ONDC: Why India’s Open Digital Bazaar Is Not Taking Off

It is a compelling idea, even carries an air of nobility: wrest back control of digital commerce from the few who dominate it and return it to the masses.

Led by the government, backed by various trusted public and private partners, and tried out by many who gravitated to its promise, the idea is seen as a potential successor in terms of impact to the Unified Payments Interface (UPI) in India’s digital infrastructure-building journey.

What UPI did for finance, this new thing would do for commerce.

But about three years into its journey, the Open Network for Digital Commerce (ONDC) is stuttering along. It got off to a slow start, then gained momentum, and is now experiencing a decline, specifically in retail, which threatens a crash-landing of the venture that aims to capitalise on a great Indian opportunity.

This opportunity can be appreciated with just a few figures: a nearly 150-crore population with over 90 crore internet users, roughly 40 crore of them in rural areas, and rising, with close to two-thirds of new online shoppers emerging from Tier-3 and smaller cities, all of them shopping for a wide variety of wants and needs.

In reality, only a tiny fraction is shopping online, despite having the means to do so — a smartphone with internet access.

India’s e-commerce penetration is estimated at merely 8 to 10 per cent of total retail transactions. This share is projected to rise to 14 per cent by 2028. Still not quite the share you would expect from an increasingly populous and smartphone-bearing India. The global average is 21 per cent. China’s share is as high as 47 to 52 per cent, that of the United Kingdom, South Korea, and Indonesia exceeds 30 per cent, and the United States sits somewhere around 20 per cent.

The buying and selling that does happen online in India largely occurs within the confines of a few platforms, often described as ‘walled gardens’ by critics of the platform-centric model. The platforms have significant power over both buyers and sellers in a number of respects, including price, which matters a great deal to the Indian consumer.

The e-commerce giants in India are said to extract high commissions from participating retailers. Estimates vary from 15 to 30 per cent. Some of this high charge is passed on to the consumer, leaving the rest to be absorbed by sellers.

With their vast troves of digital commerce data, the e-commerce companies learn about buyer preferences in all their nuances while also gaining key insights about sellers’ offerings. They arrange their premium digital real estate accordingly, aimed at driving higher sales rather than presenting a fair field for every kind of e-tailer to compete. After all, there is only a limited ‘featured’ space spotlighted on these platforms and too many retailers vying for it. The platforms essentially decide who goes where based on their interests, executed through algorithms.

Against this backdrop, how much of a chance does the smaller retail player, the kirana store, the traditional artisan, or the neighbourhood baker really have to stand out and succeed as an independent commercial entity?

India has chosen to walk the technological innovation route, buoyed perhaps by prior digital infrastructure successes like Aadhaar, UPI, and DigiLocker. In their footsteps comes ONDC, promising to provide a level playing field for all who engage in business in India.

The idea goes something like this: have a network where commissions are nil to minimal. Perhaps 5 to 10 per cent. So that deep pockets are not a point of distinction between success and failure, where every single player stands independently and confidently as an equal on their own two feet, and where the buyer decides on their own accord what to buy and from whom to buy it, uninfluenced by algorithms serving particular interests and driving (or inducing? forcing?) purchase decisions.

Notably, ONDC’s mandate is not limited to the buying and selling of biscuits, jackets, smartphones, and food alone.

The idea is to have the entire gamut of products and services online, financial services like loans and mutual funds for anyone, from a single individual all the way up to micro, small, and medium enterprises (MSMEs) and big businesses; access to mobility services across the entire spectrum: autorickshaws, cabs, buses, trains, and flights; work opportunities for job seekers; logistics solutions for businesses; a space to grow for farmer producer organisations, self-help groups, and social enterprises; and so on.

Impressive, is it not?

The allure of such an open network is visible, once again, in the numbers. More than 1.65 lakh retail sellers have jumped on this wagon since launch, and buyers from more than 850 districts of India have placed over 20 crore orders between January 2023 and June 2025. While the network took about 20 months from January 2023 to August 2024 to clock its first 10 crore transactions, the next 10 crore came in just six months, in March 2025.

