The Government of India has launched the pilot phase of ONDC (Open Network for Digital Commerce). The operations have started in five selected cities in India, and the project is planning to include 100 cities in India in the network by August. With ONDC, the goal of the Indian government is to end the monopoly of two US-based ecommerce companies in the online marketplace.
You must have gone through the above headlines on your smartphone, television, or newspaper. But, do you know the actual concept of ONDC and what changes it is going to bring in? Is it the ecommerce website being introduced and headed by the government of India or something else? What impacts will it put on the sellers and buyers of the market? We will answer all these questions in this blog.
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What is ONDC (Open Network for Digital Commerce)?
To be specific, ONDC will be an open platform for all ecommerce transactions and activities around the country. However, it is not going to be the only option, but it will probably be the most extensive network.
Currently, e-commerce networks are more platform-centric. It means that a buyer and seller must be present on the same platform to make a transaction. If a specific pair of shoes are listed on Amazon, the customer will have to go on the website or app of Amazon to get the pair of shoes. So, the transactions are more specified and platform-centric.
ONDC will change this scenario as a whole. ONDC will not be an ecommerce website or platform to sell or buy the products. It is a network on which the different sellers, buyers, and delivery partners will register themselves. A connection between all these bodies and entities will be established, and thus a cross-connection will be ensured to introduce a more broad and centralized marketplace.
It will be easier to understand the above statement with the help of an example. Suppose there is a pair of shoes provided by XYZ company at Amazon. However, you only have Flipkart for shopping purposes. In this case, if Amazon and Flipkart are registered with ONDC, you will be able to buy that pair of shoes with any shopping application you have access to.
ONDC is launched by The Commerce and Industry Ministry of India. The government of India launched the concept on 29th April 2022. The project was launched initially in the country’s five cities, including
- Delhi NCR
Working Principle of ONDC
The working principle of ONDC is focused more on the network-centric approach rather than the platform-centric approach. The network aims at drawing all the e-commerce platforms into one place. The e-commerce landscape of India is currently dominated by two major players, viz. Amazon and Flipkart. So, it becomes challenging for other e-commerce platforms and small individual sellers to make space for themselves. At the same time, some big dealers have a monopoly on these two platforms, making it difficult for other dealers to do business. ONDC will ensure that all the platforms, dealers, sellers, and delivery partners share the same platform with equal visibility.
ONDC aims to make the digital market accessible to all. Now, the small dealers and sellers will be able to register themselves on the digital commerce platform and get the same visibility as the big dealers.
While launching the ONDC, The Commerce and Industry Ministry had the following objectives:
- Enable the ecommerce for population-scale adoption
- To promote the open, inclusive, and competitive marketplace for participant platforms and software applications
- Establishing the digital infrastructure so that industry participants can efficiently implement a variety of services
- Making the ecommerce small-business-friendly
- Make the rapid adoption of ecommerce by the urban and rural consumers and sellers
Key Stakeholders in ONDC
So far, around twenty private and government organizations have confirmed their investment in the ONDC worth INR 2.55 billion. Several banks and financial sector firms have also made a good investment in the new government network. According to the reports, HDFC, Axis, Kotak Mahindra, State Bank of India, and Punjab National Bank have made investments in the shares of ONDC.
Following is the estimate of investment made by individual firms:
|Investor||Investment||Equity shares of ONDC||Face value for each share|
|Axis Bank||INR 100 million||10,00,000||INR 100|
|HDFC Bank||INR 100 million||10,00,000||INR 100|
|State Bank of India||INR 100 million||10,00,000||INR 100|
|Kotak Mahindra Bank||INR 100 million||10,00,000||INR 100|
Advisory Council of ONDC
The Advisory Council of ONDC consists of the following members:
Additional Secretary Department for Promotion of Industry and Internal Trade, Ministry of Commerce & Industry
Shri R.S. Sharma
National Health Authority
Shri Nandan M. Nilekani
Non-Executive Chairman, Infosys
Ms. Anjali Bansal
Founder & Chairperson, Avaana Capital
Shri Adil Zainulbhai
Chairman, QCI and Capacity Building Commission
Shri Arvind Gupta
Co-Founder & Head, Digital India Foundation
Shri Dilip Asbe
MD & CEO, NPCI
Shri Kumar Rajagopalan
Shri Suresh Sethi
MD & CEO, NSDL
Initial Promoters and Funding Companies
ONDC has been started as a non-profit platform. It is currently in the formation stage. However, the idea of government has managed to attract a lot of entities and businesses as promoters and fund providers. The major bodies which have made the commitment of funding to ONDC are:
- National Payment Corporation of India
- National Stock Exchange of India Ltd.
- HDFC Bank
- Central Depository Services (India) Ltd.
- Kotak Mahindra Bank
- Small Industries Development Bank of India
- State Bank of India
- Punjab National Bank
- Axis Bank
- Bank of Baroda
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Board of Directors at ONDC
As per the reports, ONDC has four Board of Directors onboard. The names are:
- Shri Arvind Gupta, Co-Founder & Head, Digital India Foundation
- Shri Thampy Koshy, Chief Executive Officer ONDC
- Shri Adil Zainulbhai, Chairman, QCI and Capacity Building Commission
- Shri Suresh Sethi, MD & CEO, NSDL
Potential Benefits of ONDC for Sellers
- Getting exposure to a broad consumer base
- Having better discoverability of the cost and products
- Low investment and cost for doing the online business
- More and better options for the delivery partners
Potential Benefits of ONDC for Buyers
- Wide range of choices among the dealers to get the best deal
- An excellent medium to help the digitize business
- The central platform to buy any product
Should You Be Concerned About the ONDC?
YES, you need to be concerned about the ONDC if you want to experience a positive curve in your business.
The number of e-commerce users and online shoppers is expected to reach 220 million by 2025 in India. It indicates that the online platforms will be a huge platform to gain business from millions of consumers. If you are also a business owner, it is more like the need and less like the option for you to step into the online business platform. ONDC is making this digital path even easier for you.
Till now, if your presence on online platforms was not broad, you would have been suppressed by big dealers dominating ecommerce platforms. However, ONDC terminates this dominance from the roots. No matter if you are listing your goods on an existing ecommerce website or your website, as long as it is registered with ONDC, you will be highlighted equally to any big dealer in the industry.
So, it is nothing less than a golden opportunity for you to bring your business online and serve a massive consumer base. Taking the right decision at this moment can take your business to greater heights with ease.
How Can We Help You?
Once you have decided to start your online journey, the first thing you will need is an ecommerce website or platform. With the help of ONDC, you are going to showcase your products to a broad audience range. So, your ecommerce website must enhance the shopping experience of the users. We at Emizentech provide you with the support of experienced developers that will help you develop your ecommerce website. The website will be designed as per your specific needs and requirements to ensure an excellent experience for you and your customers.
ONDC is a kind of ecommerce network introduced by the government of India. The platform’s primary focus is to eliminate the dominance of two big players from the ecommerce landscape of India and provide equal opportunity and growth to all the sellers and dealers. Following a network-centric approach, ONDC will connect the sellers, buyers, and delivery partners from different partners to each other and thus will increase the options to select from for everyone.