What is ONDC – Open Network for Digital Commerce?

Posted on Monday, December 16th, 2024 | By IndusInd Bank

The Open Network for Digital Commerce (ONDC) is an initiative by the Government of India to reshape the digital commerce landscape in the country. As e-commerce becomes the norm rather than the exception, the ONDC aims to help businesses of all sizes, especially those left behind, to be a part of the digital space. 

ONDC aims to empower small businesses and local vendors to compete with larger e-commerce companies by increasing their digital reach. It also aims to help small enterprises, startups, and large corporations connect with customers.

Let’s learn more about ONDC.

Understanding ONDC

• ONDC is a non-profit company established by the Department for Promotion of Industry and Internal Trade (DPIIT). 

• It is  not a standalone app or e-commerce website. Instead, ONDC is a set of open protocols that allows buyers and sellers to interact across various digital platforms. 

• You can consider the role of ONDCin the e-commerce market, like the United Payments Interface or UPI’s role in digital payments. Just as one can use UPI regardless of their preferred app, ONDC’s role is visible across multiple e-commerce platforms. 

• ONDC is especially useful for small and medium-sized businesses, local merchants, and family-owned stores. They can display their products on various buyer platforms on the ONDC network, across sectors like food, grocery, and mobile.

• As the full form of ONDC suggests, it is an ‘Open Network for Digital Commerce’. As such, it aims to break the hold of large e-commerce platforms by making it possible for different digital platforms to work together. 

• This means more businesses can transact via e-commerce, reach more customers, and grow. ONDC also reduces the reliance on any one platform. Thus, it creates a wider digital marketplace where companies can connect directly with consumers.

How ONDC Works and Its Components

Now that you know the full form of ONDC and its concept, let’s briefly look at how it works. 

ONDC’s ecosystem has three primary components: 

·       Buyer Apps

These are applications like user-facing apps, chatbots, or voice assistants. These allow customers to browse and purchase products and services.

·       Seller Apps

Businesses use these to handle the supply side. These apps help with listing products, receiving orders, and fulfilling them to complete transactions.

·       ONDC Gateways

These serve as connectors by linking buyers and sellers. For instance, an app that supports location-based searches and helps users find nearby sellers.

The architecture of ONDC is such that each component can function independently and communicate with each other through APIs. The ONDCnetwork relies on the Beckn protocol to ensure smooth and optimal functioning of its various components within its  accessible approach. 

Benefits of the Open Network for Digital Commerce

With ONDC, each player in the e-commerce market – and the market itself – can enjoy several benefits. 

·       For Consumers

– More Choices: Consumers enjoy a broader selection of products from multiple platforms and vendors.

– Competitive Pricing: Healthy competition among sellers can lead to better pricing options and discounts.

– Simplified Process: ONDC brings products across different platforms into one, which allows for a streamlined shopping experience.

·       For Sellers

– More Consumers: ONDC enables sellers, particularly smaller businesses, to reach a wider consumer base.

– Lower Costs: Reduced dependency on a single, big platform means fewer commission fees for sellers.

– More Autonomy: Sellers have more control over their listings, pricing, and customer interactions.

·       For the E-Commerce Market

– Encourages Competition: ONDC is crucial to decentralise the e-commerce space and reduce the dominance of large platforms. This creates a fairer, competitive market.

– Promotes Innovation: Its open structure allows new businesses and services to join and encourages fresh ideas.

– Supports Digital Inclusion: ONDCbrings small businesses and local stores into the digital marketplace to create a more inclusive digital economy.

Also Read: Evolving Current Account Trends & the Impact of Digital Advancements

Conclusion

The Open Network for Digital Commerce (ONDC) will help transform digital commerce in India. ONDC’s open, accessible structure will help expand customer choice, support smaller businesses, and foster healthy competition across the e-commerce sector. 

If you are a business looking to make the most of the opportunities in this unfamiliar landscape, the first step is effective financial management. IndusInd Bank’s current account options are designed to support business growth in the digital economy. 

Our current accounts offer high transaction limits, overdraft facilities, digital payment options, and on-the-go banking across different channels. This makes an IndusInd Bank’s current account the ideal choice for handling the day-to-day operations of businesses participating in e-commerce. 

The best part? We have simplified the current account opening process as well, as you can open a new account digitally, right away! Open a current account with IndusInd Bank now! 

Disclaimer:

The information provided in this article is generic and for informational purposes only. It is not a substitute for specific advice in your circumstances. Hence, you are advised to consult your financial advisor before making any financial decision. IndusInd Bank Limited (IBL) does not influence the views of the author in any way. IBL and the author shall not be responsible for any direct/indirect loss or liability incurred by the reader for making any financial decisions based on the contents and information.