Open Network for Digital Commerce | Basics
ONDC is going to change how Indians do business digitally in this decade.
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ONDC is one of the greatest interventions by the Indian government after the success of UPI. As UPI is now at the core of most of the financial transactions, ONDC will establish the new core for digital commerce in India. If you are willing to start any business in India in the coming decade, getting an understanding of ONDC is a must for you.
In this article, we will explore everything about ONDC ranging from its basics to how it is going to change digital commerce in India. It’s a long article. You can binge-read it or read it in pieces. Happy reading!
Garvit Sahdev enjoys understanding ideas that shape our world. The Thoughtful Tangle is an initiative to share this journey and experience with his friends who love to do the same. He selects one idea and deepens into it to understand its basics, relevance, impact, and opportunities.
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ONDC means ‘Open Network for Digital Commerce’. Before we dive deep into it let’s start with the basics.
What is a network?
In the digital space, a network refers to a collection of interconnected computers, servers, devices, or other entities that can communicate and share resources. This interconnectedness enables the exchange of information, data, and services, facilitating communication and collaboration in the digital realm.
Key components and characteristics of a network in the digital space include:
1. Nodes:
Nodes are the individual devices or entities connected within the network. These can include computers, servers, routers, switches, and other digital devices.
2. Protocols:
Network protocols define the rules and conventions for communication within the network. They specify how data is formatted, transmitted, and received, ensuring standardized and efficient data exchange.
3. Data Transmission:
Networks facilitate the transmission of data in various forms, such as text, images, audio, and video. This data can be exchanged between nodes for purposes like file sharing, video conferencing, or accessing online services.
ONDC is utilizing such a digital network to revolutionize commerce space. We will take one step at a time to develop a thorough understanding of this initiative.
Why is ONDC an open network?
The openness of a network is decided based on its application. The intention behind building ONDC is to boost the adoption of digital commerce in India which simply means that GOI wants more and more customers and businesses to be a part of it. It can only be ensured by building an open network.
Let's have a quick look at the benefits of an open network:
Open networks are more inclusive and accessible to a broader range of participants.
Open networks emphasize interoperability by adopting standardized protocols and interfaces. This allows different systems and services, even from different providers, to work together harmoniously.
Open networks encourage healthy competition as multiple participants can enter the market. This can lead to a more diverse and consumer-friendly marketplace.
Open networks are generally more scalable as they allow for easier integration of new participants and technologies. The modular and interoperable nature supports growth without major overhauls.
What is digital commerce?
We all have experienced physical commerce. When buying a pair of jeans, for example, the jeans were manufactured, and shipped to a retailer near you, and you would visit the retailer to explore options before making your purchase.
In digital commerce, you buy products online from marketplaces like Myntra and Amazon or directly from the brand's website such as Levi's website. You can view the product in its digital avatar and decide to purchase it. Once you click on the buy button, the entire digital commerce system gets activated to deliver the product from the retailer to your doorstep.
ONDC: Why and What?
I hope till now you have developed a basic understanding of each of the terms used in the name ‘Open Network of Digital Commerce’.
Now, let's understand why ONDC was started and what it is.
An initiative by the Government of India
Open Network for Digital Commerce (ONDC) is an initiative by the Government of India to create a standardized and interoperable digital commerce ecosystem. It aims to empower consumers, enhance competition, and facilitate the growth of the digital economy.
Based on open network principles
An open network in the ONDC context signifies a system where multiple entities, such as e-commerce platforms, logistics providers, and payment gateways, can seamlessly interact and operate within a standardized infrastructure. This interoperability is crucial for fostering healthy competition, preventing monopolistic practices, and ensuring that consumers have diverse choices.
Standardized Application Programming Interface (API)
One of the key components of the ONDC is the creation of a standardized Application Programming Interface (API) that allows different digital commerce entities to connect and share information. This standardized API facilitates data exchange and communication among various players in the ecosystem, promoting a level playing field for businesses of all sizes.
Anti-monopolistic system
Through the ONDC, the government aims to break down silos and eliminate barriers that may hinder the growth of smaller businesses in the digital commerce sector. Establishing an open network encourages innovation and entrepreneurship, as smaller players can leverage the common infrastructure without being restricted by proprietary systems.
Transparency
Moreover, an open network in the ONDC framework promotes transparency. Standardized protocols and data exchange mechanisms ensure that information flows freely between different components of the digital commerce ecosystem. This transparency benefits both consumers and businesses by providing a clear understanding of market dynamics, prices, and product offerings.
Ease of doing business
The open network concept also plays a crucial role in reducing barriers to entry for new players in the digital commerce sector. By providing a standardized infrastructure and APIs, startups and smaller businesses can more easily integrate into the ecosystem, fostering a vibrant and diverse marketplace.
Promoting digital commerce for digital India
Additionally, the ONDC's open network aligns with the broader vision of a Digital India, where digital services are accessible to all citizens, regardless of their location or socioeconomic status. The open and interoperable nature of the network ensures that the benefits of digital commerce reach a wider audience, contributing to inclusive economic growth.
In conclusion, the concept of an open network in the context of ONDC represents a fundamental shift towards creating a standardized, interoperable, and transparent digital commerce ecosystem. This approach aims to empower businesses, protect consumer interests, and foster innovation, ultimately contributing to the growth of the digital economy in India.
ONDC: Unbundling Digital Commerce
ONDC with its open network principles of interoperability and standardised APIs, is basically unbundling various components of digital commerce. In a closed platform situation like amazon, etc., most of the work like enabling product search for customers, digitalising products, order management, delivery, returns management, payments, governance, etc. are controlled by platform authority. This platform business model is winner takes all model thus we are only few major platforms in every country. So much control over the digital commerce activities brings a lot of power into the hands of companies owning these platforms. They sometimes use this power to charge higher commission or launch their own products. Small sellers often find themselves in a tough situation with these companies.
To make it an even playing field for all, ONDC unbundles these activities allowing multiple players to do them independently. Now, there can be buyer apps, seller apps, logistics players, banks, etc, who are performing different functions to enable a digital transaction.
Now, for a smooth execution of the transaction, these different components need to communicate with each other without any confusion. In a closed platform situation, it is easy as the controlling company designs the language in which its all components communicate with each other. Different platforms can have their different languages.
In the case of open networks, to solve this we need a common language. This common language in case of ONDC is beckn protocol. Let’s know more about it.
Let’s deep dive a little into Beckn Protocol
Protocols are at the core of any network. Beckn Protocol is the standard protocol used for ONDC. Let’s understand what is Beckn Protocol.
The Beckn Protocol is a set of standards and specifications designed to facilitate interoperability and seamless transactions in the world of commerce and trade, particularly within the context of digital marketplaces. It is an open protocol that aims to create a common language for various stakeholders, enabling them to interact and transact more efficiently in a decentralized environment.
At its core, the Beckn Protocol focuses on standardizing the communication and data exchange between different entities involved in commerce, such as buyers, sellers, and service providers. The protocol provides a framework for defining and structuring data related to products, services, transactions, and more, ensuring a consistent and universal approach across various platforms and applications.
