How Does ONDC Work?

ONDC (Open Network for Digital Commerce) is a government initiative to simplify online shopping for both buyers and sellers. It simply aims to provide a single platform for consumers, reducing the need for multiple apps, while offering more choices and ensuring fair competition for businesses. Imagine it like building digital roads that connect all kinds of businesses, from tiny shops to big companies. As more businesses join, it's changing how sellers and buyers interact in a more democratic way.

ONDC tries to give you more choices by breaking the control of big and monopolistic platforms and helping small businesses get a fair chance. It lets you shop freely without being tied to one app, using smart technology to improve delivery and protect your privacy.

ONDC (Open Network for Digital Commerce) is a government initiative to simplify online shopping for both buyers and sellers. It simply aims to provide a single platform for consumers, reducing the need for multiple apps, while offering more choices and ensuring fair competition for businesses. Imagine it like building digital roads that connect all kinds of businesses, from tiny shops to big companies. As more businesses join, it's changing how sellers and buyers interact in a more democratic way.

ONDC tries to give you more choices by breaking the control of big and monopolistic platforms and helping small businesses get a fair chance. It lets you shop freely without being tied to one app, using smart technology to improve delivery and protect your privacy.

A Brief Timeline

In July 2021, the DPIIT (Department for Promotion of Industry and Internal Trade) set up a council to guide this new initiative called ONDC, starting with ₹10 crore funding. By early 2022, public and private groups had started investing to help ONDC grow. ONDC started its pilot phase in April 2022 in five cities, with the first order placed through Paytm for Woolly Farms.

By July, ONDC had managed to secure ₹255 crore from over 20 organizations for expansion. It partnered with platforms like Petpooja and GrowthFalcons to help food and beverage businesses join the network and complete live transactions. By August 2022, ONDC had expanded to 51 cities and towns and started preparing for nationwide use. It also worked with NABARD to support farmers and collaborated with the government to promote schemes like ODOP and create easy-to-use apps.

How It Actually Works

Currently, in e-commerce, a buyer can only choose from products listed on a specific platform, with all stages of the transaction handled by that platform. With ONDC, it’s like ordering food on Zomato but having the freedom to mix and match. You could pick a product from one platform, and choose any delivery service to bring it to you. Everything works independently, giving buyers more choice and flexibility.

A Brief Timeline

In July 2021, the DPIIT (Department for Promotion of Industry and Internal Trade) set up a council to guide this new initiative called ONDC, starting with ₹10 crore funding. By early 2022, public and private groups had started investing to help ONDC grow. ONDC started its pilot phase in April 2022 in five cities, with the first order placed through Paytm for Woolly Farms.

By July, ONDC had managed to secure ₹255 crore from over 20 organizations for expansion. It partnered with platforms like Petpooja and GrowthFalcons to help food and beverage businesses join the network and complete live transactions. By August 2022, ONDC had expanded to 51 cities and towns and started preparing for nationwide use. It also worked with NABARD to support farmers and collaborated with the government to promote schemes like ODOP and create easy-to-use apps.

How It Actually Works

Currently, in e-commerce, a buyer can only choose from products listed on a specific platform, with all stages of the transaction handled by that platform. With ONDC, it’s like ordering food on Zomato but having the freedom to mix and match. You could pick a product from one platform, and choose any delivery service to bring it to you. Everything works independently, giving buyers more choice and flexibility.

ONDC works as a decentralized network, connecting buyers and sellers through a system that follows global e-commerce standards. A decentralized network means that no one company or platform controls everything; instead, many different people and businesses work together, following common rules. To know more about this network and who actually “owns” ONDC, feel free to read another of our blogs: https://sellersetu.in/blog/ondc-ownership-model

ONDC has three main components: buyer apps (such as chatbots and voice assistants), seller apps (that manage orders and product catalogs), and logistics services like DTDC, Dunzo etc. (which connect buyers and sellers, like location-based discovery apps). ONDC works using a system where each part operates separately but can easily communicate with other apps through APIs, making it simple to connect different platforms. An API is a set of rules that allows different software to communicate and share data with each other. It uses something called the Beckn protocol, an open system that allows different online marketplaces to work together.

