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2022 11 Decoding-OnDC

This document provides an overview of the Open Network for Digital Commerce (ONDC) initiative in India. It discusses the current state of e-commerce in India, including relatively low digital adoption, an industry dominated by a few major players, and data privacy issues. It then introduces ONDC, describing its vision to democratize e-commerce through an open network that allows multiple buyers and sellers to connect. The document outlines ONDC's architecture and key milestones. It explores opportunities for marketers through increased reach, lower costs, and new data and insights. It also addresses preparatory steps for marketers to engage with ONDC and potential risks to manage.

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0% found this document useful (0 votes)
91 views40 pages

2022 11 Decoding-OnDC

This document provides an overview of the Open Network for Digital Commerce (ONDC) initiative in India. It discusses the current state of e-commerce in India, including relatively low digital adoption, an industry dominated by a few major players, and data privacy issues. It then introduces ONDC, describing its vision to democratize e-commerce through an open network that allows multiple buyers and sellers to connect. The document outlines ONDC's architecture and key milestones. It explores opportunities for marketers through increased reach, lower costs, and new data and insights. It also addresses preparatory steps for marketers to engage with ONDC and potential risks to manage.

Uploaded by

kamal
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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ONDC

PERSPECTIVE FOR MARKETERS


FOREWORD

Technology enables Commerce to be wherever the Consumer


is. And so every interaction has a potential to lead to
Commerce. Hence at Publicis Groupe, we believe that
Commerce is now inseparable from any and all dimensions of
Marketing and Business strategy. It can no longer be treated as
a separate specialised vertical in Marketing. When we apply
the India lens to this charter, it is critical that we do not miss
out ONDC. The arrival of ONDC signals a new era in digital
commerce and opens up exciting opportunities for consumers
and brands alike. ONDC readiness requires cross functional
capabilities in planning, technology, experience, content,
discovery and commerce operations. While we have skilled
teams to support our clients in these areas, it is critical that all
marketers understand the implications on their business and
brands. Through this report we will facilitate our clients with
the right information to get started and leverage the
opportunities presented by ONDC.

Anupriya Acharya
CEO, Publicis Groupe, South Asia

The success of digital public goods in


identity, payments and social welfare
disbursements in India is based upon two
principles: trust in technology and value
co-creation. ONDC aims to incorporate these
principles to democratise e-commerce in India
and revolutionise the e-retail, e-transactions,
and logistics domains. This report hopes to
guide stakeholders on the way to transform
the e-commerce Indian landscape in a
transparent and inclusive manner.

Arvind Gupta
ONDC Board Member,
Co-Founder & Head, DIF
Table of Contents

1. State of e-Commerce in India


1.1 e-Commerce Penetration in India
1.2 Key Challenges in Current e-Commerce Landscape
1.2.1. Relatively low digital adoption
1.2.2. Industry consolidated with a few players
1.2.3. Data privacy and consent

2. Introducing ONDC
2.1. ONDC Vision: In a Nutshell
2.2. The Genesis of Digital India Initiatives
2.3. ONDC Architecture
2.3.1. ONDC architecture design principles
2.3.2. Debunking some myths around ONDC
2.3.3. Network participants
2.3.4. Rights and obligations of network participants
2.3.5. ONDC organisation structure
2.4. ONDC-Proposed Customer Journey
2.4.1. Search and discovery
2.4.2. Placing an order
2.4.3. Order fulfilment
2.4.4. Payment and settlement
2.4.5. Returns, refunds, and cancellation
2.4.6. Issue and grievance management
2.5. Key Milestones of ONDC

3. Opportunities for Marketers


3.1. Increased Reach, Product Discoverability
3.2. Reduction in Cost per Sale
3.3. Data and Insights
3.3.1. Insight from ONDC network
3.3.2. Insight from buyer-side apps
3.3.3. Insight from seller-side apps
3.4. Increased Flexibility

4. Leveraging ONDC: Industry-Specific Perspective


4.1. Consumer and Packaged Goods
4.2. Travel, Transport, and Logistics
4.3. Banking and Financial Services
4.4. Food Services and Restaurants

5. Getting Started With ONDC: Preparatory Steps for Marketers


5.1. Critical Success Factors
5.1.1. Content
5.1.2. Availability
5.1.3. Search
5.1.4. Media
5.1.5. Pricing
5.2. Setting up the Infrastructure: Seller Registration, Logistics Partners
5.2.1. Join as an inventory seller node (ISN)
5.2.2. Join via an established marketplace seller node (MSN)
5.3. Setting up Data Infrastructure: Single Customer View, Attribution

6. Key Risks to Manage in ONDC Regime


6.1. Customer Service, Returns
6.2. Managing Roles and Responsibilities in an Evolving Ecosystem
6.3. Regulatory and Compliance
6.4. Delays in Nationwide Rollout

7. Conclusion

8. References
Important Disclosures

All rights reserved.


No part of this report may be reproduced, stored in a retrieval system
or transmitted or utilized in any form or by any means, electronic or
mechanical, including photocopying, recording or otherwise, without
permission in writing from the publisher. This report is aimed at the
digital business community, dedicated to an educational cause and
intended to help the digital businesses. The views expressed in this
report are the personal views of the authors and does not in any way
aim to address the needs of the individual digital businesses. This
report may contain some third-party applications, provided purely for
reference purposes. Such references do not imply any endorsement.
The information published in this report is subjected to a peer review
to ensure equality, justice, objectivity, independence, and relevance as
far as educational needs are concerned. The authors have based their
inputs on reliable sources of information and adhere to certain defined
norms and standards. In the event of an error committed either by the
authors or publisher, neither the publisher or any other party involved
in the creation, collation, and consolidation of this report claims that
the information contained is in every respect precise and complete,
and as such, are not responsible for errors or omissions or for the
results obtained from the use of such information. Readers are
encouraged to confirm the information disseminated by this report
with other sources. The publisher and all parties involved in creating,
producing, and delivering this report do not assume any liability or
responsibility for the precision, completeness, or utility of any piece of
information provided in this report. These parties are not liable for any
form or nature of direct, indirect, situational, significant, resultant or
punitive damages arising after referring this report.
Prologue

Bengaluru, September 30, 2022

There was a sense of anticipation all around at AtoZ Supermarket in Murugeshpalya, Bengaluru, on
what otherwise would have been a regular Friday. Within minutes after opening, Deepak, the owner of
AtoZ Supermarkets, received their first online order of the day. While Deepak is quite conversant with
India’s e-commerce, there was something special about this particular order.

For starters, the customer placing the order was likely to have used any of PayTM, SpiceMoney, or
MyStore applications to place the order. The customer’s request was made available in real-time to
multiple registered seller nodes such as Bizom, Digiit, EnStore, eSamudaay, GoFrugal, GrowthFalcons,
MyStore, SellerApp, Unengage, and UShop. Out of these, SellerApp had onboarded AtoZ
Supermarkets’ inventory and passed on this specific order.

