The Open Network for Digital Commerce (ONDC) represents a major initiative to transform the e-commerce landscape. By democratizing digital commerce, ONDC is not only reshaping the way business is done but also leveling the playing field for sellers across the country.

A vision for inclusive development

ONDC is setting new standards in digital commerce by building a robust, open network that connects sellers of all scales—from MSMEs to large corporations. The network aims to promote an inclusive and competitive marketplace where every seller has the opportunity to thrive.

The vision is clear: to create an inclusive, interoperable marketplace that supports a diverse range of sellers, from artisans and farmers to women entrepreneurs and street vendors. This holistic approach is designed to empower millions of sellers who were previously marginalized by dominant e-commerce platforms.

From Traditional Narrative to Digital Frontier with ONDC

The traditional narrative of commerce is being rewritten as MSMEs increasingly find themselves at the forefront of the e-commerce wave, boosted by initiatives such as the Open Network for Digital Commerce (ONDC). This fundamental approach levels the playing field, ends the dominance of closed platforms and empowers MSMEs to connect directly with consumers across diverse e-commerce applications. According to McKinsey & Company, ONDC has the potential to drive a 5-fold increase in India’s digital consumption to $340 billion. This paradigm shift fosters an open, inclusive digital marketplace where MSMEs can thrive regardless of their size or resources.

ONDC’s impact is evident in its impressive metrics. The network supports more than six lakh sellers and processes more than 1.2 crore orders every month. In July 2024, ONDC recorded a significant month-on-month growth of 21% in transactions, reaching 12 million orders as against 10 million in June. This development indicates the network’s ability to handle high demand and its role in expanding digital commerce across India.

E-Commerce: A Digital Launchpad for MSMEs, Supercharged by ONDC

The e-commerce landscape has emerged as a catalyst for MSMEs, providing them with a digital launch pad to scale their businesses to larger markets. In the recent past, MSMEs faced tremendous challenges in reaching a wider audience. However, the digital marketplace has broken down these barriers, and the ONDC platform breaks them down further by eliminating lock-in. It empowers MSMEs to list their products on multiple buyer applications, increasing their visibility and discovery exponentially. This is expected to drive e-commerce penetration in India by 25% over the next two years, reaching 900 million shoppers. Additionally, ONDC is estimated to bring 1.2 million sellers online, generating an aggregate trade value of $48 billion, highlighting its transformative potential for the Indian economy.

Democratization of Information and Technology, expanded by ONDC

One of the defining aspects of this cooperation is the democratization of information and technology. E-commerce platforms are not mere transaction interfaces. They act 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 promoting a level playing field where all participants can access and use information equally. It empowers MSMEs to make informed decisions, improve their online presence, and compete effectively in the dynamic digital landscape.

Agility: A Powerhouse in the Digital Age, powered by ONDC

Agility of MSMEs, once considered a weakness, has become a powerful asset in the digital age. E-commerce platforms reward sophistication and innovation, allowing small businesses to pivot quickly, experiment with new ideas, and respond well to changing consumer preferences. MSMEs can seamlessly adapt their strategies to different buyer applications by taking advantage of emerging trends and catering to specific markets with greater flexibility. ONDC adds to this agility by enabling frictionless multi-platform participation. MSMEs can seamlessly adapt their strategies to different buyer applications by taking advantage of emerging trends and catering to specific markets with greater flexibility.

Beyond sales: E-commerce as an ecosystem for entrepreneurship flourishes with ONDC.

The synergy between e-commerce and MSMEs is not limited to the realm of sales and transactions. E-commerce platforms are increasingly becoming incubators for entrepreneurship, offering a range of services beyond the traditional 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 promotes a level playing field within this ecosystem, enabling MSMEs to leverage services offered by various providers, regardless of their affiliation with specific platforms. It promotes healthy competition and ensures that MSMEs have access to the most cost-effective and efficient solutions.

Challenges and need for cooperation

This digital metamorphosis has its own challenges and calls for a renaissance of traditional business models. MSMEs are increasingly adopting digital literacy, embracing the nuances of online consumer behavior, and leveraging data-driven insights for strategic decision-making. As this paradigm changes, collaboration between governments, industry stakeholders, and e-commerce platforms becomes essential to ensure a supportive ecosystem for MSMEs. ONDC plays an important role in this joint effort by promoting open dialogue, establishing transparent governance structures, and actively engaging with all stakeholders to address emerging challenges and opportunities.

ONDC’s approach to collaborating with e-commerce enabling platforms to streamline onboarding and drive growth aligns seamlessly with our own mission to democratize e-commerce. By partnering with ONDC, we aim to equip every small trader with the same opportunities and expertise as any major player in the market. Our combined efforts reflect this commitment: With 12,891 sellers onboard, 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’re 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 built a thriving community that brings forward 2.5 million catalogs for various products. Of all our sellers, 73% of them have a turnover of less than ₹60 lakh and more than 700 of these sellers are led by government agencies and initiatives.

Driving future growth

Looking ahead, ONDC’s transformational approach is poised to redefine the digital commerce landscape. By breaking down the barriers of traditional, specialized e-commerce models, ONDC is creating a more inclusive network where diverse sellers and buyers can interact seamlessly. This change represents an important step towards democratizing access and opportunity in the digital space.

The initiative seeks to break down the “walled garden” of digital commerce, which has traditionally limited access to a select few within the industry. ONDC’s mission is to open up this space, allowing a wider range of participants to benefit from the opportunities that digital commerce offers.

ONDC’s impact is already visible in various sectors. Financial institutions are finding new ways to engage, brands and retailers are looking for better connectivity, farmers are gaining access to direct markets, and manufacturers are taking advantage of a more integrated value chain. This holistic approach not only promotes growth but also drives innovation, paving the way for a more integrated and dynamic digital economy.

Finally, ONDC is not just a network but a movement towards a more equal and open digital commerce environment. It fosters a spirit of growth and cooperation, paving the way for a future where every participant has the opportunity to thrive and contribute to broader economic growth.

By: Sahil Goyal, MD & CEO, Shiprocket

Disclaimer:The views expressed in this article are those of the author and do not represent the position of this publication.