ONDC - Democratic Digital Commerce

Commerce beyond boundaries

Lalit Bhatt
Lalit Bhatt

The first thing to understand about ONDC is that it is not another application or platform but just a set of specifications. So ONDC is not a competitor in the ecommerce landscape. ONDC is the custodian of the open architecture which will make buy and sell to transcend individual eCommerce applications and platforms.

Let us understand this with an example of doing a journey of a complete transaction.

Hrithik wants to get a sculpture of a tiger around 6 ft in length and 3 ft in height max. Hrithik registers himself with one of the eCommerce or marketplace applications and registers his requirement. Let us say the application is BuyZ. It is quite possible that BuyZ will try to find a matching seller in its own ecosystem. However from ONDC perspective and how the power will get unlocked is that BuyZ will send a query to multiple other platforms who will be hosting the sellers about the need of this buyer. As every platform would have implemented the same interface it will be the same type of call going to all platforms in a loop. Let’s say SellP and SellQ are two platforms who return back with a response. SellP returns the response that Shahrukh of Chennai can provide such a sculpture. SellQ comes back telling that Sachin of Mumbai has the sculpture. Hrithik on his BuyZ application screen would see both the choices without even realizing that it is coming from two other different platforms. Suppose he chooses SellQs’ Sachin to buy the sculpture. To explain the idea in simple terms we will for now ignore the need of Hrithik to actually talk to Sachin and Shahrukh both to understand their work better and to make sure that he is going to get what he is looking for.

ONDC- One network for Digital Commerce
Transaction flow with ONDC

Now Hrithik places the order. For SellQ it is possible that the platform would be handling the logistics or they might in turn go to multiple logistics providers again supporting the ONDC protocol and get a quote. 

We have kept this narrative very simple to bring the core idea, which is the ability for different platforms to talk to each other via a standard protocol at different stages of an eCommerce transaction lifecycle.

Some of the issues that need to be sorted out:

  • How will the revenue be shared across multiple platforms for a single transaction? The usual model is to charge the seller a %age of the selling price but in this case it will need a lot of bipartite agreements between multiple platforms. This is similar to interconnect charges that telecom providers pass to each other when a call originates in one operator and is destined to a number with another operator. 
  • UPI models or telecom models are simple and usually of a much smaller duration. Only two parties are involved in it. A buyer and a seller in the terminology of e-commerce. In the UPI or telecom world a transaction is initiated and is either successful or fails. e-Commerce models are more complicated. Before even a transaction there is a discovery phase. The transactions are not short lived and may be aborted in the middle. There are more parties involved which includes logistics and insurance providers. Ironing some of these issues will be important for the success of ONDC considering that it is just a protocol level play and not really holding the whole interactions. The specifications will have to clearly outline many of these nuances otherwise the platforms will have to get into lengthy agreement cycles before they become ready to be partners. 
  • Terminologies need to be unified to give a seamless experience otherwise it will need a one to one mapping between platform players. Someone might say order and other one may say transaction. A buyer will see two different kinds of messages – “Your transaction is one the way” for one and “Your order will reach to you soon” from the other one. 

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