Deepak quickly got to work and prepared the order for dispatch. Soon, a delivery executive from
LoadShare (3rd-party logistics and delivery partner) reached the spot to pick the package for delivery.
In just a short time, Deepak received a notification stating that the order had been delivered to the
customer. “Et voilà! One more happy customer” he thought to himself! Deepak would go on to receive
nine more orders till afternoon with the average gross merchandise value (GMV) being ₹150.
Throughout the day, 150 orders in groceries and food and beverages (F&B) categories were placed
across 16 pincodes in Bengaluru.
- With inputs from ToI1 (ONDC Pilot in Bengaluru)

Welcome to the next evolution of e-commerce in India, enabled by the Open Network for Digital
Commerce (ONDC). ONDC aims to democratise e-commerce by bringing multiple buyers, sellers, and
gateway service providers on an open network to perform rule-based transactions.

In this joint report by Publicis Groupe and Digital India Foundation, we explore ONDC’s capabilities,
opportunities, and risks. Further, we look at ONDC from the eyes of brand leaders/managers and
develop a perspective on how brands should leverage ONDC to optimise business outcomes.
1. State of e-Commerce in India

The convergence of data revolution, pandemic-fueled digital adoption, and the steady rise of
entrepreneurs has brought the immense potential of India's digital economy to the limelight. In five
years, India's data traffic has grown 60x and online shoppers have increased by 175%2. With more
and more Indian consumers and businesses adopting digital channels, the e-commerce and
consumer internet sector is poised to witness rapid growth in the next three to five years.

Pioneering, new-age start-ups in sectors such as edtech, fintech, and online retail have challenged
established conventions in recent years. As next-gen technology connects people and businesses,
augmenting user experience and engagement has become pivotal. With the internet economy
boosting productivity in numerous ways, this progress has eventually led to the birth of a new
generation of relevant products and services.

Digital Infrastructure Across Key Economies

USA China
307 mn 1,020 mn
270 mn 918 mn
1.8 bn 18 bn

India

Internet Users 840 mn


479 mn
Smartphone
Growth (in USD) 48 bn

Real-time Online
Transactions

Figure 1.1 (Source: Times of India; Business Wire; Statista)

KEY INSIGHTS
1. With 48 bn real-time online transactions in 2021, India was the global leader.
2. India is expected to have 1,100 mn Internet users and 220 mn online shoppers
in the next 3 years.
(Source: Statista.com, TOI)
1.1 e-Commerce Penetration in India 

India has witnessed a tremendous uptick in e-commerce adoption in the last 5 years. According to
India Brand Equity Foundation (IBEF), India’s consumer digital economy is expected to become a
US$ 1 trillion market by 2025, growing from US$ 537.5 billion in 2020. COVID-19 has dramatically
accelerated demand and brought a whole new set of opportunities in the e-commerce segment.
With growth trajectories shifting towards tier-2 and tier-3 cities post-pandemic, large demographic
segments became accessible, which led to newer categories of products and services being added.
Consequently, e-commerce penetration increased fivefold between 2020 and 2022 alone.

Indian e-Commerce Market

350 bn

Figure 1.2 (Source: IBEF.org)


188 bn

46.2 bn

2020 2025 2030

Key Drivers of Growth

Consumers were getting hooked to digital and showing strong signs of growth even before
Covid-19. The Indian government’s 'Digital India' initiative, which sought to improve online
infrastructure and increase internet accessibility in the country, led to the emergence of powerful
currents across online shopping, banking, edtech, and cashless transactions. Furthermore, the rise
of new-age entrepreneurs and unicorns fostered a digitally inclusive economy. As per the EY
e-commerce India Trendbook 2022, Indian consumers are more positive about technology and
internet changing their lives as compared to other nations.

Indian Government’s Emerging New-Age Third Largest Online


Digital Initiatives e-Commerce Shopper Base
Entrepreneurs

Exponential growth of UPI Transactions 30+ unicorns India has 3rd-highest number
($100 bn+ in transactions) in the last 2 years of e-tail shoppers
CoWin Success (1.6 bn vaccinations) (only behind China and US);
OCEN (Open Credit Enablement India recorded 140 mn
Network) to encourage 7.9 mn MSMEs e-retail shoppers in 2020
1.3 billion+ unique digital identifiers
(Aadhaar numbers) issued

Source: EY, Snapbiz, Kantar, CoWin, Digilocker, Media articles


1.2 Key Challenges in Current e-Commerce Landscape

1.2.1 Relatively low digital adoption


Even as the Indian e-commerce sector approaches warp speed, there’s still a long way to go. As of
September 2022, India was estimated to have 63 million Micro, Small and Medium Enterprises
(MSMEs)3. Each of these MSMEs has the potential to flourish with innovative sales and marketing
efforts but are not part of the digital revolution. Even on the consumer side, only a small portion
(~20%) of the internet users in India are online shoppers4. Truth be told,

• A large portion of the retail sector is not digitally enabled


• Digital commerce is further limited in smaller towns and rural areas, or ‘Bharat’

Retail sales in India vis-à-vis other countries

China 46.3 %
United Kingdom 36.3 %
South Korea 32.2 %
Denmark 20.2 %
Indonesia 20.2 %
Norway 19.4 %
United States 16.1 %
Finland 14.6 %
Sweden 14.4 %
Canada 13.6 %
India 7.8 %

% Share of the Total Retail Sales

Figure 1.3 (Source: IBEF.org, Statista)

Organised v/s unorganised share of Indian retail market

FY20 FY25

4% 12% 84%
8% 14% 78%

Organised Online Organised Offline Unorganised


Channel Kiranas
Figure 1.4 (Source: MoSPI, IMF, Redseer Analysis)
1.2.2 Industry Consolidated With A Few Players
Over the last few years, India has witnessed multiple business models come into play in the
e-commerce space. Some household categories include:

 MARKETPLACES
Dominated by Amazon and Flipkart with a host of other
category-specific players (e.g., Nykaa).

 D2C E-COMMERCE CHANNELS


Direct-to-Customer (D2C) channels of established legacy brands (e.g.,
Unilever) and new-age digital-only brands (e.g., Sugar Cosmetics, Wow
Skin Science).

 QUICK COMMERCE
New breed of players combine e-commerce with quick, hyperlocal
delivery to drive commerce (BlinkIt, Swiggy).

 SOCIAL COMMERCE
Bring social connection and better experience to drive commerce
(e.g., Meesho, DealShare).

 B2B COMMERCE PLATFORMS


Business-to-business (B2B) players facilitate wholesale commerce
transactions (e.g., Amazon Business, JioMart, Udaan, IndiaMart).

At present, each of the above e-commerce categories are shaped by two to three large players,
comprising nearly 80% of the market share. These industry leaders, often backed by wealthy investors, are
likely to use their deep pockets to maintain their market leadership. This in turn creates entry barriers for
new bootstrapped start-ups in online retail space, thereby limiting competition. In the process, both the
consumer and the seller end up shelling out more to avail services of established market leaders.

