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Introduction to ONDC

Posted On: 04 October, 2023. 11 min read

A detailed guide on what ONDC is and how it helps you grow your business online

What is ONDC?

ONDC (Open Network for Digital Commerce) is a Government of India initiative to create an inclusive and level playing ecosystem for eCommerce in India. ONDC aims to democratize the concept of online marketplace by providing an unbiased platform for all sellers, buyers and logistics providers. It also removes the possibility of any one business entity asserting monopoly in the market.

Currently, there are broadly 2 ways in which sellers/ merchants go about selling their products online:
1. Sell on their own website
2. Sell on online marketplaces like Amazon/ Flipkart/ Swiggy/ Myntra, etc.

Challenges of selling on your own website

- For any seller, setting up an online store is a hassle in itself and needs technical know-how
- From curating a catalog to establishing a loyal customer base, from managing orders, delivery and payments, everything has to be established by the seller.
- From a perspective of starting a brand new business, this seems like a cumbersome process and could force seller parties to shell out unplanned funds which might hamper their business plans

Challenges of selling in an online marketplace

- Sellers don’t have access to customer data which prevents them from upselling or cross selling their products
- Marketplaces charge huge commissions (sometimes as high as 30%), thereby affecting sellers’ margins
- The sellers are often pushed to agree with heavily biased terms and conditions set by online marketplaces
- This gives way for marketplaces to gain an upper hand in the market and dictate flow of purchase.

How does ONDC operate?

ONDC attempts at breaking this pattern of seeking out a singular source of dependency by pooling in all the relevant parties (the buyer, seller and the logistics service provider) and creating a distributed network where each Network Participant (NP) fulfills their share of responsibility and earns commissions accordingly.


Who is a Buyer App, Seller App and Logistics Service Provider?

1. Buyer App

a. They provide a shopping interface (website/app) where the buyer can discover products or stores
b. They also are responsible for bringing in buyers and engaging with them
c. Exposes product inventory from various sellers
d. Payments and installments for the purchases are also mostly processed here
e. Order related queries or discrepancies are registered here
f. Rating and reviews for the ordered products are done here

2. Seller App

a. These are the parties who are responsible for onboarding sellers/ merchants
b. They provide the online platform for sellers where they will create a digital catalog for the products they wish to sell
c. They also provide with a dashboard to the sellers for managing orders
d. They can either avail Logistics Service Providers (on-network) or use their own means of delivery (off-network) to ship the orders to the buyers
e. They also help coordinate with logistics service provider and buyer network participants to resolve customer issues with ongoing orders

3. Logistics Service Provider Network Participant

a. These parties are involved at the shipping and delivery stage of the e-commerce shopping experience
b. From giving delivery estimates to the buyer to deciding delivery costs, every detail is established here
c. Their services can be procured by either the buyer or the seller network participant, whatever suits the business better

As you could have noticed while reading all these pointers, it becomes clearer that at every stage of the shopping experience, every single network participant is getting an opportunity to actively contribute to what they do best and earn their due commision margins accordingly.

How does eCommerce purchase flow happens on ONDC

1. Buyer opens any Buyer app connected to the ONDC network (ex: PayTM/ Pincode/ Magicpin)

2. Buyer searches for the products they wish to buy or look up stores that deliver to his/ her location

3. Buyer app broadcasts the search request to all the Seller apps connected on the ONDC network

4. All the Seller apps respond to the search request from the Buyer app with the matching product details and Sellers details

5. From the given list, Buyer chooses the product(s) they wish to buy and adds them to the cart

6. Seller app either calls the on-network Logistics Service Providers to provide a delivery fee along with the estimated delivery time or uses its own delivery fleet to arrive at the delivery cost and the time.

7. Seller app shares the delivery charges and estimated delivery time to the Buyer via the Buyer app

8. Buyer chooses the delivery partner based on the options shared by the Seller app

9. Buyer makes the purchase, which includes cost of products, taxes, packaging charges, delivery fee and any other convenience charges (Ex: Buyer app or Seller app commissions or ONDC commissions)

10. Seller receives the order along with the Buyer details via the Seller app

11. Seller packs the order and dispatches it via the delivery partner chosen by the Buyer at the time of placing the order

12. Buyer tracks the order via the Buyer App

13. Buyer receives the order

14. Buyer rates or reviews the product, seller and the delivery partner

15. Buyer app settles the money to the Seller app by withholding its commissions, if any

Advantages of ONDC from a seller’s perspective-

Distributed Responsibility- ONDC would help you prioritize quality of the products instead of worrying about the other aspects of product sale, everything else will be taken care of by other Network Participants contributing to ONDC

Access to buyer Data- Seller parties will now have complete access to buyer data as ONDC ensures transparency between parties during purchase process

Single Source of Control- The seller will be required to upload his product catalog to a digital inventory only once, all the buyer entities present in the network will be able to view the inventory broadcasted via ONDC

Ensure Market Plurality- provides an even playground for all sellers to sell their products

Interoperability- Establish clear lines of communication via Custom APIs among all entities involved (Buyer, Seller, Logistics Service Provider), which ensures transparency in conducting order of business

How will Zopping help you expand your business using ONDC?

1. With ONDC in place, the seller doesn’t have to worry about anything else except for curating the catalog and uploading a digital inventory of the same in Zopping, and Zopping will make sure that through ONDC, all their products will reach their target audience across all the buyer apps.

2. Own eCommerce website and mobile applications alongside selling on ONDC

3. The seller can also keep a track of the orders and get access to real time buyer data with reports and analytics in Zopping and come up with business strategies accordingly.

4. Zopping also ensures hassle free onboarding as we will provide you with a dedicated account manager for the same and guide you through the setup process