What is ONDC? Making E-Commerce Easy for Startups [2025]

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Introduction: Why ONDC Matters?

The Open Network for Digital Commerce (ONDC) is India’s government-backed initiative designed to make online commerce as open and interoperable as UPI made digital payments. Instead of being locked into a single platform like Amazon or Flipkart, ONDC allows buyers and sellers to connect across multiple apps, ensuring wider choice for consumers and fairer access for startups, MSMEs, and kirana stores. Launched by the Department of Industry and Internal Trade (DPIIT), Ministry of Commerce and Industry, India and Incorporated under the Companies Act on December 30, 2021, ONDC is supported by leading banks including State Bank of India, Axis Bank, Kotak Mahindra Bank, HDFC Bank, ICICI Bank, and Punjab National Bank.

In 2025, this matters more than ever. India’s e-commerce sector is on track to exceed USD 200 billion by 2030, yet traditional platforms have often favored large players with high commissions and restrictive policies. Through ONDC, the government aims to democratize digital trade, reduce monopolistic control, and empower small businesses to participate equally in this booming market. For startups, this means lower costs, greater reach, and a level playing field in India’s fast-growing digital economy.

What is ONDC?

The Open Network for Digital Commerce (ONDC) is a government-backed interoperable network for digital commerce that allows buyers and sellers to transact across multiple apps, much like how UPI transformed digital payments in India. Instead of being restricted to one platform, ONDC creates a common, open ecosystem where startups, small businesses, and consumers can interact without monopolistic barriers.

Key Facts About ONDC

• Launched: 2021 by the Department for Promotion of Industry and Internal Trade (DPIIT).
• Legal Structure: A non-profit Section 8 company.
• Purpose: To democratize e-commerce in India by ensuring fair competition, reducing dependence on large marketplaces, and enabling micro, small, and medium enterprises (MSMEs) to sell online.
• Vision: Create an inclusive, transparent, and interoperable digital marketplace where every seller—from a local kirana to a D2C startup—gets equal visibility.

The Problems ONDC Aims to Solve

• Market concentration: Large e-commerce platforms hold too much power, limiting competition.
• Discoverability issues: Small sellers struggle to be visible across multiple platforms.
• Lack of interoperability: Reputation and ratings are not portable between platforms.
• Fragmented experience: Both buyers and sellers face difficulty connecting seamlessly.

ONDC vs UPI: A Simple Analogy

• UPI made sending money across banks simple and universal.
• ONDC aims to do the same for online shopping by allowing interoperability across multiple buyer apps (e.g., Paytm, PhonePe) and seller apps (e.g., Digiit, GoFrugal).
• This means: a buyer on Paytm can purchase from a seller listed on another app without being restricted by platform boundaries.

ONDC vs Traditional E-Commerce

Feature	ONDC	Traditional Platforms (Amazon, Flipkart)
Ownership	Open Network, non-profit Section 8	Private companies
Access	Open to any buyer or seller app	Walled garden, platform-locked
Pricing	Transparent, lower commissions (3–5%)	High commissions (15–30%)
Interoperability	Yes, cross-app connectivity	No, siloed ecosystems

Why This Matters for India’s Digital Economy

• Reduces entry barriers for startups and MSMEs.
• Promotes fair pricing by lowering commission structures.
• Prevents market concentration in the hands of a few large players.
• Ensures consumers get wider choices across multiple apps.

In short, ONDC = open access, lower costs, and more opportunities a framework built to democratize digital commerce in India and fuel its projected $200+ billion e-commerce market by 2030

How Does ONDC Work? (Step-by-Step)

The Open Network for Digital Commerce (ONDC) is built to function like a digital marketplace infrastructure, connecting buyers, sellers, and logistics providers across multiple apps. Unlike traditional platforms where everything is locked within one ecosystem, ONDC ensures interoperability through the Beckn Protocol, an open-source framework designed for seamless discovery and transactions.

Step-by-Step Journey of an ONDC Transaction

1. Buyer App – Product Search
   
   • A customer opens a buyer app such as Paytm, PhonePe, or Magicpin.
   • They search for a product or service (e.g., groceries, clothing, restaurant orders).
   • The app sends this request into the ONDC network.
     
