India’s e-commerce sector has seen sharp growth lately, with more than 6.5% of the overall retail business settled online. Now, anyone can order essential products and services using just a smartphone.
However, small businesses face various challenges in this digital model. Many prominent e-commerce platforms favour sellers providing hefty discounts to their buyers. This indirectly exploits smaller vendors as they cannot match their larger competitor’s price offerings or access a massive pool of customers’ data.
To offer a non-discriminatory ground for all sellers, the Government of India came up with its Open Network for Digital Commerce (ONDC) proposition in 2021. This open network aims to provide a level-playing field instead of preferring monopolies.
To learn more about the impact of the ONDC website, continue reading.
What Is ONDC & How Does It Work?
The ONDC is a non-profit company set up by the Department for Promotion of Industry and Internal Trade (DPIIT). This entity is tech-driven and operates by analysing consumer searches and directing them to relevant product/ service providers in an unbiased manner.
To put it simply, the ONDC app acts like a middleman between online buyers and its partner e-commerce brands. It presents utmost transparency where you will get to explore various options for a particular service or a product. Additionally, you can compare prices charged for similar offerings for a more informed buying decision.
ONDC offers sufficient discoverability to small business owners as well as newcomers. Its system based on AI algorithms is not biased towards a specific grocery, mobility, or travelling company. Instead, GIS (Geographic Information System) plays the main role in determining search results for any query you post on the ONDC platform. Therefore, based on a searcher's location and past preferences, the business listings may vary from device to device.
From the seller’s side, a certain fee must be paid to be a part of the ONDC network. However, vendors do not have to pay commissions to different aggregators just to retain their revenue flow. Eventually, this system will bring any sort of e-commerce under a single umbrella which will automatically reduce the delivery charges.
Right now, you can use the ONDC shopping portal across various locations like Delhi NCR, Bangalore, Kolkata, Mumbai, Hyderabad, and so on. As this centralised marketplace allows procuring different necessities from the providers next door, you can easily make savings using the platform.
How Does ONDC Benefit Consumers?
Switching to ONDC online shopping ensures data security and privacy. There are even other upsides on the consumer’s end which include complete control over personal data and consent-based data sharing. In short, this platform is set to revolutionise the Indian digital market once and for all.
The most talked-about benefits include:
- Personalised Shopping Experience
Globally established e-commerce platforms always do not succeed in catering to the specific needs of Indians. Their offerings often lack elements that most likely suit individual customers' expectations. To bridge the gap, ONDC lists the inventory of all sellers and even before that, it plans the virtual catalogue to provide tailored offerings.
Analysing user data provides insights into consumer behaviour, preferences, and trends. Small businesses leverage this data to tailor their products and services to customer needs, thus increasing their competitiveness and profitability.
- Diverse Range of Sellers
As the buyers get a centralised interface backed by the Indian Government, they can interact with different sellers before purchasing and communicate their needs. To put it simply, you get more choices on an ONDC app irrespective of wherever you live across India.
ONDC's proprietary algorithm allows for hyperlocal deliveries, allowing buyers to get the best discounts and lower delivery fees. Customers get to choose any seller from the ONDC catalogue and choose any seller in their vicinity.
- Seamless Payment Gateway
The ONDC network has worked vigorously on creating a secure payment solution that deploys blockchain technology. It removes every single opportunity for financial malpractice which remained a possibility while using e-commerce stores that relied on third-party gateways.
Any transaction taking place across the Open Network for Digital Commerce will first require authenticating the consumer's identity using the Aadhaar Payments Network (APN). It not only makes transactions a lot swifter but also each time you can avoid the hassle of verifying a payment instrument.
- Zero Misuse of Data
You have to compromise on data security while you sign up for various other e-commerce apps. This is primarily because these companies collect your data from third-party organisations that operate in other countries. Hence, they are not subjected to Indian data protection laws.
To remove this concern, you may consider switching to ONDC apps, where there are almost no chances for a hacker to breach your personal information.
- Enhanced User Experience
Apart from the seamless interface on the seller’s end, buyers also get a simplified design where they can locate their desired services and products within seconds. This supports robust shopping experiences, and streamlined delivery and promotes better end-to-end impressions.
How Does ONDC Benefit Sellers?
Businesses can save a significant budget by registering with ONDC as they are charged lower platform fees. Also, through these apps sellers can connect to logistics companies and streamline the delivery service.
Since its inception, ONDC has gained the trust of more than 40,000 sellers across India. A number of factors resulted in its exponential growth, including:
- Unlocking New Customer Bases
Larger parts of India are yet to garner the benefits of the e-commerce world. In many places, there are still issues related to unstable internet connectivity, inadequate smart gadgets, restricted penetration of infrastructure, etc.
ONDC attempts to minimise these problems by bringing in as many e-commerce businesses as possible under one roof. This will help all sellers engage in fair competition trying to capture new clientele bases while providing the best value for money.
- Improved Digitisation of Ventures
Small business owners and start-ups face many challenges when it comes to improving their online presence. To help them compete against growing monopolies in groceries, electronics, and the consumer goods sector, ONDC provides standardised protocols that are fair to all parties.
