E-commerce
October 1, 2026
Wondering how ONDC is transforming online commerce in India? This open network, launched in 2021, allows small merchants to sell online without depending on a single marketplace. For an e-commerce merchant, understanding this dynamic is essential to anticipate the developments of the Indian market and the opportunities to come.
ONDC does not replace classic marketplaces like Amazon or Flipkart. It creates an interconnected ecosystem where applications, payments, and logistics communicate via open standards. Selling fees are significantly lower, which attracts many local and international brands.
So, how is ONDC transforming online commerce in India? On the agenda:
What is ONDC and why was it created?
How does this open network actually work?
What are the fees and benefits for sellers?
Which product categories are growing the fastest?
How does Qstomy help to take advantage of these developments?
Let's go.
Summary
What is ONDC and why was it created?
ONDC, or Open Network for Digital Commerce, is an open-source commerce framework launched in 2021 by the Indian government. Its goal is to help millions of small physical retailers, known as kiranas, establish an online presence. These neighborhood stores represent about 75% of consumer goods sales in India.
Unlike marketplaces like Amazon India or Flipkart, ONDC does not centralize transactions. Instead, it connects applications, payment providers, and logistics companies through open standards. This approach allows retailers to sell online without being locked into a single ecosystem.
The Indian government thus seeks to encourage digital transformation while protecting small local businesses. It is a direct response to the challenges posed by the dominance of large foreign platforms. By promoting interoperability, ONDC aims to democratize access to e-commerce and stimulate competition, benefiting both consumers and sellers.
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How does the ONDC network actually work?
The ONDC network is based on a decentralized architecture. On it, applications are separate for sellers and buyers. Seller applications allow merchants to list their products, manage their inventory, and process orders. Among the most widely used are Mystore, CostBo, and GoFrugal.
Buyer applications, such as Paytm, Bajaj Finserve, and Magicpin, are used by consumers to browse and purchase. Interoperability is the key: a buyer on one application can order products from a seller on another application. Products are immediately exposed to the entire ecosystem upon registration.
This interconnection is reminiscent of how UPI, India's unified payment system, operates, which has seen massive success. ONDC draws inspiration from this model to create an open commercial network accessible to everyone. This architecture also fosters innovation, as new applications can join the network and offer differentiated services.
What are the selling fees on ONDC?
Selling fees on ONDC vary between 3% and 10%, which is significantly lower than commissions on traditional marketplaces, which can reach 18% to 40%. This difference is a major argument for merchants looking to reduce their costs.
In addition to these reduced fees, sellers maintain control over their online presence. The network's algorithm is transparent, search results sorting is non-discriminatory, and ratings are portable. This means a merchant can switch seller applications without losing their reputation.
For a brand wishing to test the Indian market, ONDC represents an attractive option. The barriers to entry are lower and the flexibility is greater than on traditional platforms. Furthermore, the transparency of fees and rules facilitates budget planning and strategic decision-making.
Which product categories are growing the fastest?
The ONDC network covers a wide range of sectors: retail, logistics services, restaurants, and hotels. However, not all categories are progressing at the same pace. Grocery, meal delivery, and home and kitchen items are developing more rapidly.
This growth is explained by the high frequency of orders in these segments. Consumers buy food and household products regularly, which generates a significant volume of transactions. In comparison, fashion, pharmaceuticals, and hospitality are progressing more slowly.
For merchants, this means that product strategies must be adapted based on local demand. Categories with a high purchase frequency offer better potential for rapid growth on this network. It is therefore wise to monitor trends and adjust your offering accordingly.
Which international brands are already present on ONDC?
Several major international brands have already joined the ONDC. These include Red Bull, Unilever, Nestle, PepsiCo, Procter & Gamble, L’Oreal, and Johnson & Johnson. Their presence validates the network's appeal for global players.
Many international food brands are also using quick-commerce platforms like Blinkit, Swiggy Instamart, and Zepto to access the ONDC at minimal cost. This strategy allows them to reach Indian consumers without investing heavily in local infrastructure.
For foreign brands wishing to enter the Indian market, the ONDC offers an attractive gateway. However, it is essential to fully understand local regulations and available distribution options before launching. Collaborating with local partners can also facilitate this transition.
How are kiranas using ONDC to digitalize themselves?