1.2.3 Data privacy and consent


Without meaningful participation from smaller players, the larger players with high market shares are able
to access data pertaining to e-commerce, such as data about consumer behaviour, preferences,
best-selling products, pricing, etc. Insights from this data allow larger players to offer more competitive
offerings. For example:
• Leading marketplace platforms can provide better offerings to customers by introducing their own branded
products. Based on their insight from various data points such as fast selling categories, bestselling product
features, customer preference and price points, these platforms can create competitive offerings. Smaller
players can craft similar solutions if they have access to data through a common platform.

India has recently issued draft regulations on personal data protection. The draft, which is currently open for
public consultation, will need to address instances of misuse (e.g., remarketing, tele-calling) of personally
identifiable information and clear the protocols associated with deemed and explicit consent of customers
2. Introducing ONDC 

2.1 ONDC Vision: In a Nutshell

ONDC aims to pave the way for revolutionising digital commerce in India and creating a globally
accepted paradigm. To ensure widespread involvement by stakeholders in India's digital commerce
ecosystem through various gateways, an “open network built on open protocols based on
open-source standards with established registries”4 is being developed.

Long-tail local neighbourhood supply for categories, including grocery, fashion, home handicrafts,
flight tickets, and insurance, among others, will be available on ONDC. Apart from this, some ONDC
projections5 show:

1. More than 2 million retailers will be enabled with e-commerce


2. Over 250 million buyers will be able to purchase goods and services
3. Over 75% pin code coverage across India

Before ONDC After ONDC

Search Search

Retail
Build Cart Build Cart
Buyer
App

Capabilities Payment Gateways Payment Gateways


bundled
in a single
Catalog Management Catalog Management
marketplace
app Retail
Order Fulfilment Order Fulfilment Seller
App

Returns, Cancellations Returns, Cancellations

Logistics
Order Delivery Order Delivery
Seller App

ONDC unbundles the e-commerce components and leverages open protocols so that
the unbundled components are interoperable in the network.
ONDC is designed to address key factors4 across the value chain, such as:
1. Facilitating a decentralised network: The ONDC network will act as a catalyst and allow value
to flow down the chain, thus benefiting all parties involved instead of centralising it between
a few players.
2. Being interoperable: To enable interoperability, the underlying architecture must be “non-rivalrous
and non-exclusive" in nature. These become the ‘digital public goods’ that can stimulate and
activate larger participation to ensure that the value derived by participants is not locked in a
particular platform.
3. User-centric with minimal intervention: Adopt a minimal form of governance; it should be an
ecosystem and not a system. Should offer inclusivity, choice, and agency to all participants.
4. Innovation-led evolution of systems: Living model that evolves through active participation,
collaboration, and orchestration of members. No discouraging entry barriers preventing players
from participating and leading innovation.
5. Price comparison: Since all players will be visible with a single search on ONDC, price comparison
will become a piece of cake. Now, you can see how different websites are charging you for the same
product. Thus, all players, small and big alike, can benefit from ONDC.

2.2 The Genesis of Digital India Initiatives

The proliferation of online commerce is reshaping the international economy and levelling the
playing field for businesses of all sizes. In ONDC’s regime, new opportunities may arise for the
economy and, especially, for smaller businesses. With the earlier advent of the Open Credit
Enablement Network (OCEN), a financial revolution is expected even in the lending sector. At their
core, both ONDC and OCEN are facilitators (and not operators) with a decentralised, interoperable
network, and minimal governance. UPI, on the other hand, is a type of payment mechanism that
facilitates transactions on ONDC and OCEN.

ONDC OCEN UPI

ONDC is primed at OCEN is a credit protocol India's unified payment


promoting the exchange infrastructure built by solution for realtime
of goods and services iSPIRT for facilitating payment transactions
over digital. It is based on real-time microlending. such as IMPS, NEFT,
Beckn Protocol. and RTGS.

ONDC is set to transform OCEN will transform Today, the country has
hyperlocal e-commerce real-time money over 100 million monthly
in India. micro-lending in active UPI users.
the country.

About 300 million OCEN is expected to In FY22, UPI processed


customers are expected unlock over $1 trillion of more than 46 billion
to transact via ONDC in lending market in value. transactions amounting
five years. to over ₹84.17 trillion,
thus breaching the
$1 trillion-mark.

Source: Multiple publications


2.3 ONDC Architecture

2.3.1 ONDC architecture design principles


ONDC architecture is designed to uphold these key tenets:
• Facilitating a decentralised and interoperable ecosystem that encourages widespread
participation from all players, big and small, in the retail space
• Promoting autonomy to enable free movement of value through the supply chain
• Enable platform-agnostic discoverability
• Adoption of an ecosystem approach rather than a “system” approach
• Open digital technology infrastructure as a catalyst to distribute the ability to solve
• Open protocols, open registries, and reference apps to stimulate and activate
large-scale participation

Logistics app

OCE
N

Buyer apps
Seller apps

ONDC
Architecture

GATEWAY

Registry Reputation Ledger

Figure 2.1 ONDC architecture; (Source: Plotch.ai; ONDC Strategy document)


2.3.2 Debunking some myths around ONDC

ONDC is
An open network

Eliminates need for


central intermediary

An enabler for massive


e-commerce expansion

An enabler for broad-based


innovation

Market and community-led


initiative

ONDC
is not An application or a platform

A central intermediary

A medium to help
digitise businesses

Responsible for buyer &


seller experience

A government platform or
regulatory body
2.3.3 Network Participants

There are three types of network participants on the ONDC network9 (see figure 2.1 above)

Buyer Apps (aka Buyer Nodes): Buyer apps are Network


Participants that handle buyer-side operations, such as buyer
acquisition, search and discovery, and give functionality to the buyer to
place orders on the open network. Customers will use buyer apps to
access ONDC. Some examples of ONDC-enabled buyer apps are Paytm,
SpiceMoney, or MyStore.

Seller Apps: Seller apps manage seller-side operations and can be of


two types:

a. Marketplace Seller Nodes (MSNs): MSNs act as aggregators for


eventual sellers of products or services on ONDC. MSNs do not hold
any inventory, but rather function as pure-play marketplaces. Some
examples of ONDC-enabled MSNs are GoFrugal, SellerApp, Digiit, etc.

b. Inventory Seller Nodes (ISNs): ISNs are themselves sellers who also
are Network Participants. Large commerce players with significant
physical presence, distribution, and technological maturity can
register as ISNs. Examples include retailers such as Unilever, Marico,
etc., who may register as ISNs.

Gateways: Gateways function purely as nodes for multicasting


search queries and collecting results. Thus, they play a crucial role in
search and discovery.

Other Specialised Service providers: ONDC also has


provision for Network Participants who provide specialised services,
such as:

a. Logistics service providers, e.g., LoadShare, Dunzo

b. Payment service providers

c. Reconciliation Service providers (for reconciling payments across


multiple network partners)

d. Settlement agency

e. Online Dispute Resolution (ODR) service providers (for tackling


disputes across multiple Network Participants)
Figure 2.2 below lists select examples of ONDC Network Participants.