All good. Except that underneath this aggregated data lie trends that belie a troubling story.

Powered by financial incentives for participants, which were then passed on to consumers, who in turn paid less for products and services, ONDC was finding ever-wider acceptance. But towards the end of last year, with subsidies reportedly reducing from up to Rs 3 crore monthly to Rs 30 lakh for each network partner, retail transactions started to contract, while mobility started to take the wheel.

As per data published by ONDC, the total retail orders placed on the network in May 2025 are at levels witnessed exactly a year ago, in the ballpark of 40 lakh, after October 2024 witnessed a peak of 65 lakh orders. The June 2025 figure has dipped even below the April 2024 figure.

Karnataka among states and Bengaluru Urban among districts were quick to try out ONDC, and accounted for a large share of orders on the network. They are now charting a similar trajectory in month-on-month orders as the nation. Bengaluru Urban placed 168,371 in May 2025, then hit a peak of 1,201,826 in October 2024, and is now down to 399,786, as of May 2025. Its June figure is 293,171.

Clearly, the initiative is losing steam, and this rise and fall has occurred over the span of just one year.

That ONDC is in trouble and its technology in need of a revisit for revision is reflected in the admission by an official of the Commerce Ministry’s Department for Promotion of Industry and Internal Trade (DPIIT), which is the body spearheading the ONDC effort, speaking at an event in June: “If there’s no change in protocol with evolving circumstances, it’s a recipe for disaster.” He acknowledged ONDC had issues, ‘just like a small kid would have,’ but said they were working on solutions.

ONDC is also said to be mulling a reinstatement of subsidy to the tune of Rs 100-150 crore for its food delivery players like Magicpin, Paytm, Ola Consumer, and Waayu. Reportedly, this filip could translate to about 80 to 100 million food orders fulfilled by the network.

The experiences shared by people connected to ONDC — the buyer apps, seller apps, technology partners, and consumers — reveal problems littered across the entire retail chain.

Among the more well-publicised struggles is the inconsistent user experience on offer across the network. Much digital ink has been spilled across traditional and social media and internet forums discussing this problem in detail.

“If you have used the network, you would have faced a lot of issues when it comes to UI (user interface), UX (user interface), the experience, and the customer support. There is virtually non-existent customer support when it comes to ONDC,” Abhishek Yadav, a budding entrepreneur who also publishes a biweekly business newsletter, tells Swarajya.

The fact is that e-commerce is a wild beast with many moving parts. A buyer’s journey on an app goes from marketing, through which they might be nudged to buy a product, to product search and discovery to selection to finally placing an order. In the well-established platforms, there is a smooth flow to this sequence of events leading up to a purchase.

In its simplest form, think of buying something at the neighbourhood grocery store. A person scans the store in search of one or more products, gets handed a bag containing the products, makes the payment, and off they go.

The digital marketplaces have largely maintained this ease of purchase, though with the clinching benefit of not having to leave one’s house to buy anything. This ease of product discovery, selection, and purchase has to come through on ONDC if it has to pick up the baton and make the run forward.

Unfortunately, the network has been found lacking in this regard. That’s because there are numerous platforms housed within the network, and depending on one’s choice of platform, their experience could vary widely.

The process sometimes breaks down right at the start. A buyer shopping for smartphones on an ONDC app might click on the ‘smartphones’ category to browse phones but be shown a collection of curtains instead.

Say this step worked out well and the buyer is ready to make the purchase. Here, whereas an established platform, whether your local supermarket or the digital platform, will cover the entire journey from product search to delivery, ONDC splits up these tasks and turns them into microservices, distributing accountability for the fulfilment of the order across multiple players.

“If you order something on ONDC, it shows that the order has been placed. But for six, seven days, the order is nowhere to be seen. When you enquire about it, you do not get proper customer support,” Yadav says. Such slow and uncertain delivery times cannot hold up against the ever-shortening delivery times offered by the likes of ‘quick commerce’ players Zepto, Zomato’s Blinkit, and Swiggy Instamart.