One of the key aspects of the Beckn Protocol is its emphasis on decentralization and the removal of central intermediaries. Traditional commerce often involves centralized platforms that act as intermediaries, facilitating transactions and maintaining control over the exchange of information. Beckn aims to disrupt this model by enabling peer-to-peer transactions, allowing direct interactions between buyers and sellers without the need for a centralized authority.
The protocol operates on a set of principles that include openness, neutrality, and inclusivity. By being open, Beckn encourages a collaborative ecosystem where developers, businesses, and other stakeholders can contribute to the protocol's evolution. Neutrality ensures that the protocol doesn't favour any specific entity, promoting a level playing field for all participants. Inclusivity emphasizes the protocol's adaptability to various industries and use cases, making it applicable beyond traditional e-commerce scenarios.
Beckn utilizes a standardized set of APIs (Application Programming Interfaces) to enable communication between different components of a decentralized marketplace. These APIs cover a range of functionalities, including catalogue management, order processing, payments, and fulfilment. This standardized approach makes it easier for developers to build applications that can seamlessly integrate with beckon-compliant platforms.
One of the notable features of the Beckn Protocol is its focus on creating a universal product and service catalogue. This catalogue serves as a standardized representation of products and services, making it easier for buyers and sellers to understand and exchange information. This universal catalogue is a key component in achieving interoperability across diverse platforms and marketplaces.
Decentralized Identifiers (DIDs) are another essential component of the Beckn Protocol, ensuring secure and privacy-preserving interactions. DIDs allow participants to have unique and verifiable identities in the decentralized ecosystem, enhancing trust and reducing the risk of fraud. This aspect is crucial for building a reliable and secure foundation for digital commerce.
As a global initiative, the Beckn Protocol has gained support from various organizations, governments, and businesses looking to embrace decentralized commerce. It aligns with the broader movement towards Web3 technologies, emphasizing decentralization, transparency, and user empowerment.
Let's compare Beckn with other popular protocols.
SMTP (Simple Mail Transfer Protocol), IMAP (Internet Message Access Protocol), HTTP (Hypertext Transfer Protocol), UPI (Unified Payments Interface), and the Beckn Protocol serve different purposes but share some commonalities in terms of being communication protocols or interfaces that facilitate specific types of transactions.
Why do we need a universal product and service catalogue in the Beckn Protocol?
At the core of the Beckn Protocol is the concept of a universal catalogue, which acts as a common language for diverse platforms and marketplaces. In traditional e-commerce setups, each platform often maintains its unique way of presenting product and service information. This lack of standardization poses challenges for both buyers and sellers, hindering interoperability and creating inefficiencies in the exchange of goods and services.
The universal catalogue envisioned by the Beckn Protocol addresses this issue by providing a standardized format for representing products and services.
It has multiple advantages:
It brings enhanced clarity to product and service information.
It enables platforms and marketplaces to easily communicate and understand each other's catalogue information.
It simplifies the onboarding process on different platforms for sellers saving time and resources.
How does Beckn make ONDC a decentralized marketplace with standardized APIs?
At its core, a decentralized marketplace comprises various components, each with its distinct role – from managing product information to processing orders, handling payments, and ensuring the fulfilment of these orders. The challenge lies in making these disparate components 'talk' to each other effectively. This is where Beckn steps in with its ingenious use of APIs.
APIs act as intermediaries, allowing different software systems to communicate and share data seamlessly. In the context of Beckn, these APIs are the bridges that connect the different facets of a decentralized marketplace.
When I first started studying ONDC, I was quite mesmerized. With a decade of digital commerce, India is at a stage where it has seen the advantages of both centralised digital commerce and decentralized traditional trade. With ONDC, India is taking an ambitious step towards building a decentralised digital commerce. I like it further because I have always believed in India-specific solutions like UPI. ONDC is going to set another great example. Till now, we have developed a macro-level understanding of ONDC and Beckn Protocol which is at the core of it. If you have any questions, please let me know by leaving a comment.
ONDC is made of multiple components i.e. buyer apps, seller apps, gateways, open registries, network policies, reputation ledger, open data ledger, etc. Let’s now understand each of them.
How do 'gateways' enable search in ONDC?
Let's break down the concept of a Gateway in the context of the Beckn Protocol and the ONDC (Open Network for Digital Commerce) in simple terms.
In the world of digital commerce, a Gateway is like a matchmaker that helps buyers find sellers easily. Imagine you're in a big market, and you're looking for a specific item. The Gateway is like a friend who knows everyone in the market and can quickly tell you where to find what you're looking for.
It makes sure that your search request, like saying "I want to buy a mobile phone," is shared with all the sellers in the market who might have what you need. This sharing of your request is called multicasting. It's like your friend shouting in the market, "Hey, someone is looking for a mobile phone!"
But this shouting isn't random. The ONDC make sure that the search request is sent only to sellers who match certain criteria, like being close to your location, having the item in stock, or meeting other preferences you might have. So, it's not just any seller who hears the shout, but the right ones who are most likely to have what you want.
How do 'Open Registries' ensure digital harmony in ONDC?
Imagine you're throwing a big party, and you want to keep track of everyone who is coming. Open Registries is like your party planner who maintains a list of all the guests. In the case of ONDC, these guests are the people who want to join the marketplace.
Now, every guest at your party has a unique ID card, right? Similarly, everyone joining ONDC gets something called a digital certificate. This is like their special ID card for the online marketplace. Open Registries keep a record of all these digital certificates. This tells everyone that you're a verified participant in the online marketplace.
ONDC 'Network Policies' make it secure, fair, and reliable
ONDC Network Policies are like a rulebook for everyone involved in the ONDC network. Imagine it as a set of guidelines, just like how we have rules in a game to make sure everyone plays fairly.
Now, let's talk about what these guidelines cover. First up, there's the matter of data privacy and confidentiality. Think of it like keeping your diary safe. The ONDC network makes sure that your information is treated with respect and kept secure, just like you wouldn't want anyone peeking into your private thoughts.
Then, we have network security. Imagine your house has strong gates and locks to keep out intruders. Similarly, the ONDC network has measures to protect itself from any unwanted guests who might try to harm it. This is to ensure that when you're buying or selling something online, it's happening in a safe and secure environment.
User authentication and authorization are like having a secret handshake. When you log in or access something on the ONDC network, it checks to make sure you're the right person, just like how you would verify your identity with that secret handshake.
Now, let's talk about network governance. Think of this as having a group of wise elders in a village who make sure everything runs smoothly. In the ONDC network, there are guidelines on how decisions are made and how things are managed to keep everything in order, just like those village elders.
Lastly, we have network trust. Trust is like relying on your friend to keep a secret. In the ONDC network, there are policies in place to build trust among all the people involved. This means everyone can have confidence that they are part of a fair and reliable system.
