The Open Network for Digital Commerce (ONDC), an open technology network based on an open protocol, saw a pilot launch on Friday in five states — Delhi, Bengaluru, Coimbatore, Bhopal, and Shillong. The platform will allow buyers and sellers to connect and transact with each other online, regardless of what other applications they use.
On the platform, eSamudaay, ERP player Gofrugal, digital business platform for enterprise business Digiit, and digital marketing outfit Growth Falcon, will work with sellers on the app, while Paytm will be on the buyers’ side.
Commerce Minister Piyush Goyal in a tweet on Friday said, “After UPI, another game changing idea to democratise commerce – ONDC soft launch today to select consumers, sellers and logistics providers. Get ready for a world of choice, convenience and transparency.”
Currently, there are over 4,000 small and big e-commerce companies in India, 500 logistics companies to deliver goods, and more than 20,000 entities including travel and hotels that provide services through e-commerce. The Indian e-commerce market is expected to grow to USD 200 billion by 2026.
ONDC will have the potential to curb the dominance of large e-commerce players such as Amazon and Flipkart.
What is ONDC?
It is an open technology network based on open protocol and will enable local commerce across segments, such as mobility, grocery, food order and delivery, hotel booking and travel, to be discovered and engaged by any network-enabled application.
The buyers and sellers do not have to use the same platform or same mobile app to have a transaction. They can use different applications and still do business transactions.
The foundations of ONDC are to be open protocols for all aspects in the entire chain of activities in the exchange of goods and services, similar to HTTP for information exchange over internet, simple mail transfer protocol for exchange of emails and unified payments interface for payments, according to the commerce ministry.
The benefits of ONDC include access to more buyers; better discoverability of products and cost; autonomy on terms because of multiple choices for being digitally visible; lower cost of doing business; and more options for value chain services like logistics and fulfillment.
According to a strategy paper by this ONDC entity published in January, there needs to be “a paradigm shift from an operator-driven monolithic platform-centric model to a facilitator-driven, interoperable decentralized network”.
The ONDC will not be owned or controlled by a single entity or platform and the idea behind it is to connect buyers, suppliers, payment, and logistics providers through open-source specifications and protocols.
The platform’s aim is to create new opportunities, curb digital monopolies and support micro, small and medium enterprises (MSMEs) and small traders and help them get on online platforms. It is an initiative of the Department for Promotion of Industry and Internal Trade (DPIIT) under the Ministry of Commerce and Industry.
“We have identified five cities, as we wanted to keep a geographical spread across the board. We have a trader base in these five cities which is getting prepared on the intricacies of transacting on ONDC,” Anil Agrawal, additional secretary at DPIIT, has said earlier.