EXPLAINED: What Is Open Network For Digital Commerce, How Will It Work And What’s In Store For Buyers, Sellers

The  ONDC platform will allow buyers and sellers to connect and transact with each other online, no matter what other application they use. Here's all about the e-commerce network that is trying to end the dominance of US based companies Amazon.com and Walmart

New Delhi: India will on Friday launch an Open Network for Digital Commerce (ONDC) as the government tries to end the dominance of US based companies Amazon.com and Walmart in the fast-growing e-commerce market. The  ONDC platform will allow buyers and sellers to connect and transact with each other online, no matter what other application they use. It will be soft-launched on Friday before being expanded, the trade ministry told Reuters. The government document said that two large multinational players controlled more than half of the country’s e-commerce trade, limiting access to the market, giving preferential treatment to some sellers and squeezing supplier margins. It did not name the companies.

It is to be noted that the launch of the platform comes after India’s antitrust body on Thursday raided domestic sellers of Amazon and some of Walmart’s Flipkart following accusations of competition law violations. The companies did not respond to request for comment on the raids.

What is Open Network for Digital Commerce (ONDC)

ONDC spearheaded by the commerce ministry is an initiative aimed to promote open networks for all aspects of the exchange of goods and services over digital or electronic networks. ONDC is to be based on open-sourced methodology, using open specifications and open network protocols independent of any specific platform.

Govt claims that ‘as UPI is to the digital payment domain, ONDC is to e-commerce in India.’ The initiative is aimed to democratise digital commerce and move it from platform-centric model to an open-network model. Union Commerce and Industry Minister Piyush Goyal says that ONDC will work both for products and services.

How will ONDC work

1. ONDC goes beyond the current platform-centric digital commerce model where the buyer and seller have to use the same platform or application to be digitally visible and do a business transaction.
2. According to Commerce Ministry, the foundations of ONDC are to be open protocols for all aspects in the entire chain of activities in exchange of goods and services, similar to hypertext transfer protocol for information exchange over internet, simple mail transfer protocol for exchange of emails and unified payments interface for payments.
3. These open protocols would be used for establishing public digital infrastructure in the form of open registries and open network gateways to enable the exchange of information between providers and consumers.
4. Providers and consumers would be able to use any compatible application of their choice for the exchange of information and carrying out transactions over ONDC.

What are the potential benefits of ONDC?

For sellers:

1. Access to more buyers
2. Better discoverability of products and cost
3. Autonomy on terms because of multiple choices for being digitally visible
4. Lower cost of doing business
5. More options for value chain services like logistics and fulfilment

For buyers:

1. Access to more sellers and therefore more choices
2. Better service and faster deliveries due to access to hyper-local retailers
3. Better customer experience

What is ONDC not?

1. A government regulatory body
2. A super aggregator application or a platform
3. A central intermediary
4. A medium to help digitise business

(With inputs from agencies)