SELLER-SIDE APPLICATIONS BUYER-SIDE APPLICATIONS LOGISTICS APPLICATIONS

Live
participants

9
Final stages
of Integration

20+

Initial connects

200+

Figure 2.2: Network Participants on the ONDC Network. Data as on Oct 31, 2022 (Source: ONDC Introductory Participant Presentation)

2.3.4 Rights and obligations of network participants

ONDC establishes clear rights and obligations while upholding its principle of
decentralisation. Key elements of this approach9 are as follows:

1. Buyer and seller are bound by the terms of the sale which are declared upfront. The title for
the goods is transferred from the seller to the buyer through the invoice.

2. The buyer has a pre-existing legal relationship with the buyer app (through the latter’s terms
and conditions), and the seller has a pre-existing relationship with the seller app (through its
merchant agreement and/or terms and conditions).

3. The buyer and seller apps have a pre-existing legal relationship only with ONDC through the
Network Participant agreement (NP agreement). While the NP agreement creates the legal
relationship, the ONDC network policy details the operational aspects for a participant to
transact on the ONDC network.

4. During a transaction, a legal relationship is created between the buyer and seller, on-the-fly,
through a transaction-level contract. A transaction-level contract is a digital contract executed
through the ONDC protocol between the buyer and seller apps. However, ONDC is not a party
to that transaction.

5. While the transaction-level contract governs the terms of a given transaction, the ONDC
network policy governs the general rules of engagement, including what may or may not be
included in the contract.
2.3.5 ONDC organisation structure

From being an advisory council in 2021, ONDC went on to become a fully functional
institution in less than 12 months.

ONDC’s journey so far:

• ONDC’s Advisory Council is established by the Department for Promotion of Industry and Internal
Trade (DPIIT) in June 2021.

• ONDC is incorporated as a Section 8 company in December 2021 with the Quality Council of India
and Protean eGov Technologies Ltd as initial promoters.

• ONDC receives a fund inclusion of approx. 1,575 mn from committed investors, including Bombay
Stock Exchange (BSE), National Stock Exchange (NSE), State Bank of India (SBI), and ICICI Bank Ltd
to name a few.

As on November 08, 2022, ONDC’s board of directors includes:

Mr. Adil Zainulbhai Mr. Suresh Sethi Mr. Arvind Gupta

Mr. Thampy Koshy Mr. Ritesh Tiwari Mr. Anil Agrawal


2.4 ONDC-Proposed Customer Journey

There are 6 key customer journeys identified9 for transactions enabled by ONDC.
The identified customer journeys are described below.

2.4.1 Search and discovery


In this step, a potential buyer searches for a product or service using one of the
registered buyer apps in the network.
The buyer then gets results based on his/her search.

ONDC
Registry

Look-up relevant
Seller Application 3

Relay Multicast
1 Search 2 Search
4 Search op en

Buyer Seller Seller


Application Gateway Applications 5 Responses

op en

Responses Relay Seller


8 Listing
7 Responses
6 Responses

Figure 2.3: Search and discovery process flow

1. Buyer initiates a search (product, service, or store) on the buyer app interface.
2. Buyer app interface relays the query to the gateway service provider.
3. Gateway service provider checks within the ONDC registry to identify seller applications who sell the
product/service matching the search query.
4. Gateway service provider multi-casts the search to all relevant seller applications simultaneously.
5. Seller applications check with their registered sellers (or in case of ISNs {section 2.3.3} check internal
inventory) on availability.
6. Seller applications communicate availability information to the gateway.
7. Gateway service provider relays the information back to the relevant buyer application.
8. Buyer sees responses to his/her search query on the buyer application interface.
2.4.2 Placing an order
In this stage, the buyer selects a product, adds it to the cart, and confirms
the order.

1/7 2/8 3/9


Search/ Relay Select/ Relay Select/
Confirm Confirm Confirm

Buyer Seller
Application Application o pe n

6 5 4
Display Relay Quotation, Seller Quotation,
Offering Sale terms, Sale terms
Fulfilment terms

Figure 2.4: Order placement process

1. Buyer selects the product/service and wants to view product details, price, offers, delivery
options, and terms of sale.
2. Buyer application contacts seller application to get the relevant information about the product.
3. Seller application gathers necessary information from the seller.
4. Seller provides product details, quotation, and terms of sale.
5. Seller application relays the above information to the buyer application.
6. Buyer application shows the details to the buyer.
7. Buyer confirms the product, makes the payment, and confirms the order.
8. Transaction-level contract is created between the buyer application and the seller application.
9. Seller application confirms the order.
2.4.3 Order fulfilment
In this stage, the arrangement to execute delivery is finalised and product
delivery is initiated.

11
Deliver order

1/7 2/8 3/9


Select/ Relay Select/ Logistics search + select/
Confirm Confirm Logistics confirm

Logistics
Logistics
Buyer Buyer
Application (Buyer/
Service 10 op en

Provider
Seller App)
(NP)
Order pickup

6 5 4
Relay fulfilment terms Relay fulfilment Fulfilment terms
(along with seller’s terms terms
sent by seller app)

Figure 2.5: On-network logistics

1. Buyer initiates a search (product, service, or store) on buyer application interface.


2. Buyer selects product and confirms delivery terms on product page.
3. Buyer app/seller app with a pre-existing agreement with a logistics buyer relays the above information.
4. Logistics buyer searches for logistics service providers (registered on seller app, or MSNs delivery agent,
or logistics sellers on network).
5. Logistic buyer receives quotation from logistics service provider.
6. Logistics buyer confirms the quotation and delivery time to buyer app.
7. Buyer app relays this information to the buyer.
8. Buyer confirms order to buyer app, shares address, delivery instructions, and makes the payment. Order
is confirmed and the logistics service provider relays the turnaround time, details of the delivery agent,
tracking link, etc., to the buyer’s order.
9. Logistics buyer and logistics service provider sign a transaction-level contract for services.
10. Logistics service provider picks up the order from the seller (either an ISNs or MSNs {section 2.3.3})
11. Order is delivered to the buyer.
2.4.4 Payment & settlement

In this stage, the buyer completes the payment for his/her purchase and
the entities involved in the transaction get paid.

Pay-out
{off-network}
(If collector NP Pay-out
is Buyer App) {off-network}

6 5

open
Recipient Recipient
NPs Bank

Pay-out {off-network}
(If collector NP is the 2a
Buyer App)
4 RTGS/UPI

Collector Reconciliation Settlement


NP Service Agency
Provider

1 2 3
Confirm Order Settlement terms Settlement advice
and Complete from Transaction-level
Payment contract

Figure 2.6: Payment & settlement construct on ONDC for payment received on network and payment received off-network (cash on delivery)

1. Buyer confirms the order and makes the payment.


2. Logistics NP <either buyer or seller app> confirms the order and collects payment from the buyer.
3. Reconciliation service provider (RSP) receives settlement terms and amounts from the transaction-level
contract signed between the NPs.
4. RSP prepares settlement advice and sends to NP collector’s settlement agency.
5. Settlement agency initiates settlement through recipient’s bank.
6. Recipient’s bank receives the payment.
7. Recipient NP receives payment from his bank.
2.4.5 Returns, refunds and cancellations

The return, refund, or cancellation requests on the network depend on the terms in
the transaction-level contract created between the buyer and the seller at the time
of the sale. The logic applies, more or less, equally to the current retail online
transactions

• Sellers will initiate returns only if the goods are found defective or damaged.
• Seller can initiate a refund instead of a return.
• Cancellations will only be possible if the seller has declared it in the transaction-level contract.