Kiranas, the small neighborhood shops that dominate consumer goods sales in India, are at the heart of ONDC's strategy. The network allows them to establish an online presence without depending on a single marketplace. This enables them to reach new customers while maintaining their physical business.
Concretely, a kirana can register on a seller application, list its products, and start receiving orders from buyers on different applications. The reduced fees and transparency of the algorithm make this transition more accessible than on traditional platforms.
This progressive digitalization is a major challenge for the Indian economy. It allows for the modernization of retail trade while preserving the local economic fabric, a delicate balance that ONDC is trying to find. Furthermore, it offers kiranas new opportunities for growth and customer loyalty.
What are the benefits for local brands?
For local Indian brands, the ONDC represents an additional distribution channel rather than a replacement for existing marketplaces. This approach allows them to diversify their sales channels and reduce their dependence on a single platform.
Lower selling fees, between 3% and 10%, improve sellers' margins. Algorithm transparency and non-discriminatory sorting offer fairer visibility, even for small brands that do not have the marketing budgets of large groups.
The portability of ratings is another key benefit. A seller switching apps retains their reputation and history, which encourages competition between apps and benefits merchants. This flexibility is a major asset for growing brands.
What regulatory challenges do foreign brands face?
Foreign brands wishing to enter the Indian market must first understand the regulatory challenges specific to the country. India has put in place laws that limit the access of foreign sellers to traditional marketplaces, a protective measure for local businesses.
The ONDC offers an attractive alternative for foreign companies that comply with local rules. They can access the seller application ecosystem without going through traditional channels. This opens up opportunities for brands looking to test the Indian market.
Selling options are multiple: marketplaces, distributors, D2C sites, or cross-border sales. Each option has its advantages and constraints, and the choice depends on the brand's global strategy and its resources. A thorough analysis is therefore necessary before committing.
How does ONDC compare to traditional marketplaces?
The fundamental difference between ONDC and classic marketplaces lies in the architecture. Amazon India and Flipkart centralize transactions on their platform, while ONDC connects different applications via open standards. This decentralized approach changes the game for sellers.
Fees are significantly lower on ONDC: 3% to 10% compared to 18% to 40% on marketplaces. Sellers also retain more control over their presence and approach, thanks to a transparent algorithm and portable ratings.
However, ONDC has not yet reached the level of adoption of UPI, the unified payment system. Marketplaces retain a significant audience and advanced features that the open network does not yet fully offer. It is therefore important to weigh the pros and cons of each option.
What opportunities are there for D2C brands on ONDC?
For D2C brands, ONDC represents an opportunity to reach a wide audience without the high costs of marketplaces. Reduced fees and algorithm transparency allow brands to focus on the quality of their products and service.
The network is particularly suited for high-frequency purchase categories such as grocery, food delivery, and home goods. Brands operating in these sectors can benefit from rapid growth due to the volume of transactions generated.
To succeed on ONDC, it is essential to fully understand the specificities of the Indian market and adapt to local expectations. A solid e-commerce strategy remains indispensable to leverage this emerging channel. Support from experts can also be an asset.
How does Qstomy help to leverage these developments?
Qstomy, the Shopify AI agent, assists merchants in managing their online store. It guides customers toward purchasing through personalized recommendations, upsell and cross-sell suggestions, and optimized cart management. These features are invaluable for maximizing conversion in a competitive market like India.
The agent also handles package tracking and after-sales service, two essential aspects for building customer loyalty in a high-expectation environment. By automating these tasks, Qstomy frees up time for merchants to focus on their growth strategy.
With more than 100 merchants supported, Qstomy brings concrete expertise to optimize e-commerce performance. Whether you sell on a marketplace or on your own site, the AI agent adapts to your needs and improves the customer experience. It helps you stay competitive in an ever-evolving landscape.
What is the checklist before entering the Indian market?
Before launching into the Indian market, here is an essential checklist to maximize your chances of success.
In brief
Understand the regulation: local laws limit foreign sellers' access to marketplaces.
Choose your channel: marketplace, distributor, D2C site, or cross-border sales.
Evaluate the ONDC: reduced fees, transparency, but still limited adoption.
Adapt your offer: prioritize categories with high purchase frequency.
FAQ
Is the ONDC accessible to foreign brands? Yes, provided they comply with local rules and use seller applications.
What are the fees on the ONDC? They vary between 3% and 10%, much lower than the 18% to 40% of traditