In an exclusive interview with Express Computer, Nitin Mishra, Chief Technology Officer, ONDC, shares the current state and future prospects of the Open Network for Digital Commerce (ONDC). ONDC has rapidly evolved into a fully operational network with over 500 active participants and extensive plans for expansion. Mishra highlights ONDC’s role in incentivising participants, the demographics of its user base, and the pivotal role of GenAI in enhancing user experiences and operational efficiency. He also discusses ONDC’s approach to data privacy and its ambitious vision to unify India’s e-commerce landscape.
ONDC has been in development for some time now. Can you elaborate on the current stage of development and the functionalities that are already operational for buyers and sellers?
ONDC is no longer a proof of concept; it’s a fully functioning ecosystem. It’s an ecosystem of networks. We started with just two participants, and now we have over 500 participants actively involved, with thousands more waiting in the queue to go into production. We are no longer an experimental concept; we are a real, working ecosystem. It is developing and growing very rapidly. That’s the current state of ONDC.
Do you incentivise the buyers and sellers to join the network?
I think we do, in some sense. Most of these buyers and sellers are coming with the motivation of establishing the network. Initially, to remove certain frictions for sellers coming on board with seller apps, we incentivise seller apps to onboard sellers onto their systems. In some cases, we also provide incentives for buyer apps to bring in more demand onto the network by offering discounts. However, what we have seen is that more than incentives, the innovation and drive that the participants are putting in is bringing in more and more engagement.
As of now, there are incentives, but they are tapering down. Eventually, it will become a zero-incentive game. The buyer and seller apps will figure out how to take this business forward, which is already happening as we speak.
Can you quantify the total number of sellers or buyers onboarded so far?
We have about 500,000 sellers. I believe the number of buyers who have transacted on the network has easily crossed 20 million.
Can you share some insights into the demographics of these sellers?
It’s well spread across the country. We initially launched as a pilot in Bengaluru and Meerut. However, we started seeing a lot of demand from tier 2 and tier 3 cities because participants with a presence in these areas began to drive interest. While tier 1 cities continue to lead, there is significant demand from tier 2 and tier 3 cities. I believe the next wave of growth in e-commerce will come from these regions. Our sellers are quite widespread, with some even in rural areas.
For example, the Mann Deshi Foundation, which consists of women’s self-help groups, is bringing their products onto the network. Farmers are now transacting on ONDC as well. Recently, Alphonso mangoes were shipped via ONDC from very remote places. The scale is growing, and we hope it spreads globally. However, within India, we are present in almost all cities.
Do you see any benefit in leveraging the advantages of GenAI here?
Of course, GenAI will play a significant role in deriving experiences for both buyers and sellers. The journey for sellers begins with digitising their catalogues and becoming digitally visible. GenAI will have a major impact in this area. On average, small sellers, whether in grocery, food, or fashion domains, have about 100 to 150 SKUs. Digitally cataloguing these items is a critical problem for them to solve, especially given their current stage of digital evolution.
We see GenAI making significant progress in creating automated catalogues and indexing them, ensuring they are more visible and providing a better experience for buyers through buyer apps. This is where this technology is making a difference. On the buyer side, we are witnessing a shift from a browse-based economy to conversational economics. We see various non-conventional modes, whether it’s chat platforms like WhatsApp or Discord, voice commands, or even digital landscapes where users can make purchases through wave gestures.
Purchases can be made through any of these modes, and GenAI will have a significant contribution to make, at least in these two domains.
Are you leveraging the benefits of GenAI for customer support as well?
Yes, of course. As I said, the IGM is a framework. The API is a framework. ONDC is writing the framework. Many of these are very specific solution providers. They are using their own language models.
IGM is currently available in both English and Hindi because the network participants, who are actually operating, are in orbit. We have participants integrating with the API. We have many companies, like Hashini and Google Translator, providing support in various other languages. I don’t have a number on the languages, but it’s very specific to the partner.
