Introduction to the ONDC Platform

 Introduction to ONDC

Open Network for Digital Commerce (ONDC) is the new and revolutionary way for digital commerce in India. It provides an open specification and aims to provide more dynamic participation of buyers and sellers, promotes fair competition, aims to increase user choices and fosters further innovation. By providing a platform and open specification, there can be myriad of innovative applications that can be built of top of the ONDC Platform. ONDC itself is built on top of the Beckn Protocol and the IndiaStack.

 

Read my Earlier Article on Introduction to the Beckn Protocol.

 

What really is ONDC?

It has to be noted that ONDC is not an application, software or a technology – It is a set of specifications or an open network and associated platforms can be built out of or based on this specification. ONDC is none of the following:

ý Application or Platform
ý Central Intermediary
ý Medium to Digitize Biz
ý Government Regulator

 

At the same time, ONDC is an open network and a set of open specifications to enable and ease digital commerce.

þ Open Network, Set of Open Specifications
þ Eliminates Need for Central Intermediary
þ Enabler for E-Commerce and Innovation
þ It’s a Market & Community Led Initiative

 

How ONDC Works?

At the core of its advantages, ONDC goes beyond the current platform centric digital commerce model where the buyer and the seller have to use the same single platform to be digitally visible and do a business transaction. With the help of the underlying protocols in ONDC, ONDC provides an open specification for standardizing cataloguing, inventory management, order management and order fulfilment. This provide multiple options for businesses to be discoverable over the network and conduct business. It will also encourage the use of digital means for business that are not yet on any digital commerce networks. The maximum advantage is bound to be for the small and medium businesses.

 

 

As you can observe from the above, sellers from multiple platform can be discoverable via ONDC. Sellers, usually also called Providers in ONDC, techno functionally user the Beckn Provider Platform (BPP). The sellers will use the BPP to acquire orders and for order fulfilment via ONDC. Beckn Application Platform (BAP) allows consumers to discover sellers, place orders and allows them to make payment.

The underlying communication in ONDC happens via the Beckn Gateways, that becomes the backbone for ONDC. Beckn itself is built on top of CORD Network (Central Office Re-architected as a Datacenter). Beckn stands Blockchain Enabled Ecommerce for Knowledge Networks. It is the driving factor underlying ONDC. Beckn Gateways (BG) lie between BAP and BPP to provide all routing infrastructure or the transaction layer. BGs are extremely lean and stateless routing servers. The purpose of this infrastructure to optimize discovery of BPPs by the BAPs. Business wise, They should ensure a fair chance for all active BPPs to be discovered and to sell their goods.

 

 

Buyer and Seller Cycle in ONDC

Below, I am also providing a self-explanatory way to explain the Buyer-Cycle and the Seller-Cycle of ONDC. It is more like a Business Process Flow Diagram (Instance) of how a buyer will discover, search, purchase and pay using ONDC. It also shows how a sellers can acquire consumers.

 

Below is the depiction of the merchant cycle, for a given instance of purchase by a buyer. It shows how the order is fulfilled via logistics providers. In a way, it shows how fairness and competitiveness can be promoted among the buyers and the other members in the chain like logistics providers.

 

 Process for Joining of Buyer and of Seller App

Before I end this article, I would also like to share the process flow for joining of buyer app to ONDC and for joining of sellers to ONDC. Please note this is not related to buyers registering on the buyer app or the sellers on the seller app.

 

 

Advantages of ONDC

In the end, we take a look at all the advantages that ONDC brings to the world of digital commerce, from buyer or seller viewpoint and also for the other participants in the transactional or fulfilment cycle.

 

·        Government Backed Initiative (IndiaStack)

·        Increased Choice and a Fair Competition

·        Democratisation and Decentralization

·        Lower Prices / Competitiveness in Pricing

·        Efficiency in Logistics and Shipments

·        Ensured Data Privacy and Confidentiality

·        Support for Micro, Small, Rural Business

·        Easier Rollout of Discounts & Promotions

 

 

Current Businesses (Buyers/Sellers) on ONDC (Sep 2023)

 

Buyer Apps – PayTM, Magicpin, SpiceMoney, CraftsVilla

Seller Apps – Meesho, Snapdeal

[ Logistics ] – Ekart, Dunzo, Delhivery

 

Conclusion

ONDC does present a promising opportunity and with a government backing is all the more trustworthy. It has started off in multiple cities in India. Soon, It will be launched in more cities and towns of India. It is to be seen whether this will take on as the consistent platform of choice for big players or remain merely an advantage for micro, small and medium businesses. In any case, It will continue to foster innovation and there may be multiple platforms that are inspired from ONDC. This may or may not be directly related to digital commerce.

 

References/Credits To

ONDC-Wikipedia Page
Beckn for Developers
Government of India (PIB)
PayTM Blog on ONDC
Article - Business Std.