ONDC 'Reputation Ledger' makes it quality-oriented
The ONDC Reputation Ledger is like a big book that keeps track of how well sellers are doing on the ONDC platform. Imagine it as a report card for sellers. This report card, or ledger, shows how good or bad a seller's reputation is.
Now, the reputation score of the seller is like the marks on the report card. This score is decided by looking at many things, just like how your school grades consider different subjects. For sellers, it includes what customers say about them, the reviews they get, how people rate their products and other important things.
This score helps buyers decide which sellers are trustworthy and deliver good products and services, making the online shopping experience better for everyone.
Open Data Ledger: The bookkeeper of ONDC
The Open Data Ledger is like a big record book managed by the ONDC platform. It keeps track of every time people share information or do any transaction on the platform, but it doesn't include personal details.
Think of it this way: imagine you have a shop, and every time someone buys something, you write it down in a special book. The Open Data Ledger works similarly, but instead of items, it keeps a note of every data exchange happening on the ONDC platform.
Now, the important part is that this ledger doesn't note down things like who is using the data or any private information. It's more like saying, "Hey, this data was shared," without telling everyone who gave or received it. It's all about keeping things fair and private.
Role of Buyer's App on ONDC
The Buyer's app’s main job is to connect buyers to the ONDC network through a user-friendly application, taking care of everything that makes the shopping experience smooth for the buyer.
The Buyer's app is like a guide for shoppers, helping them discover a wide range of products and services from different sellers on the ONDC network. Moreover, the app may even throw in discounts, coupons, loyalty points, and other perks to sweeten the deal.
The buyer app also collects payments from the buyer. They can pay using credit cards, debit cards, UPI, wallets, or even choose the good old cash-on-delivery option. The Buyer's app allows you to pick your preferred delivery option from the available logistics providers on the ONDC network. The app may also keep you in the loop with tracking information, estimated delivery time, and even confirmation of when your package arrives.
It also takes care of the after-sales experience. You can manage your orders, and keep track of the status, and if something isn't right, you have the power to return or cancel orders. If you have questions or feedback, the app lets you communicate with the seller or the ONDC network. And in case there's a dispute or any issues with your order, the Buyer's app can step in to handle refunds and resolutions.
Role of Seller's App on ONDC
The ONDC seller app provides a comprehensive platform for sellers to manage their businesses efficiently. Sellers can easily sign up on the ONDC network, showcase their products, and monitor their inventory through the app. A notable feature is the seamless payment system, allowing transactions to occur directly within the app, akin to a digital cash register, enhancing both convenience and security.
ONDC's Data Protection Architecture
ONDC is committed to safeguarding user data in line with Indian regulations and global data privacy discussions. In simpler terms, when you shop online, your details and the seller's details need to be shared for the transaction. ONDC acknowledges this but promises not to peek into your transaction details – it's like sealing that information in an envelope.
Moreover, ONDC emphasizes seeking your consent for any data exchange. This means that if they need more of your data for a specific purpose, they'll ask for permission, ensuring your data isn't used without your say-so.
When it comes to performance metrics, ONDC promotes using them in a way that doesn't expose your identity. It's like assessing a sports team's performance without knowing individual player names.
Excitingly, ONDC is gearing up for Data Empowerment and Protection Architecture. This system empowers individuals to have more control over how their data is used, setting a positive example for privacy protection not just in India but globally.
Technology Service Providers (TSPs)
Technology Service Providers (TSPs) ensure the smooth operation of the Open Network for Digital Commerce (ONDC). They act as architects, facilitating interactions between buyers and sellers like a strong network connection enables internet access. TSPs empower small businesses by transforming traditional shops into digital storefronts and offering support in inventory management, order processing, payments, and digital marketing. They also prioritize customer service, providing virtual assistance to buyers. Leveraging analytics, TSPs gather market insights to inform sellers' decisions.
Reconciliation Service Providers (RSPs)
Reconciliation Service Providers (RSPs) are integral to the smooth functioning of the Open Network for Digital Commerce (ONDC) ecosystem, acting as mediators in financial transactions. In the vast ONDC network, comprising buyers, sellers, and payment intermediaries, RSPs ensure adherence to rules and timely, accurate transactions.
RSPs serve as the backbone of ONDC, fostering confidence among users by ensuring order, fairness, and reliability in transactions. Their efforts contribute to a secure, dependable digital commerce platform in India, fostering trust among stakeholders and facilitating hassle-free online shopping experiences.
Network Participant Banks
In the ONDC network, Network Participant Banks serve as essential mediators, ensuring smooth and fair transactions akin to guardians in a marketplace. They facilitate payments between buyers and sellers, acting as intermediaries between their respective banks.
Their role extends to creating trust accounts, and safeguarding funds until transactions are satisfactorily completed. In cases of disputes or issues like receiving faulty goods, these banks intervene to withhold payment until resolutions are reached. They also manage refunds and rectify payment errors, ensuring adherence to transactional regulations.
In essence, Network Participant Banks act as reliable guides, ensuring payments are directed accurately and resolving discrepancies to maintain trust within the network. Whether facilitating payments for traditional Indian sarees or rectifying payment errors, they play a pivotal role in fostering a secure and fair environment for online transactions.
ONDC is made of multiple components i.e. buyer apps, seller apps, gateways, open registries, network policies, reputation ledger, open data ledger, etc. In the last section, we tried to understand each of them. If you have any questions, please feel free to leave a comment.
Now, let us see how digital commerce happens on ONDC. Understanding all the components we have developed will help us now.
How does digital commerce happen on ONDC?
In an online shopping scenario facilitated by the ONDC platform, think of the buyer app as a virtual marketplace where you can explore and buy products from various sellers. Imagine you're browsing through this app and decide to purchase something from a seller named Seller X.
When you pick a product and hit the buy button, the buyer app uses the ONDC protocol to communicate with Seller X's app. It's like sending a digital letter asking if the product is available and how much it costs.
Now, Seller X's app gets this message, checks if the item is in stock and figures out the total cost, including any extra charges like shipping or taxes. After doing the math, Seller X's app sends a reply back to the buyer app through the ONDC protocol, sharing details about the product, its price, and any additional fees.
If you're okay with everything, you move on to payment. The ONDC platform offers various ways to pay, making it convenient for both you and the seller. Once you've paid, the seller app gets the order information and updates the ONDC system, which then confirms the purchase back to you.
Now, Seller X needs to get the product to you. They might need a logistics partner, so they ask ONDC for help. Let's say they choose Logistics Y. This partner goes to Seller X, picks up the package, and begins the journey to your doorstep.
The seller app, along with Logistics Y, keeps the ONDC system in the loop. They update it with shipping details, like when your order will likely arrive and a tracking number to follow its progress. Meanwhile, the buyer app is receiving these updates, allowing you to keep tabs on your purchase.
Finally, when the product reaches you, the buyer app confirms the delivery, officially completing the purchase. At this point, Seller X and their app receive the payment, and the entire transaction is successfully wrapped up.