- Rewards Quality Services and Innovations
On ONDC apps, any seller can now seamlessly display their products and services and access superior inventory management. Meanwhile, buyers are aware of the various merchant options which create the opportunity for repeat businesses and reward vendors offering good customer service.
ONDC incorporates new-age technologies like artificial intelligence, the Internet of Things, blockchain and machine learning to present business listings in an unbiased manner. Any seller, regardless of their means, can leverage these technologies to develop innovations.
- Marketplace for Services
ONDC-enabled platforms facilitate the exchange of services, including contractual work, microtasks, and gig economy opportunities. This allows individuals with various skills to access job opportunities on a larger scale, helping to create income generation and reduce unemployment.
- Logistics and Supply Chain Optimisation
Open-source technology enhances supply chain management, making it more efficient and cost-effective. This reduces barriers for small producers to enter the market, ensuring a diverse range of products is available to consumers.
To make the most out of this model, sellers need to level up their processes of market acquisition and pay greater attention to tailoring the offerings. This enforces newer innovative strategies for automating sales and enhancing security while handling transactions.
What Benefits Can Sellers Get by Joining the ONDC Network?
If online businesses decide to collaborate with Open Network for Digital Commerce, they can interact directly with customers. Also, their transactional security will be fortified and order processing costs will take a dip.
Here you can read about the pointers in detail:
- Lower Transaction Costs
E-commerce platforms can join hands with ONDC to reduce their dependency on certain intermediaries. This helps cut off the associated fees which otherwise go towards supporting the logistics, payment handlers, suppliers, etc. As a result, small and mid-scale enterprises find it easy to diversify their clientele base as they do not have to focus on transaction costs.
- Easier Business Retention
As no middlemen are required for the open network, sellers get to interact with customers directly. Naturally, they would prefer switching to ONDC for this reason. For continued partnership, the various e-commerce platforms will consider being a part of ONDC in exchange for a nominal fee.
- Improved Chances of Conversions
The decentralised technology helps in the creation of hyper-localised content and interfaces, catering to diverse linguistic and cultural backgrounds. It ensures that people from different regions and languages can navigate the digital commerce platform hassle-free, encouraging their participation.
- Access to Digitalised Infrastructure
Many promising ventures that lack access to conventional banking systems, find it difficult to maintain their profile on e-commerce platforms. E-commerce platforms will find it easy to cater to many small vendors by leveraging ONDC’s modernised digital commerce infrastructure.
- Regulatory and Policy Support
Any ONDC participating organisation can collaborate with the Government to develop supportive policies and regulations that protect consumers and businesses while fostering innovation and growth. The underlying technology subtly facilitates efficient regulatory mechanisms and compliance monitoring.
How Does the Future of ONDC in India Look Like?
As digital commerce continues to grow rapidly in India, an open network has the potential to foster innovation, enhance interoperability, and drive efficiency in e-commerce ecosystems. Moreover, a Mckinsey’s report suggests that the online e-commerce market through ONDC alone in India can reach up to $340 billion by 2030.
By promoting collaboration among businesses, enabling seamless data sharing, and ensuring secure transactions, the network will empower small and large enterprises alike. However, challenges such as regulatory frameworks, data privacy, and cybersecurity have to be effectively addressed. If these issues are managed, the ONDC will significantly contribute to India's overall economy, enabling sustainable growth and inclusive development.
ONDC Network uses key infrastructure like Gateway and Registry services provided by Protean. Protean also developed tools and services for this de-centralised network, like multi domain Gateway-Adaptors, Reconciliation & Settlement services etc. to enable quick network adoption.
Key Takeaways
All promoters of ONDC aim to eradicate the root problems of India's current e-commerce sector. If you wish to register your business on ONDC, you can simply fill up the form by visiting https://www.ondcregistration.com/ondcregistration. It will help you grow a lot quicker and simultaneously the buyers will gain more trust as new businesses start crowding this open network.
Frequently Asked Questions
- What additional initiatives apart from ONDC are taken by the Government to promote e-commerce in India?
The Indian Government has allocated a budget of Rs. 945 crores for the Startup India project and has spoken strongly in support of the BharatNet Scheme. Additionally, the National Payment Corporation of India is undergoing dynamic alterations to contribute towards a secure transaction channel aligned with the Indian e-commerce sector’s growth.
- Is ONDC available on Paytm?
Yes, you can use ONDC Paytm to order groceries and other consumer goods. For this facility, first, you must complete the KYC process for your Paytm account and then access the ONDC section from the home screen.
- How do I buy products through ONDC?
First, search for an ONDC store. Once you select a store online, you will see the list of services or products. Select the items you wish to purchase before finally adding your delivery address and settling the bill.
- Who can sell on ONDC?
Any individual or business can sell on the Open Network for Digital Commerce, provided they adhere to the platform's terms and policies. The network offers a marketplace for various digital products and services, making it accessible to a wide range of sellers looking to engage in online marketing.
- How are payments of buyers and sellers settled on the ONDC platform?
Protean eGov Technologies Ltd. (formerly NSDL e-Governance Infrastructure Limited) has entered into a partnership with NPCI Bharat BillPay to provide settlement for payments made on the platform. While Bharat BillPay is a settlement agency, Protean will provide Recon and Settlement services. Protean’s Recon and Settlement Product (RSP) has been proven to handle large volume transactions for the app.
