2022 11 Decoding-OnDC
2022 11 Decoding-OnDC
Anupriya Acharya
CEO, Publicis Groupe, South Asia
Arvind Gupta
ONDC Board Member,
Co-Founder & Head, DIF
Table of Contents
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
7. Conclusion
8. References
Important Disclosures
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.
USA China
307 mn 1,020 mn
270 mn 918 mn
1.8 bn 18 bn
India
Real-time Online
Transactions
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.
350 bn
46.2 bn
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.
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
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 %
FY20 FY25
4% 12% 84%
8% 14% 78%
MARKETPLACES
Dominated by Amazon and Flipkart with a host of other
category-specific players (e.g., Nykaa).
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).
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.
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
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:
Search Search
Retail
Build Cart Build Cart
Buyer
App
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.
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 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.
Logistics app
OCE
N
Buyer apps
Seller apps
ONDC
Architecture
GATEWAY
ONDC is
An open network
ONDC
is not An application or a platform
A central intermediary
A medium to help
digitise businesses
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)
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.
d. Settlement agency
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)
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 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.
There are 6 key customer journeys identified9 for transactions enabled by ONDC.
The identified customer journeys are described below.
ONDC
Registry
Look-up relevant
Seller Application 3
Relay Multicast
1 Search 2 Search
4 Search op en
op en
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.
Buyer Seller
Application Application o pe n
6 5 4
Display Relay Quotation, Seller Quotation,
Offering Sale terms, Sale terms
Fulfilment terms
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
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)
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
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)
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.
The Issue and Grievance Management (IGM) system involves the following process:
Issue
resolved
ODR Service
Yes
Providers
No
Issue
resolved
Yes Arbitration Courts
Issue Raised No
No
Yes
Issue
resolved Yes
Yes No
Yes
No
Record issue,
send solution packet No Yes
Initiate
to complainant, close issue ODR
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
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
45% 9% 64%
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.
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.
Delivery fee 3% - 5%
Buyer-side app 3% - 5%
• 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 below are some of the specific data types which are made
available to brands:
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
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.
• 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:
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)
9%
9%
18%
27% 18%
19%
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.
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
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:
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.
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
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.
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.
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).
As explained in section 2.3.3, there are two primary ways in which brands can register with ONDC
to sell their products.
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
Access and
64% ownership of data
Absence of regulator,
36% enforcing mechanism
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.
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.
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.
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.
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.
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