How do search and discovery happen on ONDC?
In the first step of the customer's journey, when someone wants to buy something, they start by searching on an app. Imagine you want to buy a new phone. So, you open your favourite shopping app and type "latest smartphones" in the search bar.
This app is like a helpful friend who knows where to find things. It doesn't keep all the items in its store but checks with other stores to see who has what you're looking for. This is where the gateway service provider comes in – think of it as the friend who knows all the shops in the market.
So, your app asks this friend, the gateway service provider, to find the latest smartphones for you. The friend then looks at a big list called the ONDC registry, which is like a directory of all the shops in the market. The registry helps find which stores sell the exact phone you're searching for.
After identifying these stores, the friend doesn't waste time. It sends your request to all those stores at once. It's like shouting in the market, "Hey, who has the latest smartphones?" This process is fast because the friend doesn't want to keep you waiting.
Now, the stores, which we can call seller applications, get the message. They quickly check if they have the phone in stock. If they do, they let the friend know, and if not, they say, "Sorry, we don't have it right now." Some stores might have their stock, while others might have to check with their sellers.
The friend, the gateway service provider, collects all this information from the stores and tells your app what it found. Your app then shows you the results. You see a list of phones, their prices, and where to buy them.
How do consumers place orders on ONDC?
In the second step of your consumer journey – placing an order, the buyer takes a significant leap towards getting the desired product or service. Let's break down this process with simple examples.
Imagine you find the smartphone that catches your eye – the latest model with great features. Now, you want to know all the nitty-gritty details before making a decision.
You open the product page, where you expect to see everything about the phone – its features, price, any special offers, how it will be delivered, and the terms of sale. It's like inspecting the goods before you decide to buy them.
Here's where your journey begins. The buyer app sends a message to the seller's app to fetch all the necessary information about the phone. It's like sending a friend to gather details for you.
On the other side, the seller app gets your request and goes to the seller, who has all the scoop on the phone. The seller collects everything – the features that make the phone stand out, the price, any discounts or offers available, and the terms you need to know.
Once the seller has all the details, they send the information back to your Buyer App. It's like your friend coming back with all the juicy details about the phone. Now, your app displays everything it gathered from the seller – the phone's features, the cost, any special deals, how it will reach you, and the rules for the transaction.
You, as the buyer, now have all the information at your fingertips. You take a good look, weigh the pros and cons, and decide, "Yes, this is the one." You hit the confirm button, make the payment, and voila – you've placed the order.
At this point, it's not just a casual agreement. It's a bit like signing a mini-contract. Your Buyer App and the Seller App create a transaction-level contract. It's a digital handshake that says, "I'm buying this, and you're selling it." It's a safety net, ensuring both parties are on the same page.
Meanwhile, the Seller App gets the signal that you've confirmed the order. It's like a shopkeeper getting a nod from you after you've chosen your items. They double-check everything, making sure they've got the right product and your payment is in.
Once everything checks out, the Seller App sends a confirmation – your order is a go! It's like the shopkeeper saying, "We've got your order, and it's on its way."
So, in a nutshell, the second step in your consumer journey is like a dance between your Buyer App and the Seller App. You request information, the seller gathers it, your app presents it to you, you confirm the order, a digital contract is made, and the seller gives the final thumbs up.
How does order fulfilment work in ONDC?
In the customer journey's third step, which is order fulfilment, let's dive into how this process works.
After you've found what you want on the shopping app, the next step involves confirming the details and delivery terms. Once you've decided on a product and agreed to the delivery terms on the product page, the app, or the seller's app, communicates this information to a logistics buyer. This buyer has a pre-existing arrangement with the app to manage the delivery process.
Now, this logistics buyer is searching for a logistics service provider. Think of them as the delivery experts. They could be registered on the seller's app or part of a network of logistics sellers. Once found, the logistics buyer gets a quotation from the service provider.
Upon receiving the quotation, the logistics buyer confirms the details, including the delivery time, with the buyer app. The buyer app then passes on this information to you.
At this stage, you confirm your order on the app. You provide your address, and delivery instructions, and make the payment. Once you've confirmed, the logistics service provider finalizes the deal by signing a contract for the delivery service with the logistics buyer.
Now, the logistics service provider goes to the seller, be it an individual seller or a big store, to pick up your order. With the package in hand, the logistics service provider sets off to deliver your order straight to your doorstep. During this process, you get updates – a tracking link, delivery agent details, and other relevant information – all provided by the logistics service provider through the buyer's app.
How do financial transactions against a fulfilled order happen on ONDC?
It begins with the buyer confirming the order and making the payment through either the buyer or seller app. Once the payment is made, the logistics service provider (NP) confirms the order and collects the payment from the buyer.
Next, the reconciliation service provider (RSP) comes into play. They receive the settlement terms and amounts from the transaction-level contract that was signed between the logistics service provider and the buyer or seller. With this information, the RSP prepares settlement advice, detailing the terms and amounts, and sends it to the NP collector's settlement agency.
Upon receiving the settlement advice, the settlement agency takes action by initiating the settlement process through the recipient's bank. This involves transferring the agreed-upon amount from the buyer's account to the seller's account. The recipient's bank plays a crucial role in this step, as it acts as the intermediary for processing the payment.
Once the payment is initiated, the recipient's bank receives the funds and ensures they are securely transferred to the intended recipient. This step is essential for maintaining the integrity and security of the transaction, as it involves the actual transfer of funds from one account to another.
Finally, the recipient NP (either the buyer or seller) receives the payment from their bank. This marks the completion of the settlement process, as the funds have now been successfully transferred to the intended recipient's account.
Hey, I hope you are enjoying reading this. Till now, we have developed a macro level understanding of ONDC, why it was needed, about Beckn Protocol, components of ONDC and how a digital commerce transaction happens on ONDC, etc. If you have any questions, please feel free to leave a comment.
Now, let us move to the next part. A digital transaction is a complex process. As we have seen, it includes multiple interactions between different functions i.e. buyer side function, seller side function, logistics, finance, etc. When all these interactions are happening under one umbrella like of amazon or Flipkart marketplaces, it is easier to manage them to deliver trustworthy, efficient digital transactions. But when these functions are separate business entities, which is the case with ONDC, it becomes difficult to deliver efficiencies with trust. Technical problems with one business entity in the network can hamper the efficiencies of the other. These entities might also try to outsmart each other. With so many possibilities to do wrong, it becomes essential to create proper rules, regulations and guidelines which can ensure smooth functioning of the network. In this section, we will be exploring these guidelines.
What if a buyer app starts favouring certain seller apps on ONDC?
While searching and discovering products on the Open Network for Digital Commerce (ONDC), a challenge arises where the buyer app might favour some seller apps over others, potentially hiding certain options from users. This issue can be addressed by implementing specific steps within the ONDC system.
To overcome the challenge, ONDC can establish a network policy that ensures the buyer app reaches out to and displays results from a broad array of seller apps. This can be achieved by mandating multicast search requests to all relevant seller apps.