The hypothesis that quick commerce ate ONDC’s lunch is well accepted. “Initially e-commerce was driven by players like Amazon and Flipkart. But then quick commerce came into the picture, and that’s where I saw ONDC losing momentum, especially on delivery times,” says Jignesh Joshi, chairman and managing director of 99 Partners Digicom, which provides services to small retail players who want to go online and build their e-commerce business. On ONDC, his company is enrolled as a technical partner.

Joshi also pointed out cash on delivery as a major bottleneck on the network. “Suppose you've ordered one item on cash on delivery and the product is not delivered, the vendor suffers, and the customer also suffers,” he says, adding that responses are authentic but not prompt on ONDC. In the absence of proper systems, vendors themselves are left frustrated by the back-and-forth over order fulfilment issues.

Say a buyer got the t-shirt they purchased but not in the right size or colour, or perhaps they misjudged the size or colour and now want a refund or replacement. On established platforms, generally within a handful of taps on the mobile screen, they find themselves on a dedicated chat window, getting prompt support from a combination of a bot and a real person.

Since the e-commerce bigwigs are generally well funded by private capital, they tend not to fuss about refunds and replacements, and are only too glad to process them immediately in the long-term interest of customer experience and retention.

How ONDC operates, however, is different. Since there’s room for everyone on the network, from a well-equipped powerhouse retailer down to a tiny store lacking resources and digital skills, the buyer in need of store assistance could be interacting with anyone or anything from an advanced chatbot to the humble store owner trying to juggle their store operations with a tiny (or no) staff and their mobile phone, trying to respond to buyers’ multiple queries on WhatsApp at a busy hour, with little leeway to hand out refunds or replacements. Even the tiniest margins matter to the small e-tailer.

The results of a survey carried out by LocalCircles, a community platform and citizen pulse aggregator, and published in May 2025, reflect the widespread dissatisfaction with the user experience on ONDC.

Fifty-four per cent of the 15,364 respondents in response to a question about the network’s user experience said it was cumbersome in comparison to other e-commerce platforms. That’s a little over one in two people. A sizable 35 per cent, or a little over one-third, of respondents found customer service to be lacking compared to the established players. (The results are a mixed bag, with people appreciating the value for money on offer on ONDC.)

With rival platforms like Amazon and Flipkart offering much better, particularly smooth and predictable, user experience, there is little margin for error for ONDC, particularly if it wants to whisk users away from the well-established players like Amazon, Flipkart, Swiggy, and Zomato. A May 2022 Jefferies report, soon after the launch of ONDC, had identified and noted the difficulty in switching customers from incumbents offering a great service as one of three challenges facing the open network. 

“The vision was very bold: to connect all the e-commerce platforms. But the execution is where it is failing. They could have executed this in a much better way, like they did with BHIM UPI. UPI is a major success. If only ONDC had been executed properly, it would have changed the face of e-commerce forever in India,” says Yadav, who is building, among other things, MaidZo—customised maid services on demand—with pilot programmes initiated in Bengaluru, Karnataka.

Although ONDC has been chasing UPI’s success, the reality is that implementing ONDC is a complex affair, unlike UPI, as noted by the Jefferies report too. This is because e-commerce has many moving parts. A network or platform’s challenge is to ensure users glide through the various steps of the process.

“The customer is there to buy products, and the seller is there to sell products. Now in between them, you can’t bring in technicalities. If you raise your collar in the middle, then those two can meet in other ways. We (ONDC) are not the only option available to them. This thing they are not understanding within the ONDC network,” an entrepreneur who runs a buyer application on ONDC and does not want to be named tells Swarajya.

In a serious indictment of the network’s failings, this entrepreneur wasn’t able to get their own personal order fulfilled from the buyer application they run on ONDC. “I placed an order of my own. The seller says it didn’t come into his system. It’s been one month, and he’s still trying to figure out why it didn’t come into his system,” they say.

The entrepreneur desperately sought alternative ways to get their product delivered, but apparently there weren’t any. “He said no, you send it through the system itself. Only then can I process the order,” effectively asking for the order to be placed again and with the hope that it enters the system this time around.

