The Open Network for Digital Commerce (ONDC), known as the Open Network for Digital Commerce, is a government-led platform that intends to create an open, transparent, and independent digital network for e-commerce transactions. It is a decentralised platform that connects buyers and sellers without the use of intermediaries. This has a number of advantages for both sellers and purchasers.
This initiative aims to address the issues of today's e-commerce world and create equal possibilities for all small, mid-tier, and large enterprises, as well as sellers of all types. It enables them to access a large consumer base while avoiding the usual hurdles of traditional digital marketing.
The Open Network for Digital Commerce (ONDC) is a network built on open protocols that allows any network-enabled application to identify and engage in local commerce across areas such as mobility, shopping, food order and delivery, hotel booking, and travel, among others.
The platform aspires to provide new opportunities, reduce digital monopolies, and assist micro, small, and medium firms, as well as small merchants, in gaining access to online platforms. It is a project of the Ministry of Commerce and Industry's Department for Promotion of Industry and Internal Trade (DPIIT).
Why are companies joining ONDC?
Reduced Transaction Costs
Payment processors, logistics providers, marketplaces, and other intermediaries that charge a fee for their services are common in digital commerce transactions. These expenses may pose substantial hurdles for fledgling companies and MSMEs. Micro, Small, and Medium-sized Enterprises (SMEs) that cannot afford the high transaction costs imposed by e-commerce platforms will benefit substantially from ONDC e-commerce. It enables SMEs to conduct business with distant clients due to cheaper transaction costs.
Direct Contact with Customers
The elimination of intermediaries is one of the most popular advantages of Open Network to Digital Commerce. There are no middlemen; sellers deal directly with their clients. Direct interactions with consumers enable firms to form deeper bonds with them, which enhances client retention and encourages repeat business. Furthermore, it enables vendors to upsell their products and services without interruption. Businesses can collect consumer input in this manner and use it to develop their products and services further.
Transaction Security and Transparency
ONDC is built on Distributed Ledger Technology (DLT), which provides immutable records. ONDC guarantees the confidentiality and security of all transactions. The full record of every transaction on the ONDC platform ensures that all transactions are transparent. This transparency aids in the development of customer and seller confidence, which is critical for the industry's continued success.
Availability of Digital Commerce Infrastructure
The availability of digital commerce infrastructure is the next of the Key Benefits of ONDC. ONDC provides full access to the digital commerce infrastructure, which comprises a variety of services such as e-commerce platforms, logistics, payment gateways, and more. Small businesses and individuals that do not have access to regular financial systems may benefit more from this access. As a result, small businesses can generate more sales and money, which supports their efforts towards financial security.
What benefits does ONDC provide both the buyers and sellers?
Benefits of ONDC for Sellers:
1. Wider Reach: ONDC is a platform that operates across India, enabling sellers to connect with a larger audience than they could on any single marketplace.
2. Lower Costs: ONDC does not charge sellers any advertising fees or commissions, which can translate into significant cost savings.
3. User-Friendly Tools: ONDC offers easy-to-use tools and analytics that can help sellers enhance their products and services.
4. Customer Insights: ONDC's analytics provide sellers with valuable insights into customer behaviour, allowing them to tailor their marketing efforts for better results.
5. Supply-Chain Services: ONDC's sellers have access to a variety of supply-chain services, such as logistics and fulfilment.
Benefits of ONDC for buyers:
More choices: ONDC provides buyers with access to a wider range of sellers than any single marketplace. This means that buyers have more options to choose from when looking for a specific product.
Lower prices: ONDC sellers do not have to pay any advertising fees or commissions, which often results in lower prices for buyers.
Seamless and hassle-free experience: ONDC's user-friendly interface is designed to be easy to use and navigate, which makes for a seamless and hassle-free shopping experience.
Personalized recommendations: ONDC uses buyer data to provide personalized recommendations, which can help buyers find the products they are looking for more easily.
Faster deliveries: ONDC includes hyperlocal retailers, which can often lead to quicker deliveries for buyers.