Additionally, gateway integration can be crucial in resolving this challenge. These gateways act as bridges, connecting the buyer app with various seller apps seamlessly.
To further enhance fairness, ONDC can enforce transparency in the sorting algorithms used by buyer apps. These algorithms determine how search results are displayed to users. Making the parameters of these algorithms public means that everyone understands how the results are sorted.
Moreover, the parameters used in sorting algorithms should be uniformly applied to all search results. No particular seller app receives special treatment or is unfairly pushed to the top of the list.
What if the seller apps become slow in responding to queries?
Imagine you're shopping online on a buyer app, you searched for an item but results are not showing up. It can happen sometimes as the time it takes for the seller app to respond varies. This can be frustrating for buyers because they don't know when to expect results. The challenge here is that the response time of seller apps is not predictable, affecting the overall experience for consumers.
To tackle this issue, the ‘asynchronous interaction’ comes into play. This fancy term simply means that buyer apps and seller apps can interact without waiting for each other. It's like when you chat with someone on WhatsApp – you both can type and send message at the same time.
Another hurdle is that sometimes a lot of data is sent between buyer and seller apps, slowing things down. To fix this, the protocol can be optimized to reduce the amount of information that needs to be exchanged. It's like when you order food online – you don't need to know the entire menu; you just want to see what's available and make your choice.
What if buyer apps try to speed up searches by caching results?
In the search and discovery process on the ONDC, a common challenge arises when buyer apps try to speed up searches by caching results. However, this approach brings the risk of showing outdated information.
Imagine you're using a buyer app to find the best deals on your favourite products. The app wants to show you results quickly, so it stores some information on your device to speed up future searches. This storage is called caching. However, there's a catch – the information might become old, like the price of a product or the item going out of stock.
To tackle this challenge, we need a set of guidelines to decide what information should be updated in real-time and what can be stored in the cache. Price, quantity available, etc. should be updated in real time and rest of the information like product images, features, description, etc, can be cached.
Once we've sorted out what to sync and what to cache, we need to decide what information is displayed when you first open the app. Displaying what is cached will catch customers’ attention and keep them deviated till real time updated information is displayed.
What if the information provided by sellers isn't up to the mark?
Sometimes, the information provided by seller apps to buyer apps isn't up to the mark. That makes it difficult for buyer apps to maintain the quality of shopping experience they are delivering to customers. Imagine you are searching for a laptop on a buyer app and the quality of images displayed on the page is not good. You will simply leave the app and buy from somewhere else. Buyer apps can’t afford to lose customers like this. Thus, the quality of information available to them is very important.
Now, in the closed marketplaces like amazon where all the processes like seller management, cataloguing, etc. are operating under one umbrella, quality is easily ensured. But open networks like ONDC have to find new solutions.
The first easy solution is to introduce a flagging mechanism. Think of it like when you're on a road trip and you see a sign warning about a bumpy road ahead. Similarly, we can have a system that lets users flag incorrect or poor-quality search results. This way, if something doesn't seem right, users can alert the system, making the shopping journey smoother for everyone.
Now, let's talk about small sellers. They might not have the tools to digitalize their inventory properly. To help them, we can introduce something called "Cataloguing-as-a-service" These are basically 3rd party service providers who can help these small sellers in building and maintaining their catalogue.
But how do we ensure the quality of this data? Well, that's where the next solution comes in – a Catalogue Scoring Mechanism. This scoring system would be automated, making sure that only the best and most accurate details are displayed. It's a bit like having a filter that only lets in the good stuff.
Flagging mechanism will bring in customer centricity to the solution while Cataloguing-as-a-service and Catalogue Scoring Mechanism bring in meritocracy and expert assistance to the solution.
Let me know if you can think of other solutions.
How do buyer apps tell seller apps/gateways about what products they want?
In the world of ONDC, where seller and buyer apps connect, there's a challenge when it comes to searching for products. Seller apps want to understand what buyer apps are looking for so that they can reply with relevant products/services, and buyer apps want detailed information from seller apps to manage their search results.
Now, to solve this challenge, we need to take a couple of steps. First, imagine there's a special language for every product category/market – a lingo that helps seller apps understand what buyer apps want. This is like having a unique set of words for each type of product, making it easier for everyone to communicate. Each industry has its own lingo, we just need to digitally organise that for better utilisation.
Next, let's talk about search-as-a-service feature. Think of it as having a friendly assistant in the market who guides you to the right stalls based on your preferences. This service ensures that when you say you want a "red, round, and affordable thing," you get what you're looking for, without any confusion.
The most common example of a similar case is Search Engine Optimisation (SEO) directed towards Google’s search algorithm. Here, buyer apps are searching for some product on Google. Google’s algorithm crawls through all seller apps (which are similar to websites in this case) and gives the most relevant results. Seller apps optimise their products for most common key words used by users to search around those products.
How can ONDC make sure that sellers deliver authentic quality products?
The ONDC network is spread out. There are multiple seller and buyer apps which are individual businesses separate from each other. Consumers and sellers engage with each other via these apps but they don't get to meet face-to-face. Trust becomes crucial in such a scenario, and one way to build this trust is through contracts.
Imagine you are buying a saree online from a seller in a different part of India. You can't physically see the product, and you want to make sure you get what you expect. That's where contracts come in. These are like agreements that lay out the terms and conditions of the deal. But with ONDC, we can make this process even better.
But the tricky thing around contracts is that they tend to confuse consumers with their language. It creates a kind of opaqueness between buyer and seller. Thus, steps for enhancing the transparency around terms and conditions should be taken.
ONDC is about volume. It is planned to enable millions of transactions per day. To do this process efficiently, we need to do digitally-executed transaction-level contract for every transaction on the network.
But what if something goes wrong? This is where the second step comes in – contract adherence through network mechanisms. It's like having a trustworthy friend who ensures that things go as planned. If the seller isn't keeping their end of the bargain, this could mean getting you a refund, a replacement, or any other solution that's fair and quick.
How do sellers figure out if they can deliver a service/product to a particular location?
One big challenge comes up during the ordering and fulfilment step. This challenge revolves around the difficulty sellers face in figuring out if they can deliver to a particular location. In case of marketplaces like amazon, they can easily do it as they are a centralised marketplace. But in a decentralised network like ONDC, small sellers or seller apps need assistance with this.
To tackle this problem, we need a technology service provider (TSP) who can help sellers with this. Imagine a digital tool that seller apps can use. This tool would help them decide if they can serve a specific location or not. How does this tool work? It takes into account various factors like the actual road distance, the current traffic situation, the time of the day, and other geographical considerations. By crunching all these details, the tool gives a clear picture to the seller about whether they can deliver to a certain place or not.
How is Personally Identifiable Information (PII) safe in the network?
In the process of ordering and fulfilling products through ONDC a notable challenge arises. This challenge pertains to the privacy risk associated with the buyer's personal information. When a buyer uses an app to make a purchase, there's a necessity for the buyer's Personally Identifiable Information (PII) to be shared with the seller app, the seller, and the logistics provider to ensure the smooth fulfilment of the order.
To address this privacy concern, it becomes essential to implement a policy that puts restrictions on how seller apps and logistics service providers utilize consumer data. The key focus of this policy should be to ensure that the shared information is solely used for order servicing and nothing beyond that. They are prohibited from utilizing your data for any other activities, such as marketing or third-party collaborations. This ensures that your privacy is safeguarded, and your information is not misused beyond the context of the transaction.
How does ONDC maintain network health without storing or accessing any data?
In the case of ONDC, one big challenge is keeping an eye on the health of the network. But here's the twist – ONDC doesn't keep or move any data on its own.
To tackle this challenge, a solution is in the works. Think of it like this – we want to create a system where we can see how many cars pass through the road without knowing who's driving each car or what's inside. It's like counting the number of vehicles without peeking inside them.
The plan to achieve this involves something called an open data framework. So, the anticipated solution is like introducing a system where the market organizer can see the total sales happening without knowing exactly which buyer bought what. We call it anonymised, aggregated transaction data. It's like saying, "Hey, we know a lot of goods are exchanging hands, but we won't know who's buying those delicious samosas or shiny bangles."
How timely reconciliation and settlement is ensured in an unbundled network?
One significant challenge is ensuring timely reconciliation and settlement in an unbundled network.
To tackle this challenge, a practical solution involves integrating with reconciliation service providers. These providers play a key role in determining liability and collectables based on transaction-level contracts. Additionally, involvement with settlement agencies becomes essential to streamline the settlement process effectively.
Another crucial step is for network participants to maintain an audit trail. Imagine this as a digital record, much like keeping a detailed diary. This trail is created through digitally signed and authenticated payloads. In simpler terms, it's like having a secure and verified digital stamp on each step of the process.
How is misuse of funds prevented among multiple partners?
One significant challenge is the need to handle payments involving multiple entities while ensuring safeguards against the misuse of collected funds.
To overcome this challenge, a proposed solution involves the use of nodal-like accounts. These accounts play a crucial role in ensuring that funds are disbursed according to system-generated triggers. This process is governed by a transaction-level contract and aligns with the regulatory framework in the country.
Now, let's dive into how this process works with a practical example. Suppose you are a seller on the ONDC platform, and you've successfully sold a product to a buyer. The moment the transaction is completed, a trigger is activated in the system, signalling that it's time to transfer the funds.
This trigger is not arbitrary; it's based on the terms outlined in the digital contract. The contract, in simple terms, is like a rulebook that everyone agrees to follow. It specifies that when a transaction is successful, the funds should move from the nodal-like account to your account within a set timeframe.
Now, why is this system so important? Imagine if there were no safeguards. In a scenario without these nodal-like accounts and digital contracts, there could be delays, disputes, or even misuse of funds. Sellers might face uncertainty about when they'll receive their money, and buyers might be hesitant due to payment uncertainties.
How does ONDC resolve conflicts around cancellations and returns?
In the world of ONDC, managing returns poses a challenge – figuring out who is responsible when cancellations or returns happen in a network where things are unbundled.
First off, there should be clear terms right from the start. Think of it like buying a saree online – the transaction contract should mention what happens if you want to return it or cancel the order. No hidden surprises.
But what if things get a bit complicated? That's where non-binding guidelines come in. Imagine you buy a pair of shoes, and there's a dispute about who's responsible for a return. These guidelines, like friendly advice, can help settle the argument. They won't force anyone, but they'll suggest the best way to handle things, considering the process and cost involved.
ONDC also needs mechanisms like an Instant Grievance Mechanism (IGM) to act like a quick-fix button to sort out problems fast and make sure everyone is happy.
Hey, I hope you are enjoying reading this. In this section we read about how small processes happen in ONDC and how ONDC has developed solutions for various potential problems. If you have any questions, please feel free to leave a comment.
Now, in the next part we will try to see how businesses can become part of ONDC, why they should do that and what steps they should take.
Why should brands/sellers become part of ONDC?
Joining the Open Network for Digital Commerce (ONDC) brings several advantages for brands in India. Let's dive into some key benefits.
Firstly, ONDC provides brands with a fantastic opportunity to boost their visibility. With ONDC, any brand can sell their products on multiple buyer apps without administering relationship with each of them.
Another significant benefit is the streamlined digital commerce processes that ONDC offers. By tapping into this streamlined system, brands can make it easier for customers to discover, choose, and buy their products. This simplicity in digital transactions can enhance the overall shopping experience, making customers more likely to return for future purchases.
ONDC can also be like a well-organized logistics team for brands. It not only saves time but also reduces the chances of errors or delays in delivery.
Consider a small business that makes handmade crafts. Joining ONDC could mean that their beautifully crafted items are not only showcased to a broader audience but also delivered efficiently, making customers happy and more likely to spread the word.
A company can join ONDC in three ways. It can become Inventory Seller Node (ISN) or Marketplace Seller Node (MSN). Alternatively, it can sell on existing MSNs like MyStore or eSamudaay. This decision depends on your budget, marketing goals, inventory size, and business model.
Joining ONDC as ISN-NP (Inventory Seller Node – Network Participant)?
The ONDC Network offers a unique opportunity for brands to become Inventory Seller Nodes (ISN). As an ISN, a brand becomes the primary seller for its products on the platform, managing everything from inventory to customer orders. This independence is crucial as it allows the brand to operate without being tied to other sellers, distributors, or retailers. In simpler terms, the brand has full control over how it presents itself and handles deliveries.
Being an ISN-NP (Inventory Seller Node – Network Participant) means the brand can either use its own products or acquire inventory from other sources. This flexibility is beneficial, especially for brands with established distribution channels. They can keep a close eye on their sales and operations on the ONDC platform.
Unlike the Managed Seller Node (MSN) where the seller takes charge of order management, an ISN handles this aspect independently. However, the brand can choose to route orders differently if needed. This setup empowers brands to have a say in how they want to manage their orders.
In essence, being an ISN-NP on the ONDC platform gives brands more control over the customer experience. This control extends to their identity and the entire delivery process. The advantage is clear – brands can potentially increase their profits while streamlining the sales process.
An ideal fit for the Inventory Seller Node is a Direct-to-Consumer (D2C) brand. These are brands that prefer direct control over their inventory and business processes. Similarly, larger companies can also benefit if they want to centralize inventory management while decentralizing fulfillment.
It's noteworthy that the ONDC network doesn't impose any commission rates on the Inventory Seller Node. This means brands get to keep more of their profits, making it a financially appealing option.
Joining ONDC as Marketplace Seller Node (MSN)?
When a brand becomes an MSN, it essentially acts as the marketplace, facilitating the sale of products or services from third-party merchants or service providers to buyers on the network. It's crucial to note that, in this role, the brand doesn't serve as the primary "seller on record"; instead, the third-party merchants take on that responsibility.