Helpless, this entrepreneur switched over from his own store on ONDC to Amazon to make the purchase. If this is the case with an ONDC store owner, what then of ordinary individuals like us?

“My point is very simple,” says this entrepreneur. “If even in two months I can’t bring in 100 orders, and that’s when I don’t have any problem in putting my money in marketing and the customer doesn’t have any problem in placing an order, then that means there is a problem. Let’s accept the fault and find a solution. But no one is doing that.”

It doesn’t help that the network is still unknown or unfamiliar to a large part of the Indian population. This could be down to the woefully inadequate marketing of ONDC. The network’s Rs 92 crore spend on incentives/marketing interventions pales in comparison to Zomato’s marketing and advertising spend of Rs 1,972 crore in 2024-25 alone. The more influential ONDC partner platforms barely carry any network ads. Nor do restaurants nudge users to place food orders via ONDC.

“The way to influence the customer is not to say, ‘Come, join the network; it’s like UPI.’ It is to market ONDC like how Amazon, Flipkart, or any standalone store is doing,” the entrepreneur explains, noting that handing over marketing to players like Paytm, Pincode, Magicpin, and so on is problematic because they all have a “conflict of interest.”

While many laud the idea of ONDC and blame the implementation challenges for its failings, Shailendra Awasthi, a technology (tech) entrepreneur with one and a half decades of experience in the retail tech and BFSI (banking, financial services, and insurance) domains, is probably among the few who never saw ONDC working out, even in principle.

Awasthi finds it amusing that the biggest food delivery player on ONDC is Magicpin, which is backed by Zomato, the one half of the duopoly from which ONDC aims to free the Indian customer. All Magicpin food deliveries, he says, are executed through Zomato delivery partners.

According to this Mumbai-based entrepreneur, the commission capping on ONDC, with the goal of offering lower prices on the network and thereby attracting customers, is difficult to sustain. Innovation especially suffers as a result.

“You are restricting people’s thought process and innovation. Because you say you can only take, say, 7-8 per cent as margin on the network. But what do I do if the cost of my innovation itself is 25 per cent?” he says, arguing that businesses should be allowed to innovate freely and bring new things to the table. And if the buyer benefits from the innovation, they would be glad to shell out more money too.

Interestingly, Awasthi had launched a retail tech app called Locoff in 2020. It was a place where offline retail stores in India could find a home online. A buyer on Locoff could look up a product on the platform and either place an order for it there or visit the closest store that sold it and make a purchase there.

Instead of taking the commission route, Awasthi opted for the subscription model. The “platform fee” was Rs 3,000 for three months for unlimited orders, and Rs 9,000 if paid upfront for the whole year. Locoff assisted retail stores with technology and delivery, the latter through partnerships with Grab, Borzo, and Dunzo.

At one point, Locoff had 43,000 retailers from 15 cities on its platform. “By August 2023, we had actually done a revenue of Rs 1 crore,” Aswathi says. But Locoff failed to raise funds during the funding winter of the early 2020s. The platform shut down in March 2024.

“We were not charging anything from the customer, and in fact, food was as cheap as 50 per cent compared to the Swiggys and Zomatoes of the world. Still, restaurants were not keen to come onto my platform. Similarly, customers were not keen to come onto my platform. They were so habituated to the Swiggys and Zomatoes of the world. It’s because that trust has been built over a period of time,” Awasthi says.

Even after Locoff would pull off food deliveries for some restaurants in adverse weather conditions—the heavy rains of Mumbai—when Swiggy and Zomato would halt their delivery services, everyone would just move on from Locoff and return to Swiggy and Zomato as soon as they opened up after the weather cleared.

Against this entrenched habituation, ONDC is facing a steep uphill climb. “A lot of effort was put into pitching it as the next UPI, but ONDC has been a flop show from day one,” Awasthi says, perhaps judging it too harshly.

