OPEN NETWORK FOR DIGITAL COMMERCE: DEMOCRATIZING
MARKETPLACES CASE STUDY SOLUTION
e
pl
SYNOPSIS
m
Sa
Open Network for Digital Commerce (ONDC) was backed by the government in India as an innovative
solution to onboard numerous small-scale retailers and other businesses to participate in the digital
commerce ecosystem comprised primarily of e-commerce platforms, on-demand food delivery, and ride-
n
sharing platforms, through standard technology and processes, policies, and entrepreneurship. ONDC was
officially incorporated in December 2021 under the Department for Promotion of Industry and Internal
tio
Trade (DPIIT) as a non-profit section 8 company. As a set of protocols to foster open, unbundled, and
interoperable networks, ONDC enabled communication among various players or entities of an e-
commerce transaction. Functions of typical e-commerce such as discovery, matching, order fulfillment, or
lu
delivery were unbundled so that multiple players could execute each of these steps independently. ONDC
had onboarded seller-side apps (applications interacting with merchants), buyer-side apps (applications
So
interacting with consumers), logistics providers, and customers over the past two years, but the scale of
ONDC’s growth was limited compared to existing players. Also, there were considerable questions on
ONDC’s decisions pertaining to continual subsidy offerings for sellers and discounts to customers.
Some success was seen in areas of hyperlocal mobility through apps developed on ONDC such as Namma
Yatri and hyperlocal delivery of restaurant food, but order volume was an impending issue. Technology
service provider firms stepped forward to help sellers in building and managing services. In the latter half of
2023, Antler Innovation Private Limited ONDC was launched to fund, train, and onboard promising
participants in the network. ONDC now had to strategically address areas in which it needed to make
investments, whom to subsidize and charge, how to enable scaling, and formulate effective governing policies.
The Case Solution Starts From page 5
,OBJECTIVES
• Analyze the business model of platforms operating in the digital commerce economy
• Understand value creation, pricing strategies, and scaling choices of a technology driven platform
• Recommend strategies for operating an open, interoperable platform like ONDC
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pl
m
Sa
n
tio
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So
ASSIGNMENT QUESTIONS
1. Analyze ONDC’s business model using the business model canvas popularized by Osterwalder and
Pigneur2 as the theoretical framework.
2. What are the different ways of value creation in the ONDC platform?
3. What factors encourage or potentially discourage adoption of ONDC?
4. What strategies can be taken to speed up scalability of ONDC and strengthen its position in the market?
The Case Solution Starts From page 5
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pl
m
Sa
ANALYSIS
The protagonist of this case is the ONDC board, with the chief spokesperson being Thampy Koshy, managing
n
director and chief executive officer of ONDC. They are faced with challenges in making ONDC a success—
onboarding sellers and buyers, operating the platform, looking after governance, and most importantly, changing
tio
the mindset of people and business organizations to come together and adopt an open network as opposed to
closed platforms. Other platform participants like sellers need to decide whether to join ONDC or list their
products in existing marketplaces or carry a combination of both. For customers, using ONDC does not incur
lu
additional charges (at the time this case was written) so they would benefit from having access to a wider range
of sellers, more choices, and the possibility of transacting with nearby preferred mom-and-pop stores
So
1. Analyze ONDC’s business model using the business model canvas popularized by Osterwalder
and Pigneur as the theoretical framework.