The ONDC platform also has several key features like an easy registration section for businesses to join, product catalogs to help customers find what they need, and a secure system to store personal data.

ONDC works as a decentralized network, connecting buyers and sellers through a system that follows global e-commerce standards. A decentralized network means that no one company or platform controls everything; instead, many different people and businesses work together, following common rules. To know more about this network and who actually “owns” ONDC, feel free to read another of our blogs: https://sellersetu.in/blog/ondc-ownership-model

ONDC has three main components: buyer apps (such as chatbots and voice assistants), seller apps (that manage orders and product catalogs), and logistics services like DTDC, Dunzo etc. (which connect buyers and sellers, like location-based discovery apps). ONDC works using a system where each part operates separately but can easily communicate with other apps through APIs, making it simple to connect different platforms. An API is a set of rules that allows different software to communicate and share data with each other. It uses something called the Beckn protocol, an open system that allows different online marketplaces to work together.

The ONDC platform also has several key features like an easy registration section for businesses to join, product catalogs to help customers find what they need, and a secure system to store personal data.

The order fulfillment section makes sure your purchases are processed and delivered smoothly, while the feedback section allows users to share their experiences, helping improve the platform. All these features work together to create a user-friendly, secure, and efficient online shopping experience.

How It Benefits Buyers and Sellers

ONDC provides consumers with access to a wider range of services on a single platform while offering more competitive prices. This is possible because the commission charged by ONDC is significantly lower compared to major e-commerce players like Zomato and Amazon, reducing overall costs for both sellers and buyers.

For sellers, ONDC provides pan-India visibility, helping small businesses compete by reducing fees and giving them more control over pricing. It connects these businesses with new customers, supports job creation, and empowers even the smallest enterprises from the most remote regions of India to grow and thrive in the digital economy. In more recent news, ONDC saw a strong 7.6% increase in transactions in October 2024, with exponential growth in Karnataka, Delhi, and Uttar Pradesh. The platform is expanding fast with more sellers onboarding every day and increasing incentives for small businesses.

The order fulfillment section makes sure your purchases are processed and delivered smoothly, while the feedback section allows users to share their experiences, helping improve the platform. All these features work together to create a user-friendly, secure, and efficient online shopping experience.

How It Benefits Buyers and Sellers

ONDC provides consumers with access to a wider range of services on a single platform while offering more competitive prices. This is possible because the commission charged by ONDC is significantly lower compared to major e-commerce players like Zomato and Amazon, reducing overall costs for both sellers and buyers.

For sellers, ONDC provides pan-India visibility, helping small businesses compete by reducing fees and giving them more control over pricing. It connects these businesses with new customers, supports job creation, and empowers even the smallest enterprises from the most remote regions of India to grow and thrive in the digital economy. In more recent news, ONDC saw a strong 7.6% increase in transactions in October 2024, with exponential growth in Karnataka, Delhi, and Uttar Pradesh. The platform is expanding fast with more sellers onboarding every day and increasing incentives for small businesses.

(Credit: First India)

Find out more about the recent updates and statistics about ONDC by reading this: https://sellersetu.in/blog/updates-nov-24

India's digital buyers are expected to exceed 380 million by 2025, and ONDC will be helping small retailers and logistics businesses tap into this growing market, offering a level playing field with major e-commerce giants.

Partnering with SellerSetu allows your brand to seamlessly join the ONDC network and access new growth possibilities. Whether you're a newcomer or aiming to expand, SellerSetu offers the resources and assistance required to thrive in the digital marketplace.

(Credit: First India)

Find out more about the recent updates and statistics about ONDC by reading this: https://sellersetu.in/blog/updates-nov-24

India's digital buyers are expected to exceed 380 million by 2025, and ONDC will be helping small retailers and logistics businesses tap into this growing market, offering a level playing field with major e-commerce giants.

Partnering with SellerSetu allows your brand to seamlessly join the ONDC network and access new growth possibilities. Whether you're a newcomer or aiming to expand, SellerSetu offers the resources and assistance required to thrive in the digital marketplace.

How Does ONDC Work?

How Does ONDC Work?