What about Namma Yatri then, ONDC’s biggest success? It has close to 11 crore completed trips to its credit, with more than a crore registered users and over 6 lakh autorickshaw drivers who have made earnings of close to Rs 1,790 crore.

“The Namma Yatri app has been developed as a solution to the problem faced by the people, not in competition with Ola or Uber. Because the local guys were facing problems where Ola and Uber were coming and driving things,” he says, drawing a contrast between Namma Yatri’s and ONDC’s raison d'etre. “No one came out on the street asking the government to shut down Amazon or Flipkart,” he notes.

Besides, Namma Yatri is for mobility, not retail. And retail is driving whatever success ONDC is enjoying currently. Even as retail’s share of the total transactions drops on the network, mobility’s share is rising, thanks to offerings like Namma Yatri.

However, the entrepreneur who runs a buyer app on ONDC and does not want to be named says mobility on ONDC still has a long way to go. “Where is this mobility currently? Two, three cities? If mobility has got solved, why is it not being replicated? When Snapdeal got a $100 million funding, 100 Snapdeals stood up. That’s not the case with mobility on ONDC,” the store owner says.

In stark contrast to Awasthi, Sunil Trisal, who works on onboarding brands both offline and online, is a big believer in ONDC and urges patience with the effort.

“E-commerce in India isn’t so easy. When you see e-commerce and when you see the numbers game, the customer acquisition cost is very high. Everybody, right from the biggest players, are bleeding. They are all burning cash. They took so many years to build the behaviour of the Indian consumer to buy online. There is a huge marketing spend, deep discounting which has gone into this. And that’s the difference. ONDC is not a company which has profits to make. It is there for a cause,” he says.

Trisal advises looking for the network’s impact not in gross numbers but in the actual communities it has benefited. “See Namma Yatri. It’s a beautiful structure. The auto drivers are driving Namma Yatri. Look at their empowerment. The real impact they will tell you,” says Trisal, who has helped onboard traditional saree sellers from Banaras and potters from Khurja, Uttar Pradesh, on to ONDC.

Trisal’s agency, Wansa, is a digital enablement agency. They discover retail players who want to move online, educate them about this journey, and help them get on board. Once they are onboarded, Wansa helps educate these new entrants about pricing, margins, returns, packaging, and so on. The typical training period is about two to three months.

Since ONDC is trying to build up social enterprises, says Trisal, they will naturally take things slow and keep a tight lease on finances. “Say I am an artisan of Kancheepuram sarees. I am a traditional saree seller. I will not think of burning cash. I will not degrade my margin. I will be cautious. So this will take time because the seller is still adapting,” he notes.

Just as the traditional seller will be cautious, so will the government, and for good reason. “Making consumers grow orders on the platform is the easier job in India. We are prompted through discounts. That’s very clear. With categories like FMCG (fast-moving consumer goods), you have to be cautious because you’re dealing with around over 14 lakh kirana stores. If you want to employ deep discounts and price products less than them, you’re destabilising the whole brick-and-mortar space. You are then trying to create a different kind of a conflict in the channel. So the government is conscious and cautious. There are implications which they know and I as a consumer strategist know,” he says.

Regarding the fall in the retail figures, Trisal makes the point that “at least those numbers happened.” He makes the point that sellers who never even had any online presence in the first place are now online, with the entire country as a market for their products, and they are starting to sell.

“There are some sellers who are doing 20 orders a day. But at least they are doing 20 orders a day! For them, 20 orders a day is like bhagwan (god). They could not even sell 20 orders earlier,” he explains. “We have to be patient,” he reiterates, expressing “100 per cent” confidence that things will improve on ONDC, even if gradually.

Just like Trisal, Deepak Ravindran, the founder of KiranaPro, is hugely optimistic about ONDC. His venture, the purchase of groceries from neighbourhood stores through voice input in 35 languages, blew up on the network pretty fast. “We have been playing around with ONDC since December last year when we launched the company. We went live in the first week of January. We were number 3 in traffic on ONDC when we launched,” he tells Swarajya.

They are now in a rebuilding phase. They rebuilt the code a couple of weeks ago and are live in Bengaluru for now, doing about 200 orders a day.