• Return logistics will be initiated by the seller or seller app as per the terms agreed in the
return policy.

2.4.6 Issue and grievance management


ONDC has set a clear process for resolving complaints of buyers and sellers.
All Network Participants will have a shared responsibility towards creating positive
customer experiences.

The Issue and Grievance Management (IGM) system involves the following process:

Buyer App GRO

Issue
resolved
ODR Service
Yes
Providers
No

Seller App GRO Meditation/


Conciliation

Issue
resolved
Yes Arbitration Courts
Issue Raised No
No
Yes

Issue LSP GRO No


Level 1 of IGM Issue Further
resolved resolved Legal Options?

Issue
resolved Yes
Yes No
Yes
No
Record issue,
send solution packet No Yes
Initiate
to complainant, close issue ODR

In NP system Managed between NPs External-ODR External-Court


2.5 Tentative Timelines for Pan-India Launch

Categories: Beauty & personal


care, electronics, toys & baby
products, travel services (hotels,
experiences), financial services

Mar
2023

Product: (B2C)
Dec Categories: Groceries,
2022
Sep Food & Beverages
2022 Services: (B2B)
Location: Bengaluru

Product: (B2B+B2C)
Categories: Home & kitchen,
agriculture, fashion, apparel, Apr
footwear & accessories 2022
Mobility: Cabs, buses, trains,
flights
Location: Pan India

Controlled Pilot
in 20 Indian cities

(Source: Times of India)


3. Opportunities for Marketers

ONDC enables multiple opportunities for brands who register their products
on the network. As an input to the report, we conducted a survey on how
ONDC is perceived by senior brand leaders across industries.

Benefits Of ONDC

Figure 3.1: Publicis survey results – Benefits of ONDC


82% 64% 45%

Increased Increased product Reduction in average


customer reach discoverability cost per sale

45% 9% 64%

Richer insights Minimal upfront Reduced dependency


on customer investment to on large marketplace
behaviour get started providers

Based on our survey, increased product discoverability (>60% of respondents),


increased customer reach (>80% of respondents), and flexibility due to reduced
dependency on large marketplace providers (>60% of respondents) came out to be
the primary perceived benefits of ONDC.
3.1 Increased Reach, Product Discoverability

Traditionally, ‘in-market’ e-commerce consumers


discover products through:

Search
(Google, Bing)

Display/Video

Marketplace apps
(Amazon, Flipkart)

Direct-to customer
(D2C)
brand websites

In contrast, products registered on ONDC can be accessible using all the above
methods as well as any ONDC-registered buyer-side application, thereby
increasing the reach of the brand.

For example, at the time of writing this report, PayTM, SpiceMoney and MyStore
were registered as buyer-side apps for the city-wide pilot rollout in Bengaluru.
A host of other banking and digital players are in process of registering
themselves on ONDC. As a result, an incremental user segment, which is used to
fintech/payment platforms, but has not embraced e-commerce yet, also becomes
a potential consumer of ONDC-registered brands.

As stated earlier, some projections5 on the forecasted reach of the ONDC


network over the next five years:

• Customer Reach: Aiming for 250 mn buyers by 2027


• Geographic Reach: Sell goods and services to more than 75% pin code in India
3.2 Reduction in Cost per Sale

Given ONDC’s open architecture and increased competition, the commissions and
overhead cost for transactions are likely to come down. The chart below shows the
prevailing commission structure7 for food delivery segment on ONDC.

Cost comparison for restaurant, food delivery industry

Figure 3.2: Commission and overhead costs on ONDC vis-à-vis marketplaces


Typical cost per
sale for food delivery
+9% 12%
Total ONDC
16% - 23%
cost per sale

Delivery fee 3% - 5%

ONDC network fee 0% - 3%

Seller-side app 10%

Buyer-side app 3% - 5%

5% 10% 15% 20% 25% 30% 35%

Overhead cost / Transaction

• Buyer-side applications: Based on empirical evidence, buyer-side apps charge approximately


3% commission (buyer finder fee) on the gross merchandise value (GMV). This amount is usually
paid by the seller-side app.

• Seller-side applications: These apps charge up to 10% of GMV as transaction fee, including the
commission payable to buyer-side apps. In the future, large brands with sufficient technical
know-how may build their own seller-side apps, further optimising the transaction cost.

• ONDC network fee: Currently, ONDC does not plan to charge any network fee. In the future,
however, a tiered transaction processing fee up to 3% could be levied.

• Delivery cost: Varies by product and location. As more and more delivery partners join the network,
the delivery cost is likely to get optimised due to increased competition.

All things considered, the net cost per sale on ONDC is already lower than the commissions
paid on marketplaces and quick commerce platforms for most product categories with scope
for further optimisation.

As we write the report, there are no data points on marketing spend on ONDC. Hence, in this
context, we assume the marketing costs on ONDC (in future) will be similar to (if not lower)
what we have in established marketplaces.
3.3 Data and Insight

ONDC’s data policy will be compliant4 with the Information Technology Act, 2000. Below are some
of the key design considerations of the ONDC data policy:

• Transaction data will reside only with the buyer and seller applications and will not be visible to
ONDC. Essentially, ONDC will not be storing/viewing transaction data.

• Policies around the exchange of this data will evolve, be consent-based, and bound by the
limitation of purpose.

• ONDC will ensure data security and credibility at the transaction level, which will be key to the
growth of digital commerce and its success.

• User’s Personally Identifiable Information (PII) as well as seller data critical to trade, i.e.,
competitive data, will be protected from third-party access.

• ONDC will foster and promote established and viable principles for platforms to emit
anonymised performance metrics. This will enable informed policymaking and network
robustness, empower network participants fairly and equitably, and make network-wide
reputation possible, all the while helping buyers make informed decisions.

Given the above considerations, brands can get insight on their


performance from three primary sources, namely:

a. ONDC network b. Buyer-side applications c. Seller-side applications

Given below are some of the specific data types which are made
available to brands:

3.3.1. Insight from ONDC network

a. Catalogue decline data: Enables brand leaders to develop strategies for expanding their
product catalogue.

b. Price gap against winning orders: Enables brand leaders to price their products better.

c. Scoring and Badging system: ONDC requires buyer and seller apps to share user ratings with
independent scoring and badging agencies. The scoring agency will then compute scores for
sellers, logistics service providers, as well as seller and buyer apps based on quality of service
and past disputes. Eventually, the scoring and badging system will act as an indicator for
trustworthiness of any Network Participant.
3.3.2. Insight from buyer-side apps
Buyer-side apps enable the customer’s buying journey
through the ONDC network. Key data attributes
captured by buyer-side apps include (but are not limited
to):

d. Demographic data

e. Location

f. Frequency of purchase

g. Shopping behaviour

h. Customer’s credit worthiness/purchasing power (from


digital banking apps doubling up as buyer-side platform)

3.3.3. Insight from seller-side apps


Seller-side applications enable the merchant-specific
journeys on the ONDC network. As described in section
2.3.3, seller-side applications can be of two types:
Marketplace Seller Nodes and Inventory Seller Nodes.