2. ONDC Network Gateway – Discovery Layer
   
   • The ONDC Gateway identifies all possible sellers across different seller apps.
   • This ensures buyers can view prices, delivery times, and availability from multiple providers instead of being restricted to one platform.
     
3. Seller App – Order Received
   • Local kirana stores, startups, D2C brands, or SMEs registered on seller apps (like Digiit or GoFrugal) receive the order notification.
   • Sellers update stock, pricing, and offers in real-time, making them visible to buyers instantly.
     
4. Logistics Provider – Fulfillment
   • Once an order is placed, logistics partners integrated with ONDC (Delhivery, Dunzo, Loadshare, etc.) handle pick-up and delivery.
   • This allows small retailers to access nationwide logistics without individual tie-ups.
     
5. Settlement – Digital Payments & Reconciliation
   • Payments are processed securely through the buyer app.
   • The ONDC settlement system ensures transparent reconciliation between the buyer, seller, and logistics partner.
     

Technology Backbone: Beckn Protocol

• Beckn Protocol is the open-source technology powering ONDC.
• It allows different apps to “talk” to each other, ensuring requests for discovery, ordering, payments, and delivery are standardized.
• Just like HTTP made websites interoperable, Beckn makes e-commerce interoperable.
  

Example Workflow Table

Step	Traditional E-Commerce	ONDC (Open Network for Digital Commerce)
Product Search	Limited to one app’s sellers	Discovery across all registered seller apps
Seller Choice	Only platform-registered sellers	Any seller connected to ONDC network
Delivery	Platform’s own logistics only	Multiple third-party logistics partners
Payments	Platform-controlled checkout	Open network with secure reconciliation

Why This Matters for Startups and SMEs

• Increased Visibility: Products can be discovered across multiple apps at once.
• Lower Dependence: No need to be tied to one marketplace’s rules.
• Shared Infrastructure: Logistics and payments are built-in, reducing costs.
• Scalability: A kirana in Jaipur can now sell to a customer in Delhi seamlessly.

In simple terms, ONDC works like the “UPI of commerce”—buyers and sellers use their preferred apps, but the network connects them all, ensuring open access, fair competition, and seamless delivery.

Benefits of ONDC for Startups & Small Businesses

The Open Network for Digital Commerce (ONDC) is designed to solve the biggest challenges faced by Indian startups, MSMEs, and kirana stores trying to sell online. By breaking platform monopolies and lowering entry barriers, ONDC empowers smaller players to compete fairly with large e-commerce giants.

Key Benefits of ONDC

1. Level Playing Field

• Traditional marketplaces often favor large sellers with deep discounts and exclusive tie-ups.
• ONDC ensures equal visibility for small shops, D2C brands, and kiranas, giving them a fair chance to compete.
• According to EY, this reduces dependency on dominant e-commerce platforms and prevents market concentration.
  

2. Lower Costs

• Existing platforms charge 15–30% commission on each order, which eats into margins of small sellers.
• ONDC reduces this to ~3–5%, making online selling financially viable for startups.
• Lower transaction costs mean businesses can offer better prices while still earning sustainable margins.
  

3. Wider Market Access

• Sellers on ONDC can reach customers pan-India, even without building their own app or paying for marketplace visibility.
• A kirana in Lucknow or a D2C brand in Jaipur can be discovered by a buyer in Bengaluru using apps like Paytm or PhonePe.
• This helps startups scale nationally without heavy marketing spends.
  

4. Integrated Logistics

• ONDC connects sellers with multiple third-party logistics providers (e.g., Dunzo, Delhivery, Loadshare).
• Startups no longer need separate logistics contracts.
• This reduces delivery time, improves reliability, and brings down costs.
  

5. Seamless Interoperability

• ONDC allows sellers to be visible across multiple buyer apps such as Paytm, PhonePe, Magicpin, and Mystore.
• This interoperability ensures customers can shop from any seller through their preferred app, boosting discoverability.
  