Despite their swift success on the open network, they have had their fair share of challenges to overcome. “We figured out early on that ONDC is not scalable across all cities. We had our own challenges. We even attempted launching in Kashmir during the war situation. (And that’s when we got hacked.) And what happened is that during that period of time, we also learnt that logistics need to be sorted out,” he said.

KiranaPro kicked off from Thrissur, Kerala. “There is no ONDC there. So we had to onboard partners to ONDC, even though we don’t have a seller app. We are a buyer app, and we don’t have a seller app. So now we are building a seller app. Because it’s hard to maintain this otherwise; all these merchant companies we are working with are poor, honestly,” says Ravindran, who has nearly 20 years of entrepreneurial experience behind him, with KiranaPro being his fourth venture.

But Ravindran is happy to do the heavy lifting. He believes it will be folks like him who will bring success to ONDC. “See, the framework’s great. It’s like Linux, but it needs torchbearers like us. If we succeed, ONDC will be a success. And that’s what we are here to prove. Give us six months. We’ll show you the power of ONDC,” he says. By 2027, Ravindran wants to take KiranaPro public, with a turnover of about a “billion dollars.”

Like Trisal, Ravindran urges patience: “I am not saying that tomorrow we will be successful. For us, it will take four or five years. And we are not here to sell and make quick cash. I am here for the long run. I will take this public. If Paytm did that with UPI in three years, we will do that with ONDC in two years.”

As for the retail dip, Ravindran puts that down to the exit of ONDC’s founding member and chief executive officer, Koshy Thampy, who stepped down earlier this year. “The soul of the company is gone. Koshy sir was a great leader. He set up a lot of foundational things. It was a premature exit, personally. Because he was like the fatherly figure for the company,” he says.

Two other senior executives exited ONDC just before Koshy’s departure — chief business officer Shireesh Joshi and non-executive chairman R S Sharma. The high-profile exits in quick succession weren’t a good look for ONDC, even as the network was struggling to fulfil its promise.

“Many of the problems are stemming not from the ONDC organisation, or its employees, but from within the pool of network participants. Either they lack focus, or they have lost hope here (on ONDC), or they are in the process of shutting down. There is clear frustration. And the network can’t do much about that now. It is the individual organisations’ problems, but it’s hurting the network,” says this store owner.

“The entire purpose of pilot programmes is to get some key insights. I am hoping that they would have got their insights, and they might be planning to roll out a better version of the network, like a beta version,” says Yadav, who, like Trisal, Ravindran, and even Joshi, is staying optimistic about the network’s future despite its current shortcomings.

"Opportunity is what I’m seeing with ONDC. There’s government push for MSMEs. And a wide scope is there. In terms of business and profitability, ONDC is far, far better than any other platform. If ONDC overcomes its problems, it might reach 200-300 per cent wider reach," Joshi says.

Even McKinsey and Company believes things are going to get bigger and better with ONDC. According to their estimate, the value of digital commerce through ONDC could rise fivefold from between $60 billion and $70 billion in 2022 to between $320 billion and $340 billion by 2030.

Awasthi, however, doesn’t see ONDC turning a corner, not with its existing commission model and the severely limited extent of cash burn possible from the government’s side — it’s public money after all — to grow ONDC into some kind of a raging success. It could work, he adds, if it became a fair game for everyone, Swiggy, Zomato, Amazon, and Flipkart included.

The Indian consumer’s ever-rising appetite is not going to be fulfilled by any one player in the future, says the anonymous entrepreneur. “Some customers say they will only buy from Amazon; they will not trust any website. Some are adventurous. Some say even if the price is higher, they’ll still buy from quick commerce. Some say they’ll buy only if they get discounts. Some say they are okay to wait 10 days. Some say they can’t wait 10 minutes.”

Amidst all the variables, however, what matters is whether a good product is offered at a good price and within a good — quick enough — delivery time. Deliver on these fronts, and the consumer will give you a fair shot. Fail on these counts, and success will be hard to come by.