Being an MSN comes with perks. The brand gains control over its sellers, providing a unified storefront, managing inventory, and handling payments and deliveries. This approach allows for a standardized and resource-efficient method of supporting sellers.
Authorized brand sellers also have the option to join and operate as sellers on the MSN network, managed by the brand itself. This setup gives the brand significant data ownership over its sellers and their performance on ONDC, offering various advantages for its business.
Establishing clear terms of engagement for sellers on the network is essential. This enables the brand to set expectations and guidelines for seller behaviour and performance. It's a way for the brand to ensure that sellers align with its standards.
Access to data on sellers' transactions within the ONDC platform is a valuable resource for the brand. It allows a deeper understanding of sales patterns, identification of growth opportunities, and monitoring of seller performance. This visibility enhances the brand's decision-making and strategic planning.
Furthermore, understanding the share of the wallet of sellers for the brand is crucial. This insight enables the brand to prioritize resource allocation effectively and offer incentives for better seller performance. It's a strategic approach to maximize returns and drive overall growth.
To maintain consistency and accuracy across product listings, brands can roll out a master catalogue from central teams. This ensures that product information remains uniform across all sellers, creating a cohesive and reliable marketplace experience for buyers.
A streamlined fulfilment process is another advantage. By allowing orders to be received directly by sellers and fulfilled either by the sellers themselves or by the Marketplace Seller Node based on preference, brands can optimize their operations. This reduces potential bottlenecks in the fulfilment process, leading to improved efficiency.
Strong data ownership over sellers on ONDC empowers the brand to manage its network effectively. This approach proves beneficial for larger brands looking to leverage existing distributors, brand stores, or seller networks to bring products onto the ONDC Marketplace in a structured manner.
In summary, the Marketplace Seller Node (MSN) approach within the ONDC Network offers brands a comprehensive way to control and support their sellers. From data ownership and visibility into transactions to streamlined operations and strategic resource allocation, it provides a robust framework for brands to thrive in the ONDC Marketplace.
Joining ONDC as a seller on existing Marketplace Seller Node (MSN)?
Platforms like MyStore or eSamudaay, known as MSNs (Marketplace Service Nodes), act as middlemen on the ONDC (Open Network for Digital Commerce) platform, providing a space for sellers who aren't part of the network themselves to carry out transactions.
Imagine you have a brand and want to sell your products. Instead of going through the hassle of setting up everything on your own, you can become a seller on an established MSN, like MyStore. This means you get to sell your products to customers within the ONDC network without dealing with individual onboarding and compliance procedures. It's a shortcut to quickly reach a larger audience, tapping into existing marketing and advertising channels.
Joining as a seller through an MSN comes with perks. These platforms take care of the nitty-gritty details like setting up your online store, managing your inventory, handling payments, and ensuring deliveries reach customers. This way, you, as a brand, can concentrate on making top-notch products and providing excellent service.
However, there are downsides to this approach. When you join MSN, you'll face higher commission fees, meaning a chunk of your earnings goes to the platform. Plus, you have limited control over how your brand looks and feels on the platform compared to ISNs (Individual Seller Nodes). ISNs give you more freedom in branding and customization.
Another challenge is the competition. Since multiple sellers operate on the same MSN, standing out becomes tougher. Every seller on the platform is vying for attention, which can make it challenging for your brand to shine and attract customers.
It's crucial to understand that when you become a seller on an MSN, your brand won't be a registered entity on the ONDC Network. MSN itself holds that status. This distinction is essential as it means you're essentially operating under the umbrella of MSN, and it's the registered entity recognized by the ONDC.
In a nutshell, selling through an MSN is like renting a ready-made store in a bustling marketplace. It's quick, convenient, and gives you access to a broad audience, but it comes with the trade-off of higher fees and less control over your brand's appearance. It's a balancing act where the advantages of rapid reach and established support need to be weighed against the challenges of higher costs and fierce competition.
In the dynamic landscape of digital commerce, choosing whether to go through an MSN or explore other avenues depends on your brand's priorities, resources, and how you want to position yourself in the competitive market within the ONDC network.
What’s in it for buyer app makers and seller app makers?
In a platform there are majorly two sides, one is buyer side and other is seller side. To create a good platform business, we need to crack both. We need to make efforts to bring a large quantity of both sellers and buyers on our platform to enable business transactions. This kind of effort requirement has limited the platform businesses to certain niches. A quick example is a niche platform for sustainable fashion where brands and customers affiliated to the niche are brought on the platform. A few bigger platforms like Amazon are exceptions.
Now with ONDC, you can build a platform by just solving one side of the platform. You can either focus on the seller side by building a seller app or on the buyer side by building a buyer app. The other side will be taken care of by ONDC.
Now, for the seller app makers there are two use cases around ONDC:
Providing more value to their existing clients: This can be done by adding seller app services to their portfolio of services.
Building a comprehensive service stack for sellers of a particular niche: This can be done by identifying all the needs of sellers of a particular niche and then aggregating services for them like logistics, financing, sourcing, selling, CRM, accounting, etc.
Now, for the buyer app makers there are similar two use cases around ONDC:
Providing more value to their existing customers: This can be done by adding more products which can be relevant for their target customer segment. It will improve customer stickiness with the offering and will also improve metrics like DAU, MAU, etc.
Building a comprehensive product and service offering for buyers of a particular niche: This can be done by identifying all the needs of buyers of a particular niche and then aggregating products/services for them like for the marriage market of a particular geography, services like food, photography, shopping, venue, etc. can be aggregated on a buyer app.
Who should build a buyer app on ONDC?
Anyone with a popular app that attracts a lot of users can build a buyer app on ONDC (Open Network for Digital Commerce). ONDC allows these buyer apps to offer a range of products and services to their existing users through standardized APIs.
For instance, banking apps, UPI payment apps, and telecom company apps can leverage their large customer base to become buyer apps on ONDC. They can seamlessly integrate ONDC's APIs into their existing applications, allowing users to access and purchase various products and services available on ONDC. These businesses can then earn a commission for each transaction made through their apps.
Similarly, commerce marketplaces with a significant number of users can join ONDC to expand their offerings and generate additional revenue. Messaging apps, social media platforms, and short-form video apps, which already have a massive user base, can also tap into ONDC to provide their users with new shopping experiences and earn commissions on transactions.
AI-based personalized shopping experiences can integrate ONDC to offer tailored product recommendations to users, creating a new revenue stream through transaction commissions. Ticketing platforms and online travel agencies (OTAs) with a substantial customer base can use ONDC to enhance their services and increase their earnings.
Even browsers and search engines with a large user base can become buyer apps on ONDC, enabling users to discover and purchase products seamlessly. Smart TVs and channels, widely used by many, can leverage ONDC to offer a variety of products and services to their audience, creating a new source of income.
In essence, ONDC provides an opportunity for diverse businesses to become buyer apps, offering a wide array of products and services to their existing user base. This integration is beneficial for both businesses and users, as it opens up new possibilities for transactions within familiar platforms. The standardized APIs make the process straightforward, allowing businesses to implement ONDC and start earning commissions on transactions quickly.
