ONDC vs. Platform Model: Who Takes Center Stage in E-commerce?

E-commerce has undergone a significant transformation with the emergence of the platform-model, where a central entity controls the entire value chain, dictating the rules of engagement for all participants. However, a new paradigm called the Open Network for Digital Commerce (ONDC) is disrupting this traditional model by introducing decentralization and unbundling of functions. 

Drawing a parallel between ONDC and the startup world, this revolutionary network disrupts the conventional e-commerce landscape, where a central entity controls every aspect of the value chain. Instead, it unbundles functions, empowering individual buyers, sellers, and ancillary services to take center stage. It's like witnessing a startup revolution where independent entrepreneurs collaborate and shape the future together.

This article will explore how transactions are governed on the ONDC Network and the unique relationships between participants.

What is the difference between Platform Model & ONDC?

In the platform model in e-commerce, a single platform entity governs all aspects of e-commerce, including customer acquisition, buyer experience management, vendor onboarding, order-flow management, logistics, payment collection, and grievance redressal. This centralized control allows the platform to set the terms and conditions for buyers, sellers, and other entities involved in transactions.

In contrast, the ONDC Network operates on a decentralized model. It unbundles the various functions of e-commerce, eliminating the need for a central platform. As a result, the relationships between participants and buyers and sellers become more intricate and multi-dimensional.

How are Transactions Governed on the ONDC Network?

On the ONDC Network, transactions are governed by a set of unique relationships and agreements. Let's examine these relationships:

Buyer and Seller Relationship: In any individual sale, the buyer and seller are bound by the terms of the transaction, and the transfer of goods is facilitated through an invoice. This direct relationship forms the core of the transaction.

Buyer App and Seller App Relationship: The buyer and seller interact with the ONDC Network through their respective applications (Buyer App and Seller App). However, there is no direct persistent legal relationship between these apps.

Persistent Legal Relationship with ONDC: Both the Buyer App and Seller App have a persistent legal relationship solely with ONDC. This relationship is governed by the Network Participant Agreement and the ONDC Network Policy.

Transaction-level Contract: To facilitate a transaction between a buyer and seller, a legal relationship is created on-the-fly between their respective apps. This transaction-level contract ensures the smooth execution of the transaction and governs the rights and obligations of the parties involved.

What are the Benefits of the Decentralized Approach on ONDC? 

The decentralized nature of the ONDC Network brings several benefits to participants and the e-commerce ecosystem as a whole:

Increased Autonomy: Participants, including buyers and sellers, have more autonomy and control over their transactions. They are not restricted by the rules and policies of a central platform, allowing for greater flexibility and customization.

Enhanced Trust and Transparency: By eliminating the need for intermediaries and central platforms, the ONDC Network promotes trust and transparency in transactions. The terms of each transaction are agreed upon by the buyer and seller directly, reducing information asymmetry and enhancing trust.

Open and Inclusive Environment: The ONDC Network fosters an open and inclusive environment, encouraging the participation of a diverse range of stakeholders. Small and medium-sized businesses, in particular, can benefit from the network's decentralized structure, leveling the playing field and enabling fair competition.

Innovation and Collaboration: With functions unbundled and open APIs available, the ONDC Network encourages innovation and collaboration among participants. Developers can build upon the network's infrastructure, creating value-added services and enhancing the overall e-commerce experience.

Embracing the Future of Digital Commerce

The ONDC Network represents a paradigm shift in the world of e-commerce. By embracing decentralization and unbundling, it offers buyers, sellers, and other stakeholders a more dynamic, transparent, and inclusive ecosystem. As the network continues to evolve, it has the potential to reshape the future of digital commerce, promoting fair competition, trust, and innovation.