-commerce giants. To overcome this, the Department for Promotion of Industry and Internal Trade (DPIIT) must ensure that ONDC offers a seamless and user-friendly platform to create a level playing field.

Building Credibility:

  • Establishing credibility in the minds of consumers and sellers is crucial. The creation of a robust and swift dispute resolution mechanism is imperative to enhance the trustworthiness and reliability of the ONDC platform.

The Open Network for Digital Commerce (ONDC) holds immense potential to transform India’s e-commerce landscape. Its implementation addresses concern of platform monopoly, empowers small businesses, expands consumer choices, and fosters holistic sectoral growth. While challenges such as competition with major players and credibility-building exist, they can be surmounted with user-friendly interfaces and efficient dispute resolution mechanisms. ONDC, with the government’s concerted efforts, has the capability to drive inclusive and accessible e-commerce in India, paving the way for a more equitable digital marketplace.

Legacy Editor Changed status to publish March 16, 2024