All Developments in ONDC in 2024 | Protean

The Open Network for Digital Commerce (ONDC) has redefined India’s e-commerce ecosystem since its inception by promoting inclusivity, innovation and interoperability. As the network evolves, 2024 has been a pivotal year marked by transformative milestones and events. 

But what is ONDC, and why did the government embark on this ambitious initiative? 

Let's dive into the journey of ONDC, its components, and its significant developments in 2024. 

What is ONDC, and Why Was It Launched?

The Open Network for Digital Commerce (ONDC) is a transformative initiative by the Government of India to reimagine the digital commerce landscape. It shifts the paradigm from platform-centric marketplaces to an open, decentralised network. 

Unlike the closed ecosystems of traditional e-commerce platforms, where buyers and sellers are tied to a single interface (such as Amazon or Flipkart), ONDC fosters interoperability. This means multiple buyers and sellers can seamlessly interact across various apps within the same network.

The Problem With Traditional E-commerce Platforms

India's e-commerce ecosystem has been dominated by a few large players for years. These platforms, while convenient for consumers, have created several challenges for small and medium-sized businesses (SMBs):

• High Commission Rates: Large platforms often charge sellers exorbitant fees, up to 25-30% of the product price. This eats into the already thin profit margins of SMBs.
• Lack of Visibility: The algorithmic structure of these platforms tends to favour more prominent brands, pushing smaller sellers further down the search rankings.
• Restricted Customer Data: Sellers on these platforms typically do not get access to customer insights, limiting their ability to improve and personalise services.
• Vendor Lock-In: This occurs when sellers and buyers are often confined to the platform they use, reducing competition and increasing dependency.

These challenges have resulted in an uneven playing field, where smaller businesses struggle to thrive or sustain themselves in the competitive market. 

ONDC: A Game-Changing Solution

ONDC is not a marketplace; it is a network. It is akin to how UPI (Unified Payments Interface) revolutionised digital payments by enabling interoperability across banks and apps. ONDC applies a similar principle to e-commerce, aiming to:

1. Democratise Digital Commerce
   ONDC breaks the monopoly of large platforms, offering equal opportunities for every seller—whether a neighbourhood Kirana store or an emerging D2C (direct-to-consumer) brand.
2. Reduce Costs
   With lower commission fees and open access, ONDC ensures businesses, especially SMBs, retain more revenue.
3. Boost Inclusivity
   The network allows sellers from even tier-2 and tier-3 cities, rural areas, or underserved markets to participate in digital commerce. Local artisans, small-scale manufacturers, and homegrown businesses can now connect directly with a broader audience.
4. Encourage Innovation
   By enabling multiple buyer and seller apps to operate within the network, ONDC encourages a competitive marketplace where businesses innovate to attract customers. 

Understanding the Building Blocks of ONDC

ONDC operates through several components that make the network robust and scalable:

1. Buyer Apps: These are consumer-facing platforms that allow users to browse, explore, and purchase from various sellers. Apps like Paytm, Magicpin, and Ola enable users to access a wide range of products or services in one place, regardless of which specific seller is listing them. These apps serve as touchpoints for consumers to interact with the ONDC network. Their integration into ONDC ensures customers can shop across different sellers without being tied to a single e-commerce platform.
2. Seller Apps: These are the tools businesses use to list products, manage inventories, and handle transactions. These apps allow large and small businesses to participate in the ONDC ecosystem by providing a seamless interface for adding products, updating prices, managing orders, and communicating with logistics partners. By leveraging these apps, sellers can reach a broader audience and benefit from the scalability and flexibility ONDC provides.
3. Logistics Partners: Timely and efficient delivery is a cornerstone of any e-commerce experience. In the ONDC network, logistics partners ensure that products reach consumers smoothly, cost-effectively, and on time. These partners handle the physical movement of goods from the seller to the buyer, working to integrate with the platform to allow for real-time tracking, optimised routes, and transparent updates for both the buyer and seller.
4. Technology Providers: This group is essential for supporting the infrastructure that makes ONDC run smoothly. These technology providers offer tools for payments, data integration, analytics, and security. They ensure a seamless flow of information across the network and that transactions are secure, efficient, and transparent. They also play a key role in maintaining the network's scalability, ensuring that the system can handle a growing number of users, sellers, and transactions without compromising performance.

