Open Network for Digital Commerce (ONDC) recorded an all-time high of 8.9 million transactions across retail and ride-hailing segments in May 2024, representing a 23% month-on-month increase in total transaction volume.
ONDC
- Open Network for Digital Commerce (ONDC) is a network of interconnected e-marketplaces through which sellers, including brands, can list and sell their products directly to customers bypassing any middlemen or intermediaries.
- It allows transitioning from a platform-centric model to an open source network for buying and selling goods and services.
- It was launched in 2021 under the Department for Promotion of Industry and Internal Trade (DPIIT) by the Ministry of Commerce as part of the Digital India initiative.
- It offers delivery services for groceries, home decor, cleaning essentials, food delivery and other products.
- It is a not-for-profit organisation that provides a network enabling local digital commerce stores across various industries to be discovered and engaged by any network-enabled applications.
- Similar to the Unified Payments Interface (UPI), ONDC aims to level the operational playing field among e-commerce platforms.
- The Quality Council of India has been tasked with integrating e-commerce platforms through this open-source technology network, allowing users to modify, enhance, or improve the original code.
Objectives
- Democratisation and decentralisation of e-Commerce
- Inclusivity and access for sellers, especially small and medium enterprises as well as local businesses
- Increased choices and independency for consumers
- Making goods and services cheaper.
Working Mechanism
- ONDC functions on the basis of an open network where it will not be a single platform similar to Amazon or Flipkart but rather in the form of a gateway where buyers and sellers across different platforms will be able to connect.
Open Source
- Open source implies that the technology or code deployed for the process is freely made available for everyone to use, redistribute, and modify.
- For instance, the operating system of iOS is closed source, it cannot be legally modified or used.
- Whereas, the android operating system is open source, making it possible for smartphone manufacturers, such as Samsung, Nokia, Xiaomi, etc., to modify it for their respective hardware.
Potential Advantages of ONDC
- Empowering Consumers: ONDC fosters a more transparent environment by potentially increasing access to information.
- This empowers consumers to make informed choices and benefit from a wider array of sellers, potentially leading to lower prices.
- Boosting Competition: By breaking down the dominance of existing platforms, ONDC creates a level playing field. This incentivizes competition among sellers, ultimately translating into a wider variety of products and potentially lower prices for consumers.
- Innovation: The open-source architecture of ONDC fosters innovation.
- Cost Efficiency: ONDC’s decentralised structure has the potential to streamline operations and reduce redundancies and lead to significant cost savings.
- Boosting Small Businesses: ONDC removes entry barriers for small and medium-sized enterprises (MSMEs) and local vendors. This paves the way for greater participation in the digital marketplace, fostering a more inclusive e-commerce ecosystem.