A business model is a representation of how the key activities of a business are planned or carried about. It
defines the means by which the organization delivers value to customers, induces customers to pay for the
value, and eventually converts the payments into profit.4 It also provides data or other evidence that
demonstrates value creation and delivery of the business such as its value proposition, primary customers,
revenue streams, technologies, operations, and other management decisions. In the context of platforms,
network externalities (often referred to as network effects) play an important role in value creation since
they can lead a platform to become more valuable to each user as more users join, often giving a competitive
advantage. Broadly, network externalities are of two types. Direct network externalities are observed when
The Case Solution Starts From page 5
, EXHIBIT -1: BUSINESS MODEL CANVAS FOR ONDC
Key partners Key activities Value Customer Customer
• Buyer apps • Promoting open propositions relationships segments
• Seller apps networks for • Provide an • Customer • Diversified
• Buyer and exchange of goods unbundled and acquisition market,
seller apps and services interoperable • primarily
• • platform for • cater to
businesses
•
•
•
•
e
•
pl
•
m
•
Sa
Key resources • Channels
• Entrepreneurial • B2C, B2B
• distribution
• channels
n
•
tio
Cost structure Revenue streams
• • Platform commission
lu
• •
•
So
•
The Case Solution Starts From page 5
MARKETPLACES CASE STUDY SOLUTION
e
pl
SYNOPSIS
m
Sa
Open Network for Digital Commerce (ONDC) was backed by the government in India as an innovative
solution to onboard numerous small-scale retailers and other businesses to participate in the digital
commerce ecosystem comprised primarily of e-commerce platforms, on-demand food delivery, and ride-
n
sharing platforms, through standard technology and processes, policies, and entrepreneurship. ONDC was
officially incorporated in December 2021 under the Department for Promotion of Industry and Internal
tio
Trade (DPIIT) as a non-profit section 8 company. As a set of protocols to foster open, unbundled, and
interoperable networks, ONDC enabled communication among various players or entities of an e-
commerce transaction. Functions of typical e-commerce such as discovery, matching, order fulfillment, or
lu
delivery were unbundled so that multiple players could execute each of these steps independently. ONDC
had onboarded seller-side apps (applications interacting with merchants), buyer-side apps (applications
So
interacting with consumers), logistics providers, and customers over the past two years, but the scale of
ONDC’s growth was limited compared to existing players. Also, there were considerable questions on
ONDC’s decisions pertaining to continual subsidy offerings for sellers and discounts to customers.
Some success was seen in areas of hyperlocal mobility through apps developed on ONDC such as Namma
Yatri and hyperlocal delivery of restaurant food, but order volume was an impending issue. Technology
service provider firms stepped forward to help sellers in building and managing services. In the latter half of
2023, Antler Innovation Private Limited ONDC was launched to fund, train, and onboard promising
participants in the network. ONDC now had to strategically address areas in which it needed to make
investments, whom to subsidize and charge, how to enable scaling, and formulate effective governing policies.
The Case Solution Starts From page 5
,OBJECTIVES
• Analyze the business model of platforms operating in the digital commerce economy
• Understand value creation, pricing strategies, and scaling choices of a technology driven platform
• Recommend strategies for operating an open, interoperable platform like ONDC
e
pl
m
Sa
n
tio
lu
So
ASSIGNMENT QUESTIONS
1. Analyze ONDC’s business model using the business model canvas popularized by Osterwalder and
Pigneur2 as the theoretical framework.
2. What are the different ways of value creation in the ONDC platform?
3. What factors encourage or potentially discourage adoption of ONDC?
4. What strategies can be taken to speed up scalability of ONDC and strengthen its position in the market?
The Case Solution Starts From page 5
, e
pl
m
Sa
ANALYSIS
The protagonist of this case is the ONDC board, with the chief spokesperson being Thampy Koshy, managing
n
director and chief executive officer of ONDC. They are faced with challenges in making ONDC a success—
onboarding sellers and buyers, operating the platform, looking after governance, and most importantly, changing
tio
the mindset of people and business organizations to come together and adopt an open network as opposed to
closed platforms. Other platform participants like sellers need to decide whether to join ONDC or list their
products in existing marketplaces or carry a combination of both. For customers, using ONDC does not incur
lu
additional charges (at the time this case was written) so they would benefit from having access to a wider range
of sellers, more choices, and the possibility of transacting with nearby preferred mom-and-pop stores
So
1. Analyze ONDC’s business model using the business model canvas popularized by Osterwalder
and Pigneur as the theoretical framework.
A business model is a representation of how the key activities of a business are planned or carried about. It
defines the means by which the organization delivers value to customers, induces customers to pay for the
value, and eventually converts the payments into profit.4 It also provides data or other evidence that
demonstrates value creation and delivery of the business such as its value proposition, primary customers,
revenue streams, technologies, operations, and other management decisions. In the context of platforms,
network externalities (often referred to as network effects) play an important role in value creation since
they can lead a platform to become more valuable to each user as more users join, often giving a competitive
advantage. Broadly, network externalities are of two types. Direct network externalities are observed when
The Case Solution Starts From page 5
, EXHIBIT -1: BUSINESS MODEL CANVAS FOR ONDC
Key partners Key activities Value Customer Customer
• Buyer apps • Promoting open propositions relationships segments
• Seller apps networks for • Provide an • Customer • Diversified
• Buyer and exchange of goods unbundled and acquisition market,
seller apps and services interoperable • primarily
• • platform for • cater to
businesses
•
•
•
•
e
•
pl
•
m
•
Sa
Key resources • Channels
• Entrepreneurial • B2C, B2B
• distribution
• channels
n
•
tio
Cost structure Revenue streams
• • Platform commission
lu
• •
•
So
•
The Case Solution Starts From page 5
