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Tata Capital > Blog > Loan for Business > What is ONDC and How it Works

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What is ONDC and How it Works

What is ONDC and How it Works

The economic growth of a country highly depends on the evolution of local, small businesses. While the growth of e-commerce has allowed small businesses to boost their presence, so many of these businesses still need help to compete with the major players and also more resources to do so.

Open Network for Digital Commerce (ONDC) is one such initiative to make these businesses known by empowering them to enter the e-commerce sector. This initiative aims to uplift small businesses and give them a fair chance to stand shoulder-to-shoulder with business giants.

ONDC addresses the online issues consumers and businesses face and leverages advanced technology to boost user convenience as well as your business presence. It provides a unified platform to consumers for all shopping and buying needs, unifying the buying and selling experience.

If you’re a small business owner and want to enter the e-commerce sector, here is everything you need to know about ONDC and its functionality.

What is ONDC?

ONDC is an initiative by the Government of India to provide an open network for buying and selling all kinds of goods and services. ONDC follows an open-sourced methodology and functions without depending on any other eCommerce platform. A distinguishing feature of ONDC is that it goes beyond using just one platform; it brings other eCommerce platforms together. Consumers can buy products listed on various compatible platforms directly on ONDC.

ONDC aims to standardise all buying and selling protocols. In addition, it gives consumers more freedom to shop from a platform they like. Buyers and sellers can use the ONDC website to bridge order management and fulfilment gaps.

Features of ONDC

ONDC is a one-stop destination for all buying and selling needs. The idea behind ONDC is to make eCommerce more accessible and inclusive. Here is why ONDC stands out among other platforms:

#1. Single platform for all businesses

ONDC democratises buying and selling. It allows multiple sellers to list their products on a single platform. From groceries and food delivery to banks and tech companies, all businesses can join the ONDC platform.

#2. Data security

ONDC provides better data security by using blockchain technology to collect and store data.

#3. Safer payments

ONDC doesn’t rely upon third-party payment gateways, making the payments more secure. This helps boost consumers’ confidence in the platform.

#4. Personalised

ONDC aims to provide a seamless buying and shopping experience by delivering sellers the data on consumer behaviour, leading to a better customer experience and higher revenues for the sellers. Sellers can tailor their catalogues according to the demands of the consumers.

How does ONDC work?

Micro, small and medium businesses have played a significant role in making India the fastest-growing economy in the world. ONDC has motivated these businesses to make an online presence and be known. It helps boost competition by welcoming all businesses, which also benefits the buyers by giving them more choices.

ONDC works on APIs (Application Programming Interfaces), which allows secure data sharing and integration with the sellers. Business owners and sellers can analyse and create a catalogue of products aligned with their customers’ needs. APIs also facilitate connectivity – when a buyer runs a product search on one app like Amazon, they can compare results from other sellers, including local businesses, to make an informed purchase decision.

In short, ONDC acts like an open network, creating better prospects for buyers and sellers in the e-commerce industry. Micro, small or medium business owners can connect with potential customers and market their goods and services in any app’s search results. Here is a breakdown of how ONDC works:

#1. ONDC connects and digitises businesses. It aims to create a buyer-side interface to connect the buyers with a network of sellers.

#2. It builds a seller network by providing a platform that enables sellers to sell their products, gets insights about consumer behaviour and accept orders.

#3. The platform provides the seller with data about the consumers to market the products they seek.

#4. ONDC also promotes technical innovations to create better buyer and seller networks.

What’s more, ONDC is also a user-friendly platform and easy to join. If you are a business owner looking to sell your products and services on ONDC, here is how you can enter:

#1. Visit the ONDC ‘How to Join‘ page to get acquainted with ONDC and its role in the digital marketplace.

#2. Select your role. The role you select will help you connect with your customers. You can choose one of these roles:

#1 Sell through the ONDC network

#2 Create a seller experience

#3 Create a buyer experience

#4 Provide software as a service

#5 Provide other services

Once you select your role, you can start connecting with potential customers and selling your products and services on ONDC.

In contrast, buyers can shop on ONDC by following these steps:

#1. Visit the ONDC ‘How to shop‘ page.

#2. Select the eCommerce store you want to buy from.

You will be redirected to the official page of the store. The stores that you can currently shop from on ONDC are Paytm,  Craftsvilla, Spice Money, Pincode and Magicpin. ONDC works in all the major cities, including Delhi NCR, Pune, Mumbai, Thane, Kolkata, Bengaluru, Chennai, Hyderabad, and more.

In a nutshell

ONDC is an innovation to revolutionise the existing digital marketplace. It is a step towards inspiring micro, small and medium businesses to expand by selling their goods and services online. Aimed at creating a network of businesses, ONDC helps boost healthy competition in various industries.

Alongside understanding the digital marketplace, the right financial support can help your business expand and reach new heights. Tata Capital is a trusted source for businesses to avail of financial services. Our business loan feature a 100% digital application process, minimal paperwork, and attractive business loan interest rates to help you meet your business needs hassle-free.

Visit the Tata Capital website today to know more!

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