By participating in ONDC, businesses can not only enhance the overall experience for their users but also diversify their revenue streams. It's a win-win situation where businesses with significant user bases can leverage their popularity to explore new avenues in the digital commerce landscape.
Who should build a seller app on ONDC?
Those with a substantial base of Micro, Small, and Medium Enterprises (MSMEs) and the ability to craft an endearing seller experience should seize this chance to become seller app enablers.
Consider businesses with an extensive network of merchants or enterprises as their clientele. With their widespread adoption, UPI Payment Apps find themselves in a prime position. Banks, being financial hubs, naturally cater to numerous businesses. The realm of restaurant service providers, B2B aggregators, and accounting/ERP software providers also boasts a rich array of merchants under their umbrella.
Delve into the digital world, and the domain of social-media marketplaces emerges as a significant player. These platforms connect businesses with potential customers, fostering a fertile ground for seller-app services. Similarly, chat-based businesses, acting as virtual storefronts, possess the potential to leverage their existing merchant base.
In the realm of connectivity, telecom and internet providers stand out. Their widespread infrastructure allows them to reach a multitude of businesses, making them strong contenders for venturing into seller-app services. co-working space providers, with their diverse tenant base, present another compelling option.
Venture into the service industry, and home services marketplaces reveal their potential. The nature of their operations naturally involves connecting service providers with consumers, making them well-suited for the seller app enabler role. distributors, serving as crucial links in the supply chain, possess an inherent advantage due to their established relationships with businesses.
Consider the online equivalent of the traditional Yellow Pages – a directory of businesses. These platforms, with their comprehensive listings, hold the key to unlocking a vast array of seller-app services. Additionally, digital marketing agencies, armed with their knowledge of online visibility and promotion, can seamlessly transition into facilitating seller apps.
These businesses are at a crossroads, armed with the golden chance to expand their service offerings. By embracing ONDC and becoming seller app enablers, they can empower MSMEs in navigating the digital marketplace. The key lies not just in the scale of their merchant base but in their ability to curate an experience that resonates with sellers.
ONDC, with its vision of democratizing digital commerce, provides fertile ground for these entities to thrive. The potential benefits extend beyond individual businesses to the broader ecosystem, fostering growth and innovation. As these potential seller app enablers embark on this journey, they contribute to shaping a landscape where MSMEs can thrive in the digital age.
In conclusion, the opportunity to become a seller app enabler on ONDC beckons those with a substantial merchant base and the ability to create a seller-friendly experience. Whether in finance, technology, services, or connectivity, businesses with expansive networks are poised to unlock new horizons. The choice to embrace ONDC is not just a strategic one but a transformative step towards ushering in a digital era that empowers businesses across India.
Hey, I hope you are enjoying reading this. In this part we got to know how businesses can become part of ONDC, why they should do that and what steps they should take. If you have any questions, please feel free to leave a comment.
Now, in the next part we will see how ONDC will impact Indian industrial ecosystem from perspectives of different stakeholders i.e. government, businesses, customers, service providers and innovators.
ONDC: A Game-Changer for the Industry
The Open Network for Digital Commerce (ONDC) is poised to revolutionize the Indian industry, ushering in unprecedented levels of efficiency and democratization. By dissecting various components of commerce and streamlining processes, ONDC promises to reshape the landscape in ways previously unimaginable.
Understanding the impact of ONDC requires a multifaceted lens, examining its implications from the perspectives of government, businesses, customers, service providers, and innovators.
Government Perspective:
From a governmental standpoint, ONDC aligns to foster increased commerce within geographic boundaries.
Better Digital Commerce: By enhancing the efficiency of digital commerce, ONDC promotes improved unit economics.
More Digitalisation: This empowers traditional traders to embrace digital commerce. Digitalisation will lead to improved economic efficiency and control.
New Commerce: ONDC paves the way for emerging channels such as peer-to-peer, live commerce, and social commerce.
Business Outlook:
For enterprises, ONDC presents a plethora of opportunities.
More Visibility: It simplifies discovering suppliers and reaching new customers, thereby amplifying business visibility and trust within the ecosystem.
Enhanced Efficiency and Profitability: Moreover, the availability of a diverse range of services, including data analytics, payment solutions, inventory management, and marketing tools, equips businesses with the necessary infrastructure to enhance efficiency and profitability.
With increased competition, innovation, and accessibility to essential services, the industry is poised for transformation.
Customer Experience:
ONDC promises to elevate the customer experience by offering various products and services.
More Choice: With more vendors joining the digital realm, customers gain access to a diverse selection of products coupled with superior service offerings.
Better Experience and Assistance: Additionally, the integration of technologies such as virtual reality and augmented reality enables customers to make informed purchase decisions, thereby enhancing their overall shopping journey.
Shop Everywhere: Whether browsing through social media channels or exploring products while on the go, ONDC expands the horizons of consumer engagement.
Service Providers' Role:
Service providers, including technology firms, logistics companies, and management tools providers, stand to benefit from ONDC's widespread adoption.
Bigger Market: With easy access to millions of businesses and customers, service providers can streamline their offerings and reach a broader clientele base.
Easier Distribution: The seamless integration of services facilitated by ONDC simplifies distribution and enhances efficiency across the service industry, fostering growth and innovation.
Empowering Innovators:
ONDC catalyzes innovation, providing a platform for emerging technologies and business models to thrive. By increasing visibility and accessibility, ONDC accelerates the adoption of innovative solutions within the ecosystem. This not only benefits innovators by facilitating scaled adoption but also enriches the industry with novel approaches and advancements.
ONDC will enable long tail businesses
Every business needs some resources, some knowledge, some effort to get initiated. Now, if this requirement of resources, effort and knowledge is high, not everyone can open an ecommerce business. ONDC has simply made it easy for everyone to engage in online business even in low volume niche market segments.
A quick example is selling homemade food in a locality. Without ONDC, a business either needs to use a marketplace to attract customers and handle their payments and delivery, or it has to do all three by itself, which becomes costly as it is a very small food joint. But with ONDC, it can outsource all these three activities to multiple separate players in the market without incurring an administrative burden.
Now, more and more people who have a kitchen and time can enter this business. Even if you are doing 10 orders per day, you can do it profitably.
ABOUT THE AUTHOR
Hey everyone, I'm Garvit Sahdev 😎. I'm on a mission to gain a deeper understanding of the world, and to develop solutions that can trigger significant global change.
My curiosities span various domains including food, business theories, material science, market size calculations, economics, politics, and sports, etc. 🧐
Professionally, I have a diverse background spanning startups, consulting, policy development, market research, system building, ISO, colour physics, nanomaterial synthesis, textile chemistry, etc. 🐘
Nice work but please use more simple language and explain more at difficult line (for good understanding). love your work you save a lot of time. thank you, keep updating.
Very well written, extremely informative and engaging. Keep up the good work :')