India is witnessing a quiet but powerful shift in the way digital commerce operates. While giants like Amazon and Flipkart have long dominated the online shopping scene, a new player backed by the Government of India is working toward a completely different model. It’s called ONDC, and it aims to revolutionize how buyers and sellers interact online.
But what is ONDC exactly? How does it work, and why is it being called India’s answer to monopolized e-commerce? This article breaks down everything you need to know about ONDC — its goals, structure, benefits, challenges, and its long-term potential to reshape online business in India.
What is ONDC?
ONDC stands for Open Network for Digital Commerce. It’s an open-source network developed by the Government of India’s Department for Promotion of Industry and Internal Trade (DPIIT), under the Ministry of Commerce and Industry.
Unlike traditional e-commerce platforms that operate as closed systems, ONDC allows any seller to connect with any buyer through a common digital infrastructure. The idea is to democratize e-commerce, reduce dependency on large platforms, and empower smaller businesses to sell online with equal opportunity.
Why Was ONDC Created?
Over the years, a handful of e-commerce companies have gained massive control over India’s digital shopping space. While they offer convenience, their dominance has also raised concerns:
- High commissions and fees for sellers
- Unfair promotion of their own products over third-party sellers
- Lack of transparency in pricing and delivery
- Barriers for local kirana stores and small businesses to compete
To address these issues, the government introduced ONDC as a public digital infrastructure, similar to how UPI transformed the digital payments space. ONDC aims to bring interoperability and neutral access to the digital commerce ecosystem.
How Does ONDC Work?
To understand ONDC, think of it like UPI — where different banks, apps, and users interact seamlessly across a unified platform.
ONDC separates the buyer side, seller side, and logistics side into independent services that can all talk to each other through the network. Instead of one app doing everything, various players can participate in different roles.
Here’s a simple example:
- A customer uses a buyer app (like Paytm or Meesho) to search for a product.
- ONDC connects this search to seller apps (like eSamudaay, GoFrugal, or even a local kirana’s inventory).
- Once the product is selected, a logistics provider (like LoadShare or Dunzo) handles the delivery.
- The buyer pays digitally through the app, and the transaction is completed.
This open network allows any buyer app to talk to any seller app, giving customers access to more choices and businesses access to more customers.
Key Features of ONDC
- Open Protocol: No single company owns or controls ONDC. It’s based on open-source standards.
- Decentralization: Buyers, sellers, logistics, and payment partners can all be separate entities working together.
- Level Playing Field: Small retailers, local stores, and startups can join without paying hefty platform fees.
- Interoperability: A buyer on one app can discover and buy from a seller on a completely different app.
- Inclusion: Supports sellers in multiple Indian languages, making it easy for local businesses to adopt.
Benefits of ONDC for India
1. Empowering Small Businesses
One of ONDC’s main goals is to enable millions of small retailers, especially local kirana stores, to sell online without depending on large e-commerce giants. This promotes inclusive growth and supports rural entrepreneurship.
2. Lower Costs for Sellers
By reducing platform commissions and enabling direct connections, ONDC allows sellers to retain more profits. This can help them offer more competitive prices to customers.
3. More Choices for Consumers
Instead of being limited to what’s available on a single app, consumers can discover a wider variety of products from various sellers across the country.
4. Transparent Pricing
ONDC encourages price transparency by allowing open comparisons across multiple sellers. This can help prevent artificial price inflation.
5. Boost to Local Economies
As more small businesses go digital, local economies can flourish. It also reduces over-dependence on centralized warehousing and supply chains.
Who Are the Early Participants?
Several companies and startups have already joined ONDC in different capacities:
- Buyer apps: Paytm, PhonePe, Craftsvilla
- Seller apps: SellerApp, eSamudaay, Digiit
- Logistics partners: LoadShare, Dunzo, Delhivery
- Banking/payment partners: HDFC, Kotak Mahindra, IDFC First Bank
The government aims to bring onboard over 1 lakh sellers and 10 crore products over time.
Challenges Facing ONDC
While the concept is promising, ONDC also faces several challenges in execution.
1. Adoption and Awareness
Many small retailers are still unaware of ONDC or lack the technical knowledge to use it. Creating awareness and providing support will be critical.
2. Technology Integration
Sellers must integrate their systems with ONDC-compatible platforms. This may require training, investment, and reliable internet connectivity.
3. User Experience
Managing quality control, delivery standards, and customer support across multiple apps could be more complex than with centralized platforms.
4. Data Privacy and Security
With multiple players involved in a single transaction, protecting customer and seller data will require strict compliance and monitoring.
5. Competition from Established Platforms
Global e-commerce players already have vast infrastructure, funding, and loyal customer bases. Convincing users and sellers to switch to or add ONDC might take time.
The Road Ahead
ONDC is still in its early stages, but the vision is ambitious. It aims to onboard all forms of commerce — from food delivery and groceries to electronics and travel — over the coming years.
The government also plans to support the network with digital infrastructure like DigiLocker, Aadhaar, UPI, and GSTN, creating a robust and secure ecosystem for both consumers and businesses.
If implemented well, ONDC could become to e-commerce what UPI has become to digital payments — a public utility that transforms how India shops online.
Final Thoughts
ONDC isn’t just a new app or website. It’s a bold attempt to reimagine the rules of online commerce in India. By creating an open, inclusive, and transparent digital marketplace, ONDC has the potential to put power back in the hands of small businesses and local entrepreneurs.
For Indian consumers, it promises more choices and better prices. For sellers, it offers a fair chance to compete in the digital economy without being tied down by big tech platforms. And for the country, it could be a major step toward building a truly digital Bharat.
As ONDC grows and evolves, it will be interesting to see how it shapes the future of e-commerce in one of the world’s fastest-growing digital economies.