Key data attributes captured by Marketplace Seller Nodes are:


i. Category insights (useful for brand planners to know how a category is performing)

j. Stockouts

k. Catalogue as a Service: ONDC aims to empanel a set of technology service providers (TSP) to
provide catalogue management as a service to individual sellers. Eventually, these TSPs providing ‘Catalogue
as a Service’ can generate additional insight on best-selling products in categories across buyer and
seller apps.

However, brands registering as Inventory Seller Nodes are likely to get a more nuanced understanding
of product/category sales and attribution to their own marketing efforts.

3.4 Increased Flexibility


Unlike established marketplaces, ONDC offers increased flexibility to brand marketers.
For example:

• Defining your own return and settlement window

• Negotiating your own fee and commission structure with Network Participants

• Choosing your own logistics partner, especially for local delivery of goods

The extra layer of flexibility allows brand marketers to optimise their product proposition and
customer experience.
4. Leveraging ONDC: Industry-Specific Perspective

ONDC will unbundle opportunities across industry verticals. Based on another survey
we conducted with senior brand leaders to understand their readiness for ONDC,
below are some key insights:

a. Consumer packaged goods (CPG) industry appeared most advanced when it


comes to awareness of ONDC (50% of our respondents are from the CPG industry).
10% of our overall respondents are already in the process of integrating with ONDC.

b. Banking and Financial Services, Travel, Transport, and Logistics, Food Services
and Hospitality are the other industries who are making ONDC part of their growth
strategy)

Consumer and Banking and


Packaged Goods Financial Services

9%
9%
18%
27% 18%

19%

Travel, Transport Others


and Logistics

Participating in Integrating Have ONDC strategy and Gathering more


ONDC Pilot with ONDC approach in place information on ONDC

Figure 4.1: Publicis survey response – ONDC readiness by industry


Let’s deep dive into some of these industries and
their potential use cases for ONDC.

4.1 Consumer and Packaged Goods

The consumer and packaged goods (CPG) industry has been a


frontrunner in adopting e-commerce in India. The advent of ONDC
opens even newer avenues for this industry. Potential use cases of
ONDC for the CPG industry are as follows:
a. Direct participation as an Inventory Seller Node (ISN): Organisations with experience in
e-commerce and having strong operational and technology capabilities may register on
ONDC as an Inventory Seller Node. In this construct, they will have complete control on
product, category definition, inventory management, distribution, and customer service.

Buyers will discover their products from any of the registered buyer applications. Once an
order is received, the brand can own end-to-end delivery and servic via ONDC. Benefits of
this approach are as follows:
i. Increased customer reach and ease of product discovery
ii. Data and insight on fast-selling categories, price comparison
iii. Access to first-party data
b. Indirect participation through Marketplace Seller Nodes (MSN): Organisations may choose to
join ONDC through existing Marketplace Seller Nodes (or seller applications) such as GoFrugal,
GrowthFalcons, etc. This approach requires minimal upfront time and effort to get started. However,
this approach involves additional overhead costs paid to an intermediary MSN.
c. As an extension to physical retail: This option is applicable to brands with substantial physical
retail presence. Such brands may register their retail outlets as distribution hubs on ONDC,
thereby increasing their chances of discovery (through hyperlocal search). Consequently,
ONDC will also augment the sales potential of each physical outlet.

4.2 Travel, Transport, and Logistics

The travel, transport, and logistics (TTL) industry has also been an
early adopter of digital transactions. Potential use cases of ONDC in
the TTL Industry are as follows
i. As a standalone digital channel: Most organisations in this space list their inventory
with aggregators (e.g., MakeMyTrip, EaseMyTrip, etc.) or have their own digital platforms.
Organisations in this industry may register their inventory on ONDC (through any seller-side
app) for increased reach and reduced overhead costs.
ii. Aggregators as ONDC network partners: Existing aggregators in this space may join ONDC
by registering as a buyer-side or seller-side app. This would open an incremental revenue
stream for existing players in this space.
iii. ONDC logistics partners: Logistics providers in this industry may choose to register themselves
as independent partners on ONDC. This way, organisations in this space can exponentially
increase their revenue by providing logistics services to a broad range of customers
and organisations.
4.3 Banking and Financial Services

While banking and financial services (BFS) organisations do not


directly engage in commerce, they have a significant way to provide
value-added services on the ONDC network. Potential use cases for BFS players are as follows:

1. As an ONDC network participant: BFS players can join as network participant and provide
primary commerce services. For example:

a. Buyer-side app: BFS organisations such as Paytm, PhonePe, Kotak Mahindra Bank, and
IDFC First Bank have already joined ONDC by launching their buyer-side apps. Benefits of
this approach are:
i. Increased customer base
ii. Commission fee as an incremental revenue stream
iii. Potential to monetise aggregated user/transaction data gathered from ONDC-enabled commerce

b. Gateway service provider: BFS providers with payment experience may register as a
standalone payment gateway service provider, thereby increasing their revenue potential.

2. Secondary value-added services: BFS providers may provide secondary value-added services
to ONDC participants beyond pure-play commerce. For example:

a. Buyer-side applications are likely to collect a wealth of consumer behaviour data


based on the transactions they record. BFS players may leverage this data to offer other
retail banking products such as personal loans, credit cards, etc., to worthy customers.

Similarly, seller-side apps will collect significant data from merchants such as their inventory,
cashflow, credit cycle, etc. Leveraging this data, BFS providers may offer SME/corporate banking
products such as working capital loans, letters of credit, bank guarantees, etc., to businesses
with potential.

4.4 Food Services and Restaurants

Restaurants typically leverage food delivery platforms or their


own website/tele-calling to grow their take-away business.
ONDC will provide an additional channel to drive orders from
customers. Restaurants can leverage ONDC’s network partners
(gateways, logistics, etc.) to serve their customers. Based on
empirical evidence, the commission structure on ONDC is likely to be more
competitive vis-à-vis established food delivery platforms (refer section 3.2).
5. Getting Started with ONDC: Preparatory Steps for Marketers

5.1 Critical Success Factors

Publicis Groupe’s proprietary CAMPS framework is highly relevant in maximising impact from
e-commerce. The framework covers five essential elements of e-commerce, namely Content,
Availability, Media, Pricing, and Search (CAMPS). Given below are the applicability of these elements
in the context of ONDC.

Content

Availability Search

Pricing
Media

Data infrastructure Technology infrastructure,


(Data Cleanroom, CDP) integration with ONDC

5.1.1 Content
Clarity and relevance of content plays a critical role in converting an interested consumer into an
eventual sale. Therefore, brands registering on ONDC must design their content to maximise
conversion potential.

