Democratising e-commerce: How ONDC is helping India's merchants reap the benefits of digital commerce

In our October 2, 2022 issue, we brought you the story of how the Unified Payments Interface (UPI), the government-backed digital payments system, is transforming the Indian payments scene, with even the smallest of merchants now sporting UPI QR codes. Today, UPI is ubiquitous and synonymous with payments in India. A similar movement is now gathering momentum in the world of e-commerce, with the Open Network for Digital Commerce, or ONDC, now live and scaling up. ONDC’s promise is that of democratising e-commerce and helping India’s smallest of merchants reap the benefits of digital commerce in a seamless way, which they currently cannot do with the dominance of large, global marketplaces. In the process, buyers, sellers and logistics players—who comprise the ONDC network—will get benefits of reach and scale in an equitable and democratic way. As Nandan Nilekani, one of India’s foremost digital architects and a member of ONDC’s advisory council, says, it is a “force of inclusion”. He adds that the value of ONDC lies in making all of commerce, e-commerce.

Even as ONDC rolls out in more cities and on-boards more network participants, our cover story takes a close look at how the network is growing, and the key challenges. As Binu Paul, who put together the cover story, finds out, the network now has around 26,000 merchants on board and has expanded to nearly 200 cities since the beta launch in Bengaluru on September 30, 2022. Product categories have grown to fashion, home decor, beauty and personal care, and electronics, beyond just groceries and food that it had started with. However, despite these initial steps, the biggest challenge in realising the promise of ONDC early is the current lack of awareness about the benefits of reach and inclusion that the network provides. Consequently, order numbers, at just over a couple of hundred a day, are very low, though the network aims to take this to 5,000 by the end of March.

Merchants who believe in the ability of the network to change the game for small sellers in remote Indian towns and villages, and have joined up early, say the biggest challenge is the lack of marketing. The real difference, they say, will be visible once sales pick up. Initial hiccups like a less-than-ideal buyer app interface by early joinee Paytm are being addressed. The network is also eagerly awaiting the entry of digital payments platform PhonePe that is set to come out with a dedicated buyer app for ONDC. Meanwhile, Meesho, a large e-commerce platform with deep small-town reach, has joined the network and expects the ONDC numbers to pick up soon. The hope is that once Paytm fixes the interface, PhonePe comes on board, and Meesho starts getting traction on the ONDC network, the order numbers will increase significantly. As ONDC’s CEO T. Koshy says, everybody is excited about the possibilities the network presents. If UPI is any indication, India may be on the cusp of witnessing another revolution, this time in e-commerce.