Open Network for Digital Commerce: Democratizing Marketplaces

Open Network for Digital Commerce (ONDC) was backed by the government in India as an innovative solution to onboard numerous small-scale retailers and other businesses to participate in the digital commerce ecosystem comprised primarily of e-commerce platforms, on-demand food delivery, and ride-sharing platforms, through standard technology and processes, policies, and entrepreneurship. ONDC was officially incorporated in December 2021 under the Department for Promotion of Industry and Internal Trade as a non-profit section 8 company. As a set of protocols to foster open, unbundled, and interoperable networks, ONDC-enabled communication among various players or entities of an e-commerce transaction. Functions of typical e-commerce such as discovery, matching, order fulfillment, or delivery were unbundled so that multiple players could execute each of these steps independently. ONDC had onboarded seller-side apps (applications interacting with merchants), buyer-side apps (applications interacting with consumers), logistics providers, and customers over the past two years, but the scale of ONDC’s growth was limited compared to existing players. Also, there were considerable questions on ONDC’s decisions pertaining to continual subsidy offerings for sellers and discounts to customers.<br><br>Some success was seen in areas of hyperlocal mobility through apps developed on ONDC such as Namma Yatri and hyperlocal delivery of restaurant food, but order volume was an impending issue. Technology service provider firms stepped forward to help sellers in building and managing services. In the latter half of 2023, Antler Innovation Private Limited ONDC was launched to fund, train, and onboard promising participants in the network. ONDC now had to strategically address areas in which it needed to make investments, whom to subsidize and charge, how to enable scaling, and formulate effective governing policies.

The case represents decisions pertaining to business models of digital platforms such as e-commerce or on-demand delivery platforms that are operating in an open platform set-up. This is a unique proposition that has rarely been executed by any firm or government. It will take students through the journey of ONDC over a two-year period to understand market dynamics for making an impact on the country’s economy. After working through the case and analyzing the assignment questions, students will be able to do the following:<br><br><ul><li>Analyze the business model of platforms operating in the digital commerce economy.</li><li>Understand value creation, pricing strategies, and scaling choices of a technology driven platform.</li><li>Recommend strategies for operating an open, interoperable platform like ONDC.</li></ul>

• Platform
• Ecommerce
• Network effects