Top companies that joined ONDC
Several renowned companies globally have recognized the potential of ONDC and have joined the platform. These companies include Hindustan Unilever (HUL), ITC, Nestlé, PepsiCo, Dabur India, Godrej Consumer Products, Marico, UPL, Tata Chemicals, and Apollo Pharmacy. Each of these companies brings unique strengths and expertise to ONDC, further enhancing the platform's capabilities and benefits.
Hindustan Unilever (HUL)
HUL is a multinational corporation that offers a diverse portfolio of consumer goods, including detergents, soaps, food products, and personal care items. In order to expand its reach to new markets and customer segments, the company decided to join the ONDC platform.
By doing so, HUL aims to reduce its reliance on large e-commerce platforms and to enhance its brand control and customer relationships. Joining the ONDC platform provides HUL with access to a wider pool of potential customers, reduced costs associated with traditional retail channels, and improved brand visibility and reputation.
ITC is a diversified conglomerate with a vast array of interests including fast-moving consumer goods (FMCG), tobacco, hotels, and packaging. With ITC, businesses can connect with new markets and customer segments, reduce go-to-market costs, and enhance brand visibility and reputation. Additionally, partners gain access to a wider variety of ITC products and potential for better deals and discounts. Furthermore, partnering with ITC also provides support for local businesses and communities.
Nestlé is a renowned global food and beverage company that offers a diverse range of products, including coffee, chocolate, bottled water, and baby food. They are looking to increase the reach and visibility of their products, leverage ONDC's open and decentralized infrastructure, and engage with customers directly to build stronger relationships.
By collaborating with ONDC, Nestlé will have access to their products from a wider range of retailers, which will potentially lead to improved product discovery and personalized recommendations. Additionally, Nestlé is committed to sustainable and ethical practices, and ONDC's platform supports these ideals, making it a perfect partnership for both companies to work towards a better future.
PepsiCo is a well-known multinational food, snack, and beverage company that offers a wide range of products such as Pepsi, Lay's, Gatorade, and Quaker. To enhance their business, they have set certain goals, which include expanding their distribution channels for their products, reducing the costs associated with traditional retail channels, and gaining insights into customer behavior.
Achieving these goals could mean that more people will have access to PepsiCo's products from a wider range of retailers, which will lead to potentially better deals and promotions. Moreover, supporting local businesses and communities is another benefit of achieving these goals.
As a global beverage giant, this corporation offers a diverse portfolio of non-alcoholic drinks and has a wide-reaching distribution network. To expand their reach and boost sales, they could consider strategies such as reducing reliance on large e-commerce platforms and enhancing brand control and customer relationships.
On the other hand, partnering with this corporation could offer smaller retailers access to a wider range of Coca-Cola products, which could lead to better deals and promotions for customers. Additionally, the corporation's support for local businesses and communities could be a valuable asset for retailers looking to connect with their community.
Dabur is a prominent Indian company that specializes in the production and promotion of Ayurvedic and natural healthcare products. One of the company's primary objectives is to expand its reach to potential customers throughout India. By doing so, Dabur aims to reduce its dependence on large e-commerce platforms and improve its brand control and customer relationships.
Customers who choose to buy Dabur's Ayurvedic and natural products can expect to benefit from a wider range of options available. Furthermore, the company's decision to reduce seller costs could lead to potentially lower prices for customers. Finally, by supporting traditional Indian brands and products, customers can feel confident that their purchase is contributing to the preservation and promotion of India's cultural heritage.
Godrej Consumer products
Godrej, a top manufacturer and marketer of home care and personal care products in India, offers a wealth of benefits to its customers. By partnering with Godrej, businesses can tap into new markets and customer segments, while also reducing go-to-market costs. In addition, Godrej's products can enhance brand visibility and reputation.
Customers who choose to work with Godrej will gain access to a wider variety of home care and personal care products, as well as the potential for better deals and discounts. Moreover, by supporting local businesses and communities, Godrej is committed to fostering sustainable economic growth.
Marico, a prominent Indian manufacturer and marketer of consumer goods, offers a diverse range of products including hair care products, edible oils, and food products. The company aims to increase the reach and visibility of its products by leveraging ONDC's open and decentralized infrastructure. Through this, Marico will be able to engage with customers directly and build stronger relationships.
