The government has established the Open Network for Digital Commerce (ONDC) to facilitate e-commerce for small businesses and break the monopoly of the e-marketplace giants. ONDC was founded in response to the government’s goal of democratizing e-commerce in India. With the assistance of this new setup, Indian e-commerce will move away from the current platform-centric model and toward an open network. This means that a large client base can be reached without registering on multiple sites, and all online businesses will benefit from increased visibility and equitable access to growth opportunities.
For public procurement, reverse auctions and bids are used, and the internet store allows for direct purchases of goods up to Rs 50,000. ONDC will be available to all online shoppers in the country, with no restrictions. A committee is said to be formed to tighten protocols and resolve conflicts in order to ensure the smooth operation of ONDC.
As an open network, the goods and services of all participating e-commerce platforms will be displayed in search results for all networked apps. It is a network that connects retailers, consumers, logistics providers, and financial service providers. The ONDC promotes inclusivity, discoverability, and interoperability, all of which aid in the growth of small online merchants.
The most significant advantage is that anyone, even the smallest merchants in the most remote locations, can join ONDC. It will benefit small businesses by ensuring that they have an equal opportunity to interact with large corporations, serve customers online through e-commerce platforms, and defend their businesses.
ONDC has already piloted the system in five cities: Delhi, Bengaluru, Coimbatore, Shillong, and Bhopal.
The benefits and drawbacks of ONDC
- Reduce entry barriers to encourage competition and, as a result, market growth.
- A common seller registry will help all players significantly expand their seller base.
- In the case of UPI, network effects tend to create virtuous growth cycles over time.
Challenges
- Unlike UPI, ONDC is a complex ecosystem to implement.
- The network’s monetization is unclear.
- It could take years for the network effect to gain traction.
