What Is ONDC? A Complete Guide for Small Businesses and Sellers

Highlights

• Understand how ONDC enables sellers to onboard through a single seller application and reach customers across multiple ONDC-connected buyer apps.
• Learn how ONDC's open-network approach gives businesses greater flexibility and reduces dependence on a single marketplace platform.
• Explore how small businesses, retailers, and startups can use ONDC to expand their digital presence and access new customer segments across India.

Introduction

For years, online selling in India has been dominated by a few large marketplaces. While these platforms helped businesses reach customers across the country, many small sellers struggled with high dependency on a single platform, limited visibility, and increasing competition.

To address these challenges, India introduced a new digital commerce framework called ONDC. Short for Open Network for Digital Commerce, ONDC aims to create a more inclusive and open e-commerce ecosystem where buyers and sellers can connect across multiple platforms.

Often described as the "UPI of e-commerce," ONDC is helping small businesses, local retailers, startups, and service providers participate in the digital economy without being locked into a single marketplace.

What Is ONDC?

ONDC stands for Open Network for Digital Commerce. It is an initiative backed by the Government of India and promoted by the Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce and Industry.

Unlike traditional e-commerce platforms that operate as closed ecosystems, ONDC functions as an open network based on standardised protocols. This allows different buyer apps, seller apps, logistics providers, and service providers to interact seamlessly with each other.

The primary objective of ONDC is to democratise digital commerce by enabling businesses of all sizes to participate in online trade and reach customers across multiple applications and platforms.

According to ONDC, the network aims to create an inclusive e-commerce ecosystem and increase digital commerce participation among millions of sellers across India.

How ONDC Works for Small Sellers

ONDC (Open Network for Digital Commerce) acts like a decentralised digital highway. Instead of locking small sellers into a single, proprietary app, it connects any merchant’s inventory directly to multiple buyer apps. This allows small businesses to reach a massive customer base without paying heavy marketplace commissions.

The network is built like the Unified Payments Interface (UPI). It isn't a single app; rather, it's an open network broken down into the following operational components:

1. The Core Components

• Seller Network Participants (Apps): The platforms small sellers use to join the network. These apps digitise your catalogue, push it to the network, and disperse payments.
• Buyer Apps: Customer-facing applications where shoppers search for products.
• The Intermediary Layer: ONDC’s backend protocol acts as a translator, allowing buyer apps and seller apps to communicate seamlessly.

2. How the Selling Process Works

• Digitisation: You sign up on a Seller App and upload your product catalogue.
• Discoverability: Once listed, your products are immediately visible to anyone searching for that item across all Buyer Apps connected to the network.
• Order Placement: When a customer buys your item on a buyer app, the order gets routed through the network to your seller app.
• Fulfilment: You can either handle local delivery yourself or opt into built-in third-party logistics integrations provided by your seller app.

3. Key Benefits for Small Sellers

• Lower Costs: Unlike legacy e-commerce marketplaces that charge 10%-30% in commissions, ONDC seller apps typically only charge a fraction of that (around 1% to 2%).
• No Vendor Lock-in: You own your customer data and can choose different providers for storefronts, logistics, and payments without being restricted by a single brand's rules.
• Equal Playing Field: The decentralised protocol ensures that small local shops appear in search results alongside large brands, free from biased, algorithm-driven gatekeeping.

What Can You Sell and Where?

ONDC supports a wide range of product and service categories, allowing businesses from different sectors to participate in digital commerce. Sellers can offer products across categories such as grocery, food and beverages, fashion, electronics, beauty and personal care, home and kitchen, health and wellness, and agriculture. The network also supports services including mobility, financial services, and professional services through participating applications.

Because ONDC is an open network, sellers are not limited to a single marketplace. Once onboarded through an ONDC-enabled seller application, their products can become discoverable across multiple buyer applications connected to the network, helping them reach a broader customer base.

Getting Started with ONDC

If you are a seller looking to join ONDC, the process is designed to be straightforward. ONDC recommends the following steps for onboarding:

1. Sign up on the ONDC Participant Portal
2. • Create your profile and explore onboarding resources.
   • Official Portal: ONDC Participant Portal
3. Choose a Seller Network Participant (SNP)
4. • Sellers do not connect directly to ONDC.
   • Instead, they onboard through an ONDC-enabled seller application or Seller Network Participant that helps manage catalogues, orders, and payments.
5. Complete Business KYC
6. • Submit required documents such as PAN, bank account details, GST registration (if applicable), and business information.
   • Requirements may vary depending on the seller app.
7. Upload Your Product Catalogue
8. • Add product images, descriptions, pricing, inventory details, and other relevant information.
   • Ensure catalogue data is accurate and complete for better discoverability.
9. Go Live on the ONDC Network
10. • After verification and onboarding approval, your products become discoverable across ONDC-enabled buyer applications.

Moving Forward with Digital Commerce

ONDC represents India's commitment to inclusive digital commerce. By removing platform monopolies and reducing commission rates by7-10 times, the network levels the playing field for small sellers. You gain access to the same infrastructure as large brands without needing deep pockets for high commissions or separate platform fees. With government support through the MSME-TEAM Initiative, transitioning to digital commerce has never been more accessible for neighbourhood stores and small businesses.