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Industry Report
E-commerce

Can ONDC

really disrupt

e-commerce

in India?

Could be massive a driver in taking India’s digital
penetration in retail from 5-7% to almost 20% in 5 years

Jyothi Shankaran

pen Network for Digital
Commerce (ONDC),
incubated by the central
Ogovernment with the primary
purpose of supporting grassroots-level
entrepreneurship and digitising local
retailers by making them a participant in
India’s e-commerce revolution, is finally
underway with beta testing in Bengaluru.
To begin with, consumers can place
orders across 16 locations in two
domains – groceries and restaurants -
on the ONDC network.
"ONDC is pursuing an open protocol
approach that drives interoperability
between all onboarded platforms and,
hence, lowering the entry barrier for
a retailer to sell online," says a recent
report from JM Financial, an equity
advisory firm. "This allows a consumer
on any app of his/her choice to buy from
any seller across the network even if the
seller might not be onboarded on the
app that the customer is using." "ONDC is a digital good and not a
JM believes this could be a platform just as UPI is not a wallet or a
massive driver in taking India’s digital bank. Instead of ONDC disrupting any
penetration in retail from the current of the incumbents, similar to UPI, we
5-7 percent to almost 20 percent in believe ONDC can have a healthy
the next five years. relationship with these incumbents.
"Obvious parallels have been We postulate that onboarding some of
drawn with UPI that democratised the larger incumbents early might
the digital payments space in actually provide ONDC the much
India and we believe that despite needed scale as well as credibility
a much higher operational with buyers and sellers."
complexity, a successful ONDC Sachin Dixit, the lead author
should look like UPI of today. of the report, repeats that ONDC is
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