ONDC Growth Snapshot (2025)

Metric	Value (Jan 2025)	Source
Sellers onboarded	3.5 lakh+	PIB
Monthly transactions	1.2 crore+	PIB
Average commission rate	3–5%	Protean
Potential market size	$200B+ by 2030	EY

Why ONDC is a Game-Changer for Indian E-Commerce

The Open Network for Digital Commerce (ONDC) is more than just another digital initiative—it is a structural reform for India’s e-commerce sector. By creating an open, interoperable, and government-backed network, ONDC addresses long-standing challenges such as platform monopolies, high costs for small sellers, and limited consumer choices.

Key Reasons ONDC Transforms Indian E-Commerce

1. Democratization of Digital Commerce

• ONDC levels the playing field by giving equal digital visibility to small kirana stores, MSMEs, D2C startups, and farmer producer organizations (FPOs).
• Sellers don’t need to rely on expensive advertising or exclusive tie-ups with dominant platforms.
• As AU Bank highlights, ONDC brings grassroots participation into mainstream digital trade, ensuring inclusivity.
  

2. Empowering Kiranas, MSMEs, and FPOs

• India has 13 million+ kirana stores, most of which remain offline.
• ONDC enables them to go digital with minimal onboarding costs, connecting them to nationwide demand.
• FPOs and small manufacturers can also directly reach urban consumers, bypassing multiple intermediaries.
  

3. Tackling Monopolistic Practices

• Large e-commerce platforms often control pricing, visibility, and logistics, creating entry barriers for new sellers.
• ONDC breaks these silos by allowing interoperability across multiple apps, making it harder for any one platform to dominate the market.
• Business Standard notes that this transparency discourages predatory pricing and ensures fair competition.
  

4. Expanding Consumer Choice & Competitive Pricing

• Consumers benefit from wider product discovery, since ONDC connects multiple sellers on a single search.
• Price transparency allows buyers to compare options across apps, ensuring competitive pricing (Paytm, EY).
• This not only reduces dependence on a few large platforms but also improves trust and affordability for end-users.

ONDC’s Game-Changing Impact at a Glance

Impact Area	Traditional Platforms	ONDC Advantage
Seller Visibility	Restricted to platform policies	Open & equal access
Participation of MSMEs/Kiranas	Limited due to costs & tech barriers	Inclusive onboarding
Market Structure	Oligopolistic, dominated by few players	Open, competitive
Consumer Benefits	Limited choice, high pricing	Wider options, transparent pricing

ONDC is positioned as the “UPI moment for e-commerce”—breaking down barriers, fostering inclusivity, and ensuring that India’s projected $200B+ digital commerce market by 2030 is not controlled by a handful of players. For both startups and kiranas, it creates a sustainable path to growth, while consumers enjoy greater choice and better pricing.

How to Join ONDC as a Startup

For Indian startups, joining the Open Network for Digital Commerce (ONDC) is a straightforward process that opens doors to nationwide visibility, lower costs, and access to millions of digital buyers. Unlike traditional marketplaces, onboarding to ONDC does not require exclusive contracts or high platform fees.

Step-by-Step Process to Get Started

1. Choose a Seller App

• Startups can register with an ONDC-integrated Seller App such as GoFrugal, Digiit, Mystore, or eSamudaay.
• These apps act as the gateway for sellers to connect with the ONDC network.

2. Complete KYC & GST Registration

• Businesses need to provide Know Your Customer (KYC) details, PAN, Aadhaar (for proprietorships), and business documents.
• A valid GST registration is required for most product categories to comply with tax laws.

3. Upload Products & Business Details

• Add your product catalog, pricing, and delivery preferences directly on the seller app.
• Product listings are then made discoverable across multiple buyer apps on the ONDC network.

4. Go Live on ONDC Network

• Once verification is complete, your startup is “live” and visible to consumers on apps like Paytm, PhonePe, Magicpin, and Meesho.
• This allows you to instantly reach a pan-India customer base without building your own marketplace.

Pro Tip: Many startups choose to work with Technology Service Providers (TSPs), who offer API integration, catalog management, and logistics support—helping businesses onboard faster and scale efficiently.

