Open Networks for Online Selling: ONDC

How India's Open Network for Digital Commerce aims to let small sellers reach online buyers without depending on a few big platforms.

Online shopping is dominated by a few large platforms. Small sellers often depend on them to reach customers, paying commissions and following their rules. India launched an experiment to change this: the Open Network for Digital Commerce, or ONDC.

The idea

ONDC, a government-backed non-profit initiative launched in pilot form in 2022, is not a single app or marketplace. It is an open network, a set of shared rules and protocols that let different apps connect. A buyer using one app can find and buy from a seller listed on a completely different app.

This is similar to how UPI works for payments or how email works across providers: you can send an email from one provider to another. ONDC aims to do the same for online commerce.

Why it matters

Reducing platform power: sellers are not locked into one platform.
Lower costs: competition between apps could reduce commissions.
Inclusion: small shops, artisans and farmer groups could reach online buyers more easily.
Innovation: new apps can serve niche markets without building a huge customer base first.

Progress and challenges

ONDC has grown in areas such as food delivery, groceries and mobility, with millions of transactions a month at times. But it faces challenges:

Customer habits: buyers are used to big platforms with fast delivery and easy returns.
Logistics and quality: delivering reliably across many independent sellers is hard.
Incentives: early growth relied partly on discounts.
Trust: resolving disputes across different apps is complex.

A handloom weaver online

A handloom weaving cooperative lists its products through a small seller app connected to ONDC. A shopper in another city using a different buyer app searches for handloom sarees and finds the cooperative's listing. The cooperative reaches a national market without building its own website or paying a large platform commission.

The bigger question

ONDC is an important test of whether open, shared infrastructure can make digital markets more competitive, as UPI did for payments. Economists are watching whether it can grow beyond early adoption.

Thinking ONDC is just another shopping app

ONDC is a network that connects many apps, not an app itself. Its goal is to change how online markets are structured, allowing competition among many apps rather than a few closed platforms.

Key takeaways

ONDC is an open network, launched in 2022, that connects buyers and sellers across different apps.
It aims to reduce dependence on a few large platforms and lower costs for small sellers.
It works like UPI or email, using shared rules rather than one platform.
Customer habits, logistics and trust are key challenges.