Figure 5.1: ‘Catalog’ schema definition


Above is the ‘Catalog’ schema as defined8 by ONDC. From a content perspective, both 'categories'
and 'descriptor' attributes play a critical role. Brands need to plan for the following while designing
their content strategy.

a. Design proper category mapping: Leverage 'Categories' schema on ONDC to make sure
products are listed under relevant categories.
b. Increase relevance: The 'descriptor' schema provides detailed attributes such as 'name',
'short_desc', and 'long_desc'. Brands can use these attributes to highlight relevant keywords
and product proposition, thereby increasing the chances of discovery.
c. Leverage images and audio: The 'descriptor' schema further allows brands to define
'symbol', 'images', 'audio', and '3d_render'. Brands must design hi-resolution,
e-commerce-optimised creatives to fully leverage these attributes to make the product
description attractive, consequently increasing the chances of conversion.

5.1.2 Availability
Product availability plays a critical role in e-commerce, especially in ONDC’s regime. Brands need to
pay attention to two specific aspects:
a. Declaring products/SKUs under the right category within ONDC: As described in section
2.3, at the early stages of discovery, the buyer application checks the ONDC registry to
identify a seller application. There is significant opportunity cost associated with incorrect
category tagging.
b. ONDC brings focus on hyperlocal commerce. Brands must design logistics’ and operations’
structures to ensure availability in majority pincodesof their target markets.

5.1.3 Search
Product discovery on ONDC is driven primarily by search on buyer-side apps. Consumers are most
likely to make a purchase decision based on results displayed in the first or second page of the
search results. Therefore, it is essential for brands to ensure their products are ranked higher in the
search results page to have a meaningful chance of conversion.

Figure 5.2: ‘Intent’ schema definition


Search from buyer-side apps on ONDC are primarily based on 'context' and ‘intent'. The above
picture shows the 'intent' schema definition. Brands must carefully optimise for content (as
described earlier), provider rating, fulfilment, payment options, and offers for improving their search
result ranking.

As ONDC evolves, all buyer-side platforms must declare their search ranking approach in public.
Brands must continue to optimise (ongoing process) their catalogue and content to improve their
search rankings. For example, during the pilot phase, the buyer-side apps allowed filtering based on
price and location. Brands can improve their chances of being discovered by increasing their
presence in as many locations as possible (defined by 'Circles' in ONDC).

5.1.4 Media
In the current state, ONDC does not have a provision for advertising on the network. However, brands
must develop their media strategy along following lines:
a. ONDC may, in the future, extend the 'Catalog' schema to include 'Advertising Inventory' as a
purchasable item to enable paid advertising
b. Buyer-side applications are likely to build provisions for promoted content. As per OND policies,
this is allowed if the terms are declared and shared on the network.

Brands must keep a watch on the latest developments on ONDC specifications to design their media
strategy accordingly.

5.1.5 Pricing
Pricing is, perhaps, the most critical element of an e-commerce transaction. Price comparison and
benchmarking are likely to be challenging given the availability of multiple buyer-side apps and
delivery options. However, ONDC plans to provide insight on price-rejection data by category for
brand marketers to set the right pricing for their product(s).

5.2 Setting up the Infrastructure: Seller Registration, Logistics Partners

As explained in section 2.3.3, there are two primary ways in which brands can register with ONDC
to sell their products.

5.2.1 Join as an Inventory Seller Node (ISN)


Joining as an Inventory Seller Node requires addition to ONDC Live (Production) registry.

At the present stage, these steps will be followed:


1. Participant shares the following information with ONDC:
a. Legal entity name or business name (as per GSTN)
b. Business address (primary place of business)
c. GST details (for primary place of business)
d. Permanent Account Number (PAN)
e. Name of Authorised Signatory for digitally signing transactions
f. Address of Authorised Signatory
g. E-mail ID
h. Mobile No.
i. Domain (retail/logistics)
j. Cities
k. Type of application (buyer app / seller app)
l. subscriber_id
m. subscriber_url
n. public key for signing (base64 encoded)
o. public key for encryption (base64 encoded)

2. Participant initiates verification of domain ownership


A participant generates the code for verification of domain ownership using the endpoint
“/ondc/verifyParticipant/verifyD/init”, as documented here. The domain verified here would
be a part of the ‘subscriber_url’ to be provided by the participant for registration. ONDC will
verify the domain.
3. After successful verification of domain ownership, participant initiates verification of
ownership of keys by participant. Participant will initiate verification of their signing and
encryption keys using the endpoint “/ondc/verifyParticipant/verifyK/init”, as documented here.
4. ONDC verifies subscriber GST, PAN, contact details (email ID, phone number).
5. Participant is added to registry with status “Subscribed”.
6. Participants can initiate key rotation (policy to be announced) using the endpoint
“/ondc/subscribe”.
7. For further onboarding details, contact [email protected].

5.2.2 Join via an established Marketplace Seller Node (MSN)


Various Marketplace Seller Nodes are already available on ONDC. These MSNs can help merchants
sell their products on the open network. Notable MSNs to get started on ONDC are:
Brand marketers can follow the below steps to register on ONDC using an MSN:
1. Seller must share the following information with the seller app to register
a. Legal entity name/business name (as per GSTN)
b. Business address (primary place of business)
c. GST details (for primary place of business)
d. Permanent Account Number (PAN)
e. Name of authorised signatory for digitally signing transactions
f. Address of authorised signatory
g. Email ID
h. Mobile no
i. Domain (retail/logistics)
j. Cities

2. Seller app initiates verification of domain ownership.


3. Seller-side service provider uploads product catalogue.
4. ONDC verifies subscriber GST, PAN, contact details (email ID, phone number)
5. Participant is added to registry with status 'SUBSCRIBED'.

5.3 Setting up Data Infrastructure: Single Customer View, Attribution

As ONDC opens newer avenues for commerce, brands must invest in the setting up of/upgrading
their data platforms. The following data infrastructure will be necessary to get the most out of ONDC:

1. Basic MIS: At present, ONDC does not provide rich, on-network reports on category and
product-wise sales. As the guidelines evolve, MSNs and 3rd-party data service providers will
start to provide advanced reports. Until then, brands must invest in gathering ONDC
transaction data in a data pool and build their own reports as well as Management Information
Systems (MIS). Off-the-shelf tools such as Tableau or QlikView can provide reach analysis
beyond what is possible using basic spreadsheet software.

2. First-party customer data: Enables brands to understand their customer behaviour better.
Using first-party data, brands may reach out to customers in the most optimal channel with
the right product and offer. If a brand joins ONDC as an ISN, they will have access to all
sales-side transactions and customer information. If a brand joins ONDC through an MSN
(intermediary seller-side application), they may have to strike partnerships with either the MSN
or some leading buyer-side application to collect first-party customer data.