ONDC Startup Onboarding Snapshot

Step	Requirement	Outcome
Seller App Selection	GoFrugal, Digiit, Mystore, eSamudaay	Access to ONDC network
Compliance	KYC + GST registration	Verified business profile
Catalog Upload	Products, pricing, logistics preferences	Nationwide visibility across buyer apps
Go Live	Final approval on Seller App	Sales enabled via ONDC ecosystem

Why Startups Should Join ONDC Now

• Faster market entry with minimal setup costs.
• Pan-India discoverability without high ad spends.
• Integrated logistics and payments built into the network.
• Scalable growth opportunity in India’s $200B+ e-commerce market by 2030.

For early-stage startups, ONDC is not just an alternative channel—it’s a gateway to compete with large players and build a sustainable digital presence.

How Consumers Use ONDC (Explained Simply)

The Open Network for Digital Commerce (ONDC) makes online shopping as easy and universal as UPI payments. Consumers don’t need to download a new app to use ONDC—instead, they can access it through familiar buyer apps like Paytm, PhonePe, Meesho, and Magicpin.

Step-by-Step Guide for Consumers

1. Download a Buyer App
   • Install any ONDC-enabled buyer app such as Paytm, PhonePe, Meesho, or Mystore.
   • No separate ONDC app is required—these apps integrate directly with the ONDC network.
     
2. Search for a Product or Service
   • Type in what you want to buy—groceries, clothing, electronics, or even food.
   • The ONDC gateway fetches results from multiple seller apps, showing you products from local kiranas, D2C startups, and big retailers all in one place.
     
3. Select Seller and Add to Cart
   • Compare prices, delivery timelines, and ratings across different sellers.
   • Choose the seller that best suits your needs and add items to your cart.
     
4. Checkout with Preferred Payment
   • Pay securely using UPI, debit/credit cards, net banking, or wallet options.
   • Payments are processed through the buyer app, making checkout familiar and seamless.
     
5. Choose Delivery Option
   • Select your delivery partner or opt for hyperlocal delivery (for food and groceries).
   • Logistics partners like Delhivery, Loadshare, and Dunzo ensure doorstep service.
     

Real-Life Example

Imagine craving biryani in Delhi:

• Open Paytm app → Search “Biryani.”
• ONDC fetches results from local restaurants nearby, not just Zomato or Swiggy listings.
• You compare prices, select your preferred restaurant, pay via UPI, and choose express delivery.
• Result: More choices, better prices, and faster delivery.
  

Why Consumers Prefer ONDC

Feature	Traditional Platforms	ONDC Advantage
App Dependence	Limited to one app (e.g., Amazon, Zomato)	Multiple apps connected to one network
Seller Visibility	Only platform-listed sellers	Access to local kiranas, startups, and FPOs
Pricing Options	Controlled by platforms	Transparent & competitive pricing
Payment Options	Platform checkout only	UPI + multiple digital payments

Key Consumer Benefits

• Wider Choice: Access to both big brands and local sellers.
• Competitive Pricing: Compare offers across sellers in real time.
• Convenience: Use your existing apps without switching ecosystems.
• Trust & Security: Government-backed framework ensures safe payments and standardized processes.

In short, ONDC puts consumers at the center of digital commerce by offering choice, transparency, and convenience—all within apps they already use daily.

Challenges & Limitations

While the Open Network for Digital Commerce (ONDC) has made impressive progress onboarding over 3.5 lakh sellers and processing 1.2 crore+ monthly transactions as of January 2025, the network is still in its early growth phase. Startups and policymakers must be mindful of certain challenges and limitations that need to be addressed for ONDC to achieve its full potential.

Key Challenges Facing ONDC

1. Low Consumer Awareness Beyond Metros

• Adoption remains concentrated in metros like Delhi, Bengaluru, and Mumbai.
• In Tier 2 and Tier 3 cities, many consumers are still unaware that buyer apps like Paytm or PhonePe integrate ONDC.
• Expanding digital literacy and marketing campaigns will be critical to driving mass adoption.

