ONDC: Democratizing eCommerce And Empowering MSMEs Across India
The Open Network for Digital Commerce (ONDC) represents a groundbreaking initiative to transform the eCommerce landscape. By democratising digital commerce, ONDC is not only reshaping the way business is conducted but is also levelling the playing field for sellers across the nation.
A Vision for Inclusive Growth
ONDC is setting new standards in digital commerce by creating a robust, open network that connects sellers of all scales—from MSMEs to larger corporations. The network’s objective is to foster an inclusive and competitive marketplace where every seller has the opportunity to thrive.
The vision is clear: to build a comprehensive, interoperable marketplace that supports a diverse range of sellers, from artisans and farmers to women entrepreneurs and street vendors. This inclusive approach is designed to empower millions of sellers who were previously marginalised by the dominant eCommerce platforms.
From Traditional Narratives to a Digital Frontier with ONDC
The traditional narrative of commerce is being rewritten as MSMEs increasingly find themselves at the forefront of the eCommerce wave, amplified by initiatives like the Open Network for Digital Commerce (ONDC). This groundbreaking approach levels the playing field, dismantling the dominance of closed platforms and empowering MSMEs to connect directly with consumers across diverse eCommerce applications. According to McKinsey & Company, ONDC has the potential to enable a 5-fold rise in India’s digital consumption to a staggering $340 billion. This paradigm shift fosters an open, inclusive digital marketplace where MSMEs can thrive irrespective of their size or resources.
ONDC’s impact is evident in its impressive metrics. The network supports over six lakh sellers and processes more than 1.2 crore orders every month. In July 2024, ONDC achieved a remarkable 21 percent month-on-month growth in transactions, reaching 12 million orders, compared to 10 million in June. This growth underscores the network’s capacity to handle high demand and its role in expanding digital commerce across India.
eCommerce: A Digital Launchpad for MSMEs, Supercharged by ONDC
The eCommerce landscape has emerged as a catalyst for MSMEs, providing them with a digital launchpad to catapult their businesses to the larger marketplace. In the not-so-distant past, MSMEs faced formidable challenges in reaching a wider audience. However, the digital marketplace has dismantled these barriers, and ONDC further shatters them by eliminating platform lock-in. This empowers MSMEs to list their products on multiple buyer applications, increasing their visibility and discoverability exponentially. This is expected to propel eCommerce penetration in India to 25% in the next two years, reaching a massive 900 million buyers. Additionally, ONDC is projected to bring 1.2 million sellers online, generating a gross merchandise value of $48 billion, highlighting its transformative potential for the Indian economy.
Democratisation of Information and Technology, Amplified by ONDC
One of the defining aspects of this collaboration is the democratisation of information and technology. eCommerce platforms are not merely transactional interfaces; they serve as knowledge hubs, equipping MSMEs with valuable insights, trends, and market intelligence. ONDC takes this a step further by establishing open network protocols, ensuring free flow of data and fostering a level playing field where all participants can access and utilise information equally. This empowers MSMEs to make informed decisions, optimise their online presence, and compete effectively in the dynamic digital landscape.
Agility: A Powerhouse in the Digital Age, Bolstered by ONDC
The agility of MSMEs, once considered a vulnerability, has become a potent asset in the digital age. eCommerce platforms reward nimbleness and innovation, allowing small businesses to pivot swiftly, experiment with new ideas, and respond adeptly to changing consumer preferences. MSMEs can seamlessly adapt their strategies across diverse buyer applications, capitalising on emerging trends and catering to niche markets with greater flexibility. ONDC compounds this agility by enabling frictionless multi-platform participation. MSMEs can seamlessly adapt their strategies across diverse buyer applications, capitalising on emerging trends and catering to niche markets with greater flexibility.
Beyond Sales: eCommerce as an Ecosystem for Entrepreneurship, Flourishing with ONDC
The symbiosis between eCommerce and MSMEs is not solely confined to the realm of sales and transactions. eCommerce platforms are increasingly becoming incubators of entrepreneurship, offering a suite of services that extend beyond the conventional boundaries of online retail. From digital marketing tools and payment solutions to logistics and customer relationship management, these platforms are empowering MSMEs with a comprehensive ecosystem to thrive in the digital economy. ONDC fosters a level playing field within this ecosystem, enabling MSMEs to leverage the services offered by various providers, irrespective of their affiliation to specific platforms. This fosters healthy competition and ensures that MSMEs have access to the most cost-effective and efficient solutions.
Challenges and the Need for Collaboration
This digital metamorphosis has its challenges and demands a recalibration of traditional business models. MSMEs are increasingly embracing digital literacy, adapting to the nuances of online consumer behaviour, and leveraging data-driven insights for strategic decision-making. As this paradigm shift unfolds, collaboration between governments, industry stakeholders, and eCommerce platforms becomes imperative to ensure a supportive ecosystem for MSMEs. ONDC plays a crucial role in this collaborative effort by fostering open dialogue, establishing transparent governance structures, and actively engaging with all stakeholders to address emerging challenges and opportunities.
ONDC’s approach to collaborating with eCommerce enablement platforms to streamline onboarding and boost growth aligns seamlessly with our own mission of democratising eCommerce. By partnering with ONDC, we aim to equip every small merchant with the same opportunity and expertise as any big player in the market. Our joint efforts reflect this commitment: with 12,891 sellers onboarded, 2,443,361 SKUs listed, and 219,494 orders processed, Shiprocket is proud to support the diverse and dynamic ecosystem that ONDC champions. Together, we are not just enabling growth; we are shaping the future of digital commerce in India, ensuring that every seller has the opportunity to thrive in this evolving landscape. We have created a thriving community bringing forward 2.5 million catalogues for various products. Out of all our sellers, 73% of them have turnover under ₹60 lakhs and over 700 of these sellers are led by government entities and initiatives.
Driving Future Growth
Looking ahead, ONDC’s transformative approach is set to redefine the digital commerce landscape. By breaking down the barriers of the traditional, exclusive eCommerce models, ONDC is creating a more inclusive network where diverse sellers and buyers can interact seamlessly. This shift represents a major step towards democratising access and opportunity in the digital space.
The initiative seeks to dismantle the “walled garden” of digital commerce, which has traditionally restricted access to a select few within the industry. ONDC’s mission is to open up this space, allowing a broader range of participants to benefit from the opportunities that digital commerce offers.
The impact of ONDC is already visible across various sectors. Financial institutions are discovering new avenues for engagement, brands and retailers are finding enhanced connectivity, farmers are accessing markets directly, and manufacturers are benefiting from a more integrated value chain. This inclusive approach not only fosters growth but also drives innovation, setting the stage for a more connected and dynamic digital economy.
In conclusion, ONDC is not merely a network but a movement towards a more equitable and open digital commerce environment. It embodies the spirit of progress and collaboration, paving the way for a future where every participant has the opportunity to thrive and contribute to broader economic growth.
Written By: Saahil Goel, MD & CEO, Shiprocket
Disclaimer:The views expressed in this article are those of the author and do not represent the stand of this publication.