3. Data clean rooms: As ONDC adds yet another digital sales channel, in addition to brands
present in existing marketplaces, D2C commerce, quick commerce, etc., having a data clean
room becomes even more important. Using such data clean rooms, brand marketers may
analyse sales data across channels to build uniform media attribution and targeting models.
6. Key Risks to Manage In ONDC Regime

Despite its attractive value proposition, ONDC has some associated inherent risks.
Based on our survey, we found these to be:
a. Access and ownership of data
b. Evolving roles and responsibilities, and
c. Customer service

Risks associated with ONDC

27% Brand Safety

Access and
64% ownership of data

73% Absence of clear


guidelines on
customer service

Evolving Roles &


64% Responsibilities in a
Multi-party Network

Absence of regulator,
36% enforcing mechanism

Figure 6.1: Survey Response: Key risks associated with ONDC


The following are key risks that marketers should plan for:

6.1 Customer Service, Returns


ONDC does not prescribe how to handle returns, refunds, and cancellations as it deems itself a
facilitator and not a regulator.

1. ONDC operates in a decentralised, rule-based system. Unless brands join ONDC as ISNs,
they would have limited control on actual delivery and customer service.

2. ONDC has set up a dispute resolution framework to address inter-party conflicts. As these
frameworks get tested and refined, eventual customer experience remains at
risk in the interim.

In a recently published consultation paper9, ONDC has proposed a series of steps to build trust
in returns, refunds, and cancellations through transparency and contracts between the buyer
and seller. Key recommendations are as follows:

a. When making an offer, the seller must provide terms for returns, refunds, and
cancellations. The transaction-level contract will encode these terms for transparency.

b. Repeated infractions can result in disciplinary action against the Network Participant.

6.2 Managing Roles and Responsibilities in an Evolving Ecosystem


Given ONDC’s role as facilitator, it sets guidelines on roles and responsibilities of various network
participants. As such, ONDC relies on community support and 3rd-party online dispute resolution
(ODR) platforms to resolve disputes. This poses significant risk of malicious activities, poor customer
experience, and delays in dispute resolution, among others. The veracity of this model will be proven
over time. Until then, brands can take control of their own fulfilment, delivery, customer service, etc.,
through either direct ownership (ISN model) or partnerships to mitigate risk.

6.3 Regulatory and Compliance


The standards governing the ONDC network demand that an independent auditor conduct periodic
reviews to ensure that all applicable policies are being followed. Given the anticipated (high) number
of providers and buyers, the efficiency and success of these audits, especially amid the absence of
data storing/tracking standards, remains to be seen.

6.4 Delays in Nationwide Rollout


ONDC plans for a nation-wide rollout by the first quarter of calendar year 2023. However, a lot
depends on the success of ongoing pilots in select cities. As with any new service offering, new
learnings will emerge, which may delay the pan-India roll out of ONDC. The true benefit of ONDC will
be seen when it is made available to a wider audience than it is now. Brands must factor in possible
delays in the nation-wide rollout in their ONDC strategy plan.
7. Conclusion

ONDC, as a concept, is pathbreaking in many ways. If all goes as planned


it is likely to revolutionise the way e-commerce is conducted. Further,
the modular and interoperable architecture opens multiple relevant use
cases across industries.

That said, we are still at the early stages of the ONDC lifecycle. A lot of it rides on
the learnings from the ongoing pilot run. As we speak, the policy framework is
being refined based on public consultation. If all goes as per plan, we should
expect a nation-wide roll out in CY2023.

Meanwhile, brands need to get their ONDC strategy and approach in place (key
elements identified in section 5 of this report). Those who plan to join the
network as ISNs would need additional preparation (in terms of catalogue,
inventory management, logistics, etc.) to register on the network.

As with any innovation, ONDC brings its own share of opportunity (section 3)
and risks (section 6). Brands who take the initiative to maximise opportunity
while addressing the risks are likely to come out as winners.
8. References

1. P. Suraksha, “ONDC starts beta testing with consumers in 16 pin codes of Bengaluru,”
Economic Times,
https://economictimes.indiatimes.com/tech/technology/ondc-starts-beta-testing-with-
consumers-in-16-pin-codesof- bengaluru/articleshow/94566549.cms.
Accessed October 01, 2022.

2. EY, “E-commerce and consumer internet sector: India Trendbook 2022,”


https://assets.ey.com/content/dam/ey-sites/eycom/en_in/topics/e-commerce/2022/ey-e-c
ommerce-and-consumer-internet-sector-india-trendbook-2022.pdf?download.
Accessed September 23, 2022.

3. India Brand Equity Foundation (IBEF), “MSME Industry Report 2022,”


https://www.ibef.org/industry/msme#:~:text=India%20has%20more%20than%207.9,Micro
%2C%20Small%20%26%20Medium%20Enterprises.
Accessed September 23, 2022.

4. Open Network for Digital Commerce (ONDC), “Open Network for Digital Commerce:
Democratizing Digital Commerce in India Strategy Document 2022,”
https://res.cloudinary.com/daea2fs3n/image/upload/v1659889490/ondc-website/files/ON
DCStrategyPaper_ucvfjm.pdf.
Accessed September 24, 2022.

5. Open Network for Digital Commerce (ONDC), “Introductory Industry Awareness Workshop
Presentation,” offline.
Accessed September 24, 2022.

6. Beckn Homepage, https://becknprotocol.io/.


Accessed September 25, 2022.

7. How’s ONDC solving small sellers’ discoverability and commission concerns on ecommerce
-
https://www.businesstoday.in/latest/economy/story/hows-ondc-solving-small-sellers-disco
verability-andcommission-concerns-on-e-commerce-348124-2022-09-25.

8. ONDC-Protocol-Core API and Schema specifications:


https://app.swaggerhub.com/apis/ONDC/ONDC-Protocol-Core/1.0.0.

9. Open Network for Digital Commerce (ONDC). “ONDC Building Trust in the ONDC Network:
Consultation paper,”
https://res.cloudinary.com/daea2fs3n/image/upload/v1664541553/ondcwebsite/files/OND
C_Building_Trust_Consultation_Vf_utbodw.pdf.
Accessed October 03, 2022.
Authors

Lalatendu Das is the CEO of Performics India and


part of Publicis Commerce. He has over 22 years of rich
experience in digital business build and transformation
across India, SE Asia, Middle East, and North America. He
brings a wide spectrum of knowledge to the Groupe when
it comes driving growth through digital and eCommerce.

Aakash Guglani is a senior policy associate at Digital


India Foundation. He has keen interest in the political theory of
technology deployment, science and technology policies, and
the philosophy of the mind and its intersection with AI. He has
published articles in JICPR and SSRN as well as authored a
book of essays on Gender, Society, and Self.

Ujjwal Rao is a senior editor and content strategist at


Performics India. With his deep roots in media and publishing,
he has helped companies of all sizes across industries gain
momentum and elevate their user experience via content
and communications’ strategies that are augmented by
powerful storytelling.

Kalpana Gupta is a group head marketing at Performics


India. She is a senior communications specialist with
comprehensive experience in enhancing brand image as
well as upscaling the performance of marketing functions
within organisations.

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