2. Integration Complexity for Small Sellers

• Many kiranas and MSMEs face hurdles in digitizing product catalogs, managing GST compliance, and syncing inventory.
• Seller apps and Technology Service Providers (TSPs) are working to simplify onboarding, but the learning curve remains steep for first-time digital sellers.

3. Need for Strong Dispute Resolution & Trust-Building

• Unlike single-platform ecosystems (e.g., Amazon), ONDC transactions involve multiple stakeholders (buyer app, seller app, logistics provider).
• This raises questions such as: Who resolves complaints if an order is delayed or misdelivered?
• A robust grievance redressal framework and trust signals (ratings, verification badges) are essential for consumer confidence.

4. Logistics Standardization Still Evolving

• EY and Antler highlight that logistics integration remains fragmented.
• Smaller logistics providers may lack real-time tracking, leading to inconsistent service quality.
• Ensuring uniform service-level agreements (SLAs) across providers will be critical for reliability and scale.
  

Snapshot of ONDC’s Current Limitations

Challenge	Impact on Ecosystem	Next Steps Needed
Low Awareness outside metros	Slower consumer adoption in Tier 2/3	Awareness campaigns, digital literacy
Complex Seller Integration	Slower MSME onboarding	Simplified TSP tools, training support
Weak Dispute Resolution	Lower consumer trust	Strong grievance framework, verified ratings
Logistics Fragmentation	Inconsistent delivery experience	Standardized SLAs, nationwide partnerships

ONDC in Numbers

As of January 2025, ONDC has moved from pilot phase to large-scale adoption, showing measurable traction across India. These figures highlight how the Open Network for Digital Commerce is rapidly shaping India’s e-commerce ecosystem.

Key ONDC Metrics (2025)

Metric	Value (2025)	Source
Sellers onboarded	3.5 lakh+	PIB
Cities covered	600+	PIB
Monthly transactions	1.2 crore+	PIB
Commission range	3–5%	Protean
Market potential (2030)	$200B+	EY

These numbers show that ONDC is already creating critical mass, reducing costs for sellers, and opening up nationwide access to consumers.

Future Outlook

The next phase of ONDC’s growth focuses on scale, inclusivity, and innovation. Industry experts (EY, Antler, PIB) project that ONDC could fundamentally transform India’s digital commerce landscape by 2030.

Key Growth Drivers for the Future

1. Integration with Financial Services

• ONDC is expected to embed loans, insurance, and credit access for MSMEs directly within the network.
• This will enable small sellers to access working capital and protect against risks, boosting financial inclusion.

2. Expansion into Rural & Tier 3 Cities

• Current adoption is strong in metros and Tier 1 cities, but the next growth wave will come from rural India.
• ONDC’s open infrastructure lowers entry barriers, allowing local kiranas and FPOs in small towns to reach digital buyers nationwide.

3. AI-Driven Personalization

• Future ONDC integrations will use AI to match consumers with relevant sellers, ensuring better product discovery and customer experience.
• This personalization will help small sellers compete effectively with larger brands.

4. Government’s Long-Term Vision

• The Government of India aims for ONDC to account for 25% of all e-commerce transactions in India by 2030.
• This aligns with the country’s vision of making digital commerce as universal as UPI payments.

What This Means for Startups & Investors

• Startups: Lower costs, embedded financial services, and access to rural consumers = sustainable growth.
• Investors: Opportunity to back ONDC-focused SaaS tools, logistics, and fintech solutions.
• Consumers: Wider choice, competitive pricing, and trust in a government-backed network.

Conclusion

The Open Network for Digital Commerce (ONDC) is India’s bold step towards building an open, transparent, and inclusive e-commerce ecosystem. By lowering commissions to 3–5%, enabling 3.5 lakh+ sellers across 600+ cities, and providing nationwide access through apps like Paytm, PhonePe, and Meesho, ONDC empowers startups, kiranas, MSMEs, and consumers alike. Much like UPI transformed digital payments, ONDC is set to democratize digital trade, reduce monopolistic control, and drive India’s $200B+ e-commerce market potential by 2030. For entrepreneurs and small businesses, joining ONDC today means securing a fair, scalable, and future-ready presence in India’s digital economy.