India’s ONDC is one year old. Here's a status check

Open Network for Digital Commerce

Launched in April 2022, the Open Network for Digital Commerce (ONDC) project, aimed at democratising the digital ecosystem in an attempt to become a single point of access for all digital services, has registered significant growth. Moneycontrol takes a look at the journey of the platform, a not-for-profit promoted by the Department for Promotion of Industry and Internal Trade.

Platform growth: from 30 transactions to 600 a day

Envisioned to make e-commerce more inclusive and accessible for consumers, the platform has, as per official claims, “achieved major milestones in the past few months”.

Addressing a press conference in Delhi on April 6, joint secretary, DPIIT, Ministry of Commerce and Industry, Sanjiv, and ONDC CEO T Koshy said that the platform has been able to find 37 network participants ranging from market leaders to emerging Indian startups with the likes of PhonePe, Hindustan Unilever and ITC joining the platform as sellers.

The platform is currently working with over 26,000 merchants, offering more than 27 lakh products on its network.

The platform takes no money from the government but is funded by banks including State Bank of India, Axis Bank, Kotak Mahindra Bank, HDFC Bank, ICICI Bank and Punjab National Bank, among others. “This is an effort in industry players coming together for their own good and for the greater good of the public. There is no joining charge if anyone wants to on-board us,” Koshy said.

The network, as per Sanjiv, had started with only two domains, food and groceries. “It has however expanded to include beauty products and fashion as well in the last couple of weeks,” he said.

The platform, which had about 30-40 transactions a day back in September last year, now boasts of over 600 transactions a day, said Sanjiv.

The platform has also grown in the total number of merchants, going from around 800 in December to more than 26,000 currently.

“This number grew only in the past couple of weeks. Earlier we were approaching others to join our platform but people have started to come to us now. We are hoping to double this number within a month,” said Koshy.

The platform also recently went live with its electronics sector and hopes to see positive response there as well.

Special attention to non-digitised sellers

ONDC is giving special attention to sellers, merchants and businesses with little or no access to the internet, with eight Kanchipuram weavers and four social sector enterprises live on ONDC with the support of the Small Industries Development Bank of India.

“Despite most of India now having access to digital technology, the penetration of digital commerce has remained low at about 5 percent in India. Our aim here has been to find something truly transformational. We are thus reaching out to organisations like NABARD (National Bank for Agriculture and Rural Development), SIDBI, other district-level organisations to bring such persons on board,” said Sanjiv.

“The organisations are keen on getting partners of their ecosystem on board while also helping them become digitally literate to gain from the network,” he added.

No algorithms which exploit sellers

The platform, by its founding concept, will try to create an ideal economic market both for sellers as well as buyers, said Sanjiv.

Expanding on this, he added, “Sellers are generally exploited at big platforms. Even if someone is selling a product for a lower price, they are not shown anywhere in the, say, list of top 10 because of biased algorithms. Our platform will do away with all this. The customer would be able to see the same quality products being offered at cheapest prices which will help them make an informed decision.”

This will help reduce the control of online retail giants, and is expected to enable a level playing field for all businesses to operate in an open, transparent and uniform environment. The step will also help local vendors market their products and find space in e-commerce.

Logistics sector gains momentum

Shiprocket was the first intercity logistics provider to plug into the ONDC network, on October 22 last year, enabling sellers from all segments to ship products to cities and towns across India.

Since then, the logistics sector has seen significant growth on the platform with names such as Dunzo, Delhivery, Loadshare, Grab and Ekart signing up.

The platform is also under integration with India Post to strengthen its logistics services and take online deliveries to all parts of the country.

“ONDC logistics partners can deliver products to 90 percent-plus PIN codes across India. The aim is to have coverage in every PIN code in India, which will be achieved very soon,” said Koshy.

Mobility a challenge

Mobility has been enabled in only two cities with 5 lakh users registered for the service since the inception of the platform a year ago. While the platform works with mobility partners in Kochi and Bengaluru, it is yet to be approached by partners in other cities, even in its base city of Delhi.

“We on-boarded Namma Yatri (an app that links drivers to customers) onto our platform as part of our open mobility initiative in Bengaluru two weeks back. Before that, we have found success in working with a taxi service in Kochi which we launched last year in November. However, no mobility merchants have approached ONDC in Delhi yet,” Sanjiv said.

The government continues to be in talks with several mobility partners in various towns of the country.

ONDC’s future

“We are only at the beginning of a new journey,” says Sanjiv.

Officials hope to increase e-commerce penetration in the country to 25 percent in the next two years, reaching 900 million buyers and 1.2 million sellers through the network and reaching a gross merchandise value of $48 billion.

“We want to take this platform to the level of penetration our UPI (Unified Payments Interface) has,” Sanjiv added.