Additionally, the partnership with ONDC will provide customers with access to Marico's products from a wider range of retailers. This creates the potential for improved product discovery and personalized recommendations based on the customer's preferences. Furthermore, Marico's commitment to sustainable and ethical practices will be supported through the partnership with ONDC.
UPL is a renowned sustainable agricultural solutions provider with a global footprint. The company is committed to providing top-notch crop protection products and solutions to farmers worldwide. UPL is continuously working towards expanding its distribution channels, reducing costs associated with traditional retail channels and enhancing its data and insights into customer behaviour to provide unparalleled service to its customers.
As a result of its efforts, farmers now have access to UPL's agri-inputs and solutions from a wider range of retailers, which opens up opportunities for better deals and promotions. Moreover, UPL's support for sustainable and climate-friendly agricultural practices ensures that farmers can make a positive impact on the environment while improving their yields.
Tata Chemicals is a well-known manufacturer and marketer of chemicals, fertilizers, and other industrial products in India. The company has recently taken steps to increase its reach to potential customers across India by reducing its reliance on large e-commerce platforms.
This move is expected to help the company improve brand control and customer relationships. By offering access to a wider range of Tata Chemicals' chemicals and fertilizers, customers can benefit from a potential reduction in prices due to reduced seller costs. Additionally, this approach also supports local businesses and communities, providing them with a platform to showcase their products and services to a wider audience.
Apollo Pharmacy is a renowned pharmacy chain in India that offers a diverse range of healthcare products and services. By partnering with them, businesses can connect with new markets and customer segments, while reducing go-to-market costs and enhancing brand visibility and reputation. Customers can also benefit from access to a wider variety of Apollo Pharmacy's healthcare products, potential for better deals and discounts, and support for local healthcare providers and communities.
A social commerce platform based in India serves as a bridge between resellers and buyers. The platform aims to expand its reach to smaller towns and cities in India while providing a more seamless shopping experience for customers. By doing so, the platform hopes to reduce its reliance on large e-commerce platforms.
In addition to the aforementioned benefits, the platform's users will have access to a wider range of products from Meesho's network of sellers, which could lead to a potential reduction in prices due to reduced seller costs. Furthermore, supporting local businesses and communities is another advantage of using the platform.
A logistics and supply chain solutions company based in India has recently expanded its reach to more than 20,000 pin codes across the country. With this expansion, the company aims to improve its logistics efficiency, reduce costs and offer new delivery options to its customers. As part of this initiative, the company has partnered with Xpressbees, which will provide logistics services for their products.
This partnership is expected to offer potential benefits such as faster and more reliable deliveries. Additionally, the partnership is expected to support local businesses and communities, thereby contributing to the overall growth of the logistics industry in India.
India's e-commerce market is expected to undergo a significant transformation by 2025 with the introduction of the Open Network for Digital Commerce (ONDC). It is projected that ONDC will account for 20% of India's e-commerce market, connecting over 100 million sellers and 1 billion buyers. With such a massive user base, ONDC is expected to create over 10 million new jobs in India.
One of the major advantages of ONDC is its open and decentralized architecture, which allows for greater participation and innovation from a wide range of stakeholders. This open platform will foster competition and drive down costs, ultimately benefiting both sellers and buyers. By focusing on small and medium-sized businesses (SMBs), ONDC is committed to empowering these enterprises, which play a crucial role in India's economy. By providing a level playing field for SMBs, ONDC will help them reach a wider audience and compete more effectively with larger e-commerce platforms.
ONDC's focus on connecting buyers and sellers in local markets will help to revitalize local economies and foster economic growth at the grassroots level. This will be particularly beneficial for rural areas, where internet penetration is still relatively low. ONDC's data-driven approach to matching buyers and sellers is expected to lead to more efficient and transparent transactions, which will help to reduce friction in the market and make it easier for buyers to find the products they want at the best prices.
The Indian government is fully supportive of ONDC and has made significant investments in its development. This support will be crucial in ensuring the success of the platform and its widespread adoption across the country. As ONDC continues to grow and mature, it is expected to have a profound impact on the Indian e-commerce landscape. It has the potential to democratize e-commerce, making it more accessible and affordable for all Indians. Additionally, ONDC will play a key role in driving economic growth and job creation in India, paving the way for a brighter future for India's economy.