There are TSPs who have developed solutions that are available in almost all major languages of India. They are translating the content so that the seller or buyer can see it in their vernacular languages of choice. This is happening in these schools.
Do you encounter any technological limitations that prevent you from fully utilising your ideas?
I believe technology should enable and expand rather than limit. That’s how technology is evolving. With LLM, there’s significant unstructured development. Information now enters structured spaces, enhancing user experiences.
Technology continually evolves without offering friction. The digital evolution process depends on individual maturity and usage preferences. Simplifying this remains a challenge, but AI-based techniques help. They enable sellers to market products in any language, facilitating transactions regardless of common grammar.
Regarding AI, recent advancements include GenAI and the rise of conversational economics. On the catalogue side, the QR code release simplifies shopping—a one-stop solution for browsing and purchasing.
Serviceability is enhanced through a Gravian’s framework and integrating ODR on the network. Innovations span various domains, aiming for a Sodexo-like system enabling corporate purchases via ONDC.
These innovations, seeded by ONDC, promise substantial growth, fostering a digital ecosystem accessible to all. Watch for numerous solutions on ONDC, catering to digital users everywhere.
Very soon, you will see many solutions coming on ONDC. These solutions will likely touch everyone who is striving to be digitally conversant.
How does ONDC plan to expand into new service sectors like hyperlocal deliveries and travel bookings?
Travel is now live. We have EaseMyTrip as one of the first brands launching on travel, offering hotels, flights, and trips.
Regarding services, we are gradually introducing them. It’s highly likely that many of these services will be available on the network in the next couple of weeks, if not sooner.
What is your take on ONDC’s approach to data ownership and privacy, especially in light of concerns surrounding big data in e-commerce?
Data is highly decentralised, which is the essence of ONDC and the network’s beauty. Your data isn’t concentrated in one place. Instead, it’s held by participants and only accessible to the transacting parties. Thus, privacy concerns primarily reside within the respective platforms. ONDC isn’t an intermediary and doesn’t influence transaction closure; it functions solely as a discoverer. When a buyer seeks something, ONDC facilitates an infrastructure for buyer apps to locate relevant sellers across the network, offering this service to the buyer. Subsequently, all transactions occur peer-to-peer. Essentially, ONDC doesn’t retain any data.
So, you don’t utilise the data to train your models as well?
We don’t have specific seller-level data, but we do adhere to an open data concept. This means we collect anonymised and fully masked data that holds economic value for the ecosystem, presented at an aggregate level with aggregate numbers. Therefore, we don’t possess information about individual sellers and their sales details.
Do you have any new collaborations coming up in the next few months?
Collaborations are a natural part of the ONDC concept, which functions like a network. Just as there are collaborations for the internet, people will naturally find ways to collaborate within ONDC. For instance, we recently announced a collaboration to bring OTT onto our network with Prasar Bharati and USO. The focus is on enhancing understanding of the ONDC ecosystem and offering these services, available on a single platform, to a diverse range of users on various platforms.
Collaborations within ONDC will continue to grow, but not all will result in signing an MOU with ONDC. Instead, many participants are entering agreements with Google or AWS, while ONDC plays a role by offering value-added services from these partners and fostering a broader ecosystem of solutions. Many collaborations are informal, focusing on cooperation between parties rather than formalised agreements on paper.
Do you envision ONDC becoming a unified network connecting the entire country for e-commerce in the next decade?
The entire concept of ONDC revolves around de-platforming and creating a network. Our perspective is that in the future, the entire globe will function as a unified e-commerce network. From any location, a user will have the capability to purchase items from a platform anywhere else in the world, provided it complies with the law.
I believe that within the next five years—rather than the ten years you mentioned—anything that can be categorised and meets the SQA standard will be transactable on ONDC. We envision this unfolding over the next couple of years. A decade seems too distant for us to predict accurately. However, the network will naturally build its own momentum. Just as it’s challenging to foresee the internet’s trajectory over the next decade, which has already faced limitations such as IP address depletion, this network effect will likely spread widely and take on a viral nature, expanding into unexpected territories.