ONDC: Can India's Open Commerce Network Actually Break the Amazon-Flipkart Grip?

India's e-commerce market is dominated by two players: Flipkart (owned by Walmart) and Amazon India. They control the marketplace, set the commission rates (18–40% per transaction), and essentially determine which sellers get visibility.

ONDC — the Open Network for Digital Commerce — is the Indian government's attempt to break that duopoly. Not by building a competing app, but by building an open protocol that any app can plug into.

The numbers so far are genuinely surprising. Whether they signal a real shift or just a government-backed spike is worth examining closely.

## What ONDC Actually Is

ONDC launched in December 2021, set up by India's DPIIT as a non-profit Section 8 company. But calling it a "platform" is a mistake — it's a set of interoperability specifications, similar conceptually to what UPI did for payments.

UPI didn't replace HDFC Bank or SBI. It created an interoperability layer that let any payment app — PhonePe, Paytm, Google Pay — transact with any other. ONDC is attempting the same for commerce: a buyer on Meesho should be able to purchase from a seller listed on PhonePe's storefront, with the order routed through ONDC's open specifications.

The commission structure is the headline stat: ONDC charges 8–10% versus the 18–40% typical on Amazon and Flipkart. For small sellers in India, that difference can determine whether selling online is profitable at all.

## The Growth Numbers

The scale-up from launch to end of 2023 was steep:

- January 2023: 1,281 transactions per month (beta testing)
- November 2023 (Diwali week): ~1.2 million transactions in a single week across 600+ cities
- December 2023: 5.5 million monthly transactions (2.1M retail + 3.4M mobility/food)

By March 2025, Indian media was reporting approximately 15 million monthly transactions — though that specific figure wasn't independently verifiable from primary sources at time of writing.

The mobility and food delivery categories grew faster than retail, partly because Rapido (bikes and auto-rickshaws) joined early and immediately generated transaction volume in tier-2 and tier-3 cities that Ola and Uber hadn't fully penetrated.

## The Problems ONDC Hasn't Solved

Here's what the numbers don't tell you.

**Seller experience is still rough.** Onboarding a small seller onto ONDC requires using one of the seller-side apps (buyer-side apps and seller-side apps are separated in the protocol). For a kirana owner in Lucknow, navigating multiple apps with inconsistent UI is a real barrier. ONDC's interoperability advantage is also a UX fragmentation problem.

**Returns and disputes cross app boundaries.** When a buyer on Paytm orders from a seller listed via Magicpin and the product arrives damaged, who handles the return? The dispute resolution across ONDC participants is still maturing. Amazon and Flipkart's closed systems are frustrating, but they at least own the problem end-to-end.

**Discovery and trust aren't solved.** Amazon's recommendation engine has years of behavioral data. ONDC's open network means buyers need to trust sellers they discover across unfamiliar storefronts. Fake reviews and fraudulent listings remain a concern that a decentralized network handles less cleanly than a centralized one.

## Why McKinsey's $340 Billion Projection Deserves Skepticism

McKinsey projected ONDC could add $340 billion to India's digital commerce market by 2030. That number gets cited a lot.

It's a potential-scenario number, not a baseline projection. It assumes ONDC successfully onboards millions of small sellers, achieves significant consumer adoption, and solves the UX and trust problems described above. Those are large assumptions.

The more useful framing: ONDC is genuinely useful for **seller-side inclusion** — bringing small businesses onto digital commerce at a cost structure that makes sense. Whether it dislodges Amazon and Flipkart from the consumer preference side is a much harder problem.

## What to Actually Watch

Amazon India joined ONDC as a participant in 2024. That's either a sign the network is becoming too large to ignore, or a strategic move to observe and potentially shape standards from the inside — possibly both.

The more telling indicator is whether large app platforms (PhonePe's Pincode, Paytm) stay invested after the initial government-incentive phase winds down. ONDC's September 2024 launch of Saarthi — a multilingual reference buyer app supporting Hindi, Bengali, Tamil, and 18 more Indian languages — suggests the network is betting on tier-2/3 cities and vernacular internet users for its growth thesis.

That's the right bet for India. Whether the execution matches the theory is still being tested.

ONDC: Can India's Open Commerce Network Actually Break the Amazon-Flipkart Grip?

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