ONDC: Trying to Build Open E-Commerce Through Protocol

ONDC — the Open Network for Digital Commerce — launched in December 2021. It's the newest and, so far, the most uncertain layer of India Stack.

The premise: India's e-commerce market is dominated by Amazon and Flipkart. Small sellers are locked into their platforms, paying commissions of 18–40% of the selling price, and the platforms control the customer relationship and data. ONDC is trying to break this by making e-commerce work like a protocol rather than a platform.

## How ONDC Works

Think of it like how email works. When you send an email, you don't need to be on the same service as the person you're emailing. Gmail users can email Outlook users. The protocol handles interoperability.

ONDC tries to do the same for commerce. A buyer on Paytm's ONDC-compatible app can order from a seller listed on Meesho's ONDC-compatible app, with Delhivery handling logistics. No one is forced to be on Amazon's platform. The seller's data stays with the seller.

The technology backbone is the Beckn Protocol — an open, decentralized e-commerce specification.

## Commission Structure: The Key Argument

Commission rates are where ONDC makes its strongest case. ONDC charges 8–10% of selling price versus Amazon/Flipkart's 18–40%. ONDC referral commissions are capped at 3% versus roughly 30% on major platforms.

For small sellers, especially those selling locally, this difference is significant.

## Current Scale

ONDC launched in 5 cities in April 2022. By October 2024, it was processing 14 million monthly transactions — 5.5 million mobility (ride-hailing, transit tickets) and 8.4 million non-mobility (retail, food, grocery). That's roughly 200% year-on-year growth from October 2023's 4.5 million transactions.

As of February 2024: 370,000+ vendors and service providers on the network; 800+ cities with fulfilled transactions.

McKinsey projected ONDC has the potential to increase India's digital commerce by $340 billion by 2030, though that figure is speculative.

## Who's Actually Using It

**Buyer apps**: Paytm, Ola (mobility), Magicpin, Khojle, Microsoft
**Seller apps**: Meesho, Snapdeal, Mystore
**Logistics**: Ekart (Flipkart's logistics arm), Delhivery, Porter, Shadowfax — covering 20,000+ pin codes
**Large integrations**: Amazon (logistics + Smart Commerce, February 2023); Meta/WhatsApp (500,000 MSMEs onboarding, 2024); Zoho (Vikra platform, 2024); Google Maps (transit ticketing)

Amazon joining ONDC as a logistics and smart commerce partner is interesting — they're participating in the infrastructure they're ostensibly competing against.

## What ONDC Hasn't Done Yet

Fourteen million monthly transactions sounds significant until you compare it to the scale of India's overall retail market or even just Flipkart and Amazon's monthly order volumes.

ONDC also hasn't solved the discoverability problem. When you open Amazon, you get a curated, personalized experience. ONDC-compatible apps vary widely in quality, and the experience of buying across disconnected apps isn't seamless for most consumers.

The commercial question — whether buyers will consistently choose ONDC-compatible apps over Amazon's own app — remains unresolved. The answer depends on whether the lower seller costs translate into lower prices for buyers, and whether the user experience catches up.

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But before evaluating whether India Stack succeeded, it's worth looking at who it didn't reach — and where the design created new problems for vulnerable populations.

ONDC: Trying to Build Open E-Commerce Through Protocol

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