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How the ONDC Network works: A deep dive into the future of ecommerce in India

By Mughil R24 February 2025
ONDC working

Introduction


The ONDC Network, also known as the Open Network for Digital Commerce protocol, is an initiative undertaken by the Government of India to develop digital commerce, and make it accessible to everyone by giving equal space for sellers of all sizes from all regions. This network aims to create a more inclusive and accessible online shopping ecosystem for Indians by breaking the barriers affecting growth. This network offers sellers of all sizes, from any part of the country, a fair chance to connect with millions of potential buyers across a wide range of top consumer apps.


This blog post will explain the technology on which the ONDC Network operates, and how it works in detail.


On which technology does the ONDC Network operate?


The network works on the BeckN protocol. BeckN is an open-source framework that works on the principle of interoperability. This protocol lets various platforms like buyer apps, seller apps, and logistic providers speak the same language so buyers can see a variety of products from multiple sellers. As a result of creating the network on this protocol, sellers do not have to create separate accounts for each platform they want to sell on.


Buyer app: An app for buyers with an interface to browse, discover, and purchase products listed by various sellers across the network.


Seller app: An app for sellers with an interface to facilitate ecommerce transactions by connecting sellers to the ONDC Network and manage their business.


Logistic service providers: They provide delivery and fulfillment services for orders placed on the ONDC Network.

An open network is not new


The open network model isn't completely new to Indian consumers. India has already executed the open network model with UPI (Unified Payment Interface) and found great success in transforming digital payments in India. Since the launch of UPI in 2016, it has allowed people to send and receive money across different banks and payment apps, democratizing digital payments for everyone.


Similar to UPI, the ONDC Network, launched in 2022, takes the open network approach to ecommerce and brings buyers, sellers and logistic service providers under a unified network. Just like UPI brought all banks under one roof, the ONDC Network has already brought 2.5 lakh sellers together and has processed 44M+ orders to date. By creating a common, equal, and enjoyable space for digital commerce, this network makes it more accessible, competitive, and compatible for Indian sellers.


How does the ONDC Network work?


Initiation of transaction


When a customer searches for a specific product through any ONDC protocol-compliant buyer app like Paytm or Pincode by PhonePe, the search request reaches the ONDC Network gateway. Gateways are technology entities that serve as intermediaries in the ONDC ecosystem that enable and ensure communication between buyer apps and seller apps. The gateway then checks the ONDC registry to identify sellers across the Network who can fulfill the request and forwards the request to the respective seller app.


Seller response


Seller apps, like Vikra, receive the search request from the buyer app and check the seller's inventory for product availability. If the requested product is available, a response is sent back to that buyer app through the gateway completing the transaction.


The gateway compiles all the available options from sellers on different seller apps and showcases them in the buyer app, allowing the buyer to view the choices, compare them, and make the right purchase.


Placing an order


Once the buyer selects a product and places an order, the order is received through the seller's app, and a digital agreement known as a Transaction-Level Contract (TLC) is created. This contract details the rights and obligations between buyer and seller, including settlement terms, commissions, and any applicable charges.


Order fulfillment


Order fulfillment can either be managed by the seller themselves or via third-party logistic service providers available on the network. Sellers can also offer a self-pickup option, where customers can come pick up their orders directly from the shop at their convenience.


Settlement process


Once the order is delivered, the settlement process is initiated. The ONDC has assigned Reconciliation Service Providers (RSPs) and settlement agencies to manage the payment transfers based on the TLC's terms. These agencies ensure each party involved, such as the seller and logistic providers, receives their settlements on time, every time.


Grievance management


The ONDC has built an IGM (Integrated Grievance Management) framework which helps resolve any issues raised within the network centrally with all the participants. Both buyer apps and seller apps, like Vikra, are included within this framework where they get a dedicated customer support channel to resolve any issues related to transactions, such as product quality issues, delivery delays, and the like, with chat support.


If initial resolutions are unsatisfactory, grievances can be escalated through defined procedures involving higher-level support teams from either the buyer or seller apps. This ensures both buyers and sellers have a way to resolve disputes.


Post-transaction management


Unlike traditional platforms, the ONDC Network uses a decentralised data approach, where transaction level records will stay with the respective buyer and seller platforms. This approach improves privacy, ensuring compliance and data protection.

Conclusion


With its decentralised and interoperable network approach, the ONDC Network brings buyers and sellers across multiple platforms under one roof, benefiting both buyers and sellers, to make transactions more accessible from Kashmir to Kanyakumari and anywhere in between.


Vikra, an all-in-one seller app on the ONDC Network, is a significant addition to the ecosystem. The app simplifies the ecommerce experience for sellers by providing a holistic seller app for setting up an online store, tracking inventory, and streamlining operations. With its benefits like free onboarding assistance, its integrations with Zoho Finance apps, and personalised operational support, Vikra helps sellers sell and scale on the ONDC Network without hefty upfront investments.


Ready to take your first step towards your success on the ONDC Network as a seller? Learn more about Vikra here. If you have any questions, feel free to drop them in the comments section below. To book a demo with our product experts, reach out to us at presales@vikra.com.


Happy selling!

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