These components create a comprehensive, open digital ecosystem where buyers and sellers can interact across multiple platforms without being confined to a particular marketplace. 

Benefits for Buyers and Sellers

For Buyers:

1. Access to diverse sellers on a single platform.
2. Competitive pricing due to increased market transparency.
3. Enhanced delivery options through a network of logistics partners.

For Sellers:

1. Reduced commission rates, leading to higher profits.
2. Access to a larger customer base, including tier-2 and tier-3 cities.
3. Opportunities for small and medium enterprises to scale quickly.

Key Developments in ONDC in 2024: A Year of Growth and Transformation

The Open Network for Digital Commerce (ONDC) has emerged as a pivotal player in India's e-commerce ecosystem. With a mission to democratise digital commerce, ONDC aims to break down barriers and create a seamless, inclusive, and scalable network for buyers, sellers, and service providers. Throughout 2024, ONDC has made significant strides, navigating challenges, driving innovation, and redefining the landscape of digital commerce. 
 

Here’s a comprehensive look at its key developments this year.

Scaling Financial Incentives: A Strategic Pivot

In 2024, ONDC recalibrated its financial incentives for network participants. Initially, the network provided substantial financial assistance to encourage participation. You can look at the initial and changed incentives approach in this image:

The reduction in incentives reflects ONDC’s strategic focus on conserving cash and driving sustainability. Starting in January 2025, a “network infrastructure development and services” fee of ₹1.50 per transaction over ₹250 underscores its move toward financial self-sufficiency. 

Transaction Volume and Merchant Participation

ONDC’s transaction volume and merchant network have grown exponentially. By November 2024, the platform facilitated 14.45 million transactions, a steady increase from the 13.9 million orders in October 2024. 

Key metrics include the following, as presented in the image below:

This expansion reflects ONDC’s commitment to inclusivity. Many of the sellers onboarded are small or medium-sized enterprises (SMEs). 

Sector-Specific Growth: Mobility and Non-Mobility

Mobility:

Mobility services remain a cornerstone of ONDC’s operations, contributing to 40% of total transactions. Over the past eight months, mobility services recorded a 120% growth.

Non-Mobility:

Non-mobility sectors saw an 825% growth during the same period, driven by categories like food (300% growth), grocery, fashion, and home goods. The introduction of hyperlocal logistics in April 2024 has been a game-changer, enhancing the platform’s appeal to a broader audience. 

Milestone Events: ONDC Startup Mahotsav

In May 2024, ONDC, in collaboration with the Department for Promotion of Industry and Internal Trade (DPIIT), hosted the ONDC Startup Mahotsav in New Delhi. This event symbolised the synergy between the Startup India initiative and ONDC. 

Key highlights include:

• Participation from 5,000 startups (hybrid mode).
• Commitment from 125 ecosystem stakeholders, including unicorns and high-growth businesses like EaseMyTrip, Zerodha, and PolicyBazaar, through Letters of Intent (LoIs).
• A focus on nurturing innovation and collaboration within the startup ecosystem.

ONDC’s MD and CEO, Shri T.K. Koshy, highlighted the event as pivotal in India’s digital transformation journey. Over 5 lakh sellers were onboarded, 70% of whom are SMEs. 

Innovations and Collaborations

gCommerce Initiative

ONDC partnered with Nazara Technologies to launch “gCommerce”, a unique in-game shopping platform. This platform aims to address challenges faced by Indian game developers, such as low in-app purchase conversion rates. Developers can earn commissions on transactions initiated by players, opening new revenue streams in the gaming sector. 

Magicpin’s Exponential Growth

Hyperlocal e-commerce firm Magicpin achieved remarkable success on ONDC:

• Recorded 15 times order growth in 15 months.
• Reached 1.5 lakh daily orders for food and logistics services.
• Onboarded 70,000 restaurant partners, up from 22,000 in March 2023.
• Plans to invest ₹100 crore to onboard an additional 1 lakh restaurants and cloud kitchens.

Magicpin’s CEO highlighted its significant market share in cities like Delhi and Bengaluru. Magicpin fulfils 90% of food orders from buyer apps like Paytm and Ola. 

Financial Performance

ONDC’s financial trajectory reflects its growing ambitions and associated costs:

• FY24 Loss: ₹195.61 crore, up from ₹46.76 crore in FY23.
• Marketing Budget: Increased to ₹91.73 crore from ₹3.27 crore in FY23.
• Network Maintenance Costs: Rose to ₹35.49 crore from ₹14.66 crore in FY23.

Despite these losses, ONDC is poised for long-term sustainability, driven by its shift toward fee-based revenue models. 

Expanding Ecosystem

ONDC continues to onboard major buyer apps, enhancing its ecosystem:

• Leading Buyer Apps: Paytm, Magicpin, Ola, Snapdeal, Namma Yatri (Bengaluru), and Yatri Sathi (Kolkata).
• Exit of PhonePe’s Pincode: Reflects the platform’s competitive and evolving nature. 

Other Key Developments 

1. 8 February 2024: ONDC, NCCF, and Shiprocket partnered to support the government's "Sarkar se Rasoi Tak" initiative, delivering essential household items like rice, wheat flour, and lentils directly to consumers' homes in the Delhi NCR region at government-approved prices, with delivery within 24 hours and no charges.
2. 7 March 2024: ONDC celebrated women entrepreneurs, highlighting their success stories within its network and empowering women-led businesses and artisanal ventures across India.
3. 2 April 2024: During Shark Tank India Season 3, Anupam Mittal, founder of Shaadi.com, compared ONDC to the Unified Payments Interface (UPI) and emphasised ONDC’s role in democratising digital commerce.
4. 28 May 2024: The 'Build for Bharat' initiative concluded successfully, with ONDC attracting over 27,000 participants to develop solutions for e-commerce challenges across India.
5. 1 July 2024: ONDC achieved a significant milestone, with 374,000 orders in a single day during the T20 World Cup Final. The F&B (food and beverage) category contributed significantly (61,000 orders).
6. 30 July 2024: ONDC launched its interoperable QR code, allowing small businesses, artisans, and local sellers to establish a digital presence and connect with customers through ONDC-registered buyer apps like Paytm and Magicpin.
7. 22 August 2024: ONDC introduced a digital lending initiative, offering fully digital, paperless loans in just 6 minutes. The initiative is integrated with 9 buyer apps and 3 lenders to enhance accessibility to credit services.
8. 10 September 2024: Dr. R.S. Sharma was appointed as the Non-Executive Chairperson of ONDC. A seasoned technocrat, he has been instrumental in pioneering initiatives such as Aadhaar, CoWIN, and Ayushman Bharat.
9. 11 September 2024: ONDC launched Saarthi, a reference application developed with Bhashini to enable businesses to create multilingual buyer-side apps. Initially supporting five languages (Hindi, English, Marathi, Bangla, and Tamil), Saarthi aims to expand to 22 languages.
10. October 2024: ONDC, NCCF, and Otipy launched a collaborative initiative to tackle rising onion prices in Delhi NCR, offering onions at ₹35 per kg via ONDC-supported buyer apps like Otipy, Paytm and Mystore, with plans to expand to Mumbai.

Vision for 2025

here. 

This goal aligns with its mission to democratise digital commerce and foster innovation across sectors.

2024 has been a transformative year for ONDC, marked by strategic pivots, exponential growth, and an unwavering commitment to inclusivity and innovation. By fostering collaboration, driving sector-specific growth, and embracing financial sustainability, ONDC is not just redefining e-commerce in India but also setting the stage for a global digital commerce revolution. 

The developments in ONDC throughout 2024 underscore its transformative potential for India’s digital commerce landscape. By fostering inclusivity, innovation, and transparency, ONDC redefines how businesses and consumers interact digitally.

Also Read: 

How to Login and Place Order on ONDC: A Step-by-Step Guide

How does lending option in ONDC benefit consumers?

How to Register as a Seller on ONDC: Step-by-Step Guide

How to Promote Your Products on the ONDC Platform?

What is ONDC and How to Resolve Disputes on It?

Written by Bruhadeeswaran R.