India’s digital commerce flourishes with open network scheme

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The Indian government’s Open Network for Digital Commerce (ONDC), designed to promote open digital networks for the exchange of goods and services, is achieving notable success. It is particularly effective in helping startups and small businesses engage in the digital marketplace, expanding its presence nationwide, and increasing transaction volumes.

“ONDC has contributed to empowering small businesses and revolutionising e-commerce, thus playing a vital role in furthering growth and prosperity,” Prime Minister Narendra Modi said in January.

ONDC is a significant move toward building India’s fair, open, and inclusive digital commerce ecosystem. By tackling monopolistic practices and empowering smaller players, it has the potential to reshape the e-commerce landscape, the Ministry of Commerce & Industry said in a statement.

FollowG, an artificial intelligence (AI)-driven retail platform designed to connect brands, retailers, and consumers, has reportedly integrated with the ONDC to transform the electronics retail industry.

With the introduction of its dedicated seller app, FollowG aims to support over two lakh technology retailers and micro, small, and medium-sized enterprises (MSMEs) by bridging the gap between physical and digital retail with an innovative “phygital” approach.

This integration allows electronics retailers to access India’s extensive e-commerce network, enabling them to sell products nationwide via the ONDC platform. It streamlines operations, boosts profitability, and drives digital transformation through advanced technologies like blockchain, the Internet of Things (IoT), and AI.

“FollowG, by integrating with ONDC Network, is democratizing e-commerce in India by providing a level playing field for electronics retailers. Our goal is to simplify technology for this segment—one of the largest industries in both e-commerce and retail—and make it accessible to stakeholders at an affordable cost,” said Poonam Gugale, chief executive officer of FollowG.

“We believe ONDC Network has the power to reshape the industry. FollowG is committed to contributing to this evolution by equipping manufacturers and retailers with the tools they need to thrive in the digital economy,” Gugale added.

On the other hand, local restaurants are reportedly looking to challenge popular food delivery giants like Zomato and Swiggy by leveraging ONDC and launching private-label food offerings. This strategy aims to give restaurants more control over their digital presence and customer data, reduce costs, select their own logistics partners, and cut down on the commissions of up to 35% charged by Zomato and Swiggy.

Launched in April 2022, ONDC is an initiative to promote open networks for all aspects of exchanging goods and services over digital or electronic networks. ONDC is based on open-sourced methodology, using open specifications and open network protocols independent of any specific platform. ONDC envisions creating a level playing field for sellers, buyers, and service providers across India, particularly startups and MSMEs.

According to Piyush Goyal, Minister for the Ministry of Commerce and Industry, ONDC continues to revolutionize the nation’s e-commerce landscape by bridging the gap between sellers and buyers.

“Over the past 3 years, it has not only achieved numerous milestones but also empowered businesses, especially small enterprises, by creating a level playing field for them on the network,” Goyal said.

Goyal mentioned that the platform boasts a network of over 200 participants, with more than 700,000 sellers and services spanning 600 cities nationwide.

ONDC serves as a unified platform where stakeholders can interact freely without the constraints of exclusive ecosystems. ONDC aims to catalyze innovation and inclusivity in the digital commerce landscape by fostering open protocols and reducing dependence on monopolistic platforms.

With the vision to create an organization with a startup mentality supported by the government, ONDC’s key objectives include breaking the dominance of large e-commerce platforms by enabling interoperability across networks, empowering small businesses, retailers, and local artisans to access the digital marketplace, as well as lowering the cost of customer acquisition and transaction processing for sellers.

ONDC also intends to bridge regional and linguistic gaps, bringing untapped markets into the fold of digital commerce while increasing options for buyers by providing access to a broader array of sellers. Due to its decentralized architecture, ONDC does not own or operate e-commerce services but acts as an enabler for interconnectivity, according to the Commerce & Industry Ministry’s statement.

As the MSME sector forms the backbone of India’s economy, ONDC provides them a unique opportunity to overcome challenges such as limited digital reach and high platform costs.

The Department for Promotion of Industry and Internal Trade (DPIIT) hosted the inaugural ‘ONDC Startup Mahotsav’ last year, celebrating the Startup India initiative and ONDC. The hybrid event saw around 5,000 startups and over 125 ecosystem stakeholders, including unicorns and high-growth businesses like EaseMyTrip, Livspace, and Zerodha, signing Letters of Intent (LoI) to collaborate with ONDC. Panel discussions focused on topics like ‘Building a Collaborative Future of Indian E-Commerce’ and ‘Driving Startup Growth through ONDC,’ highlighting opportunities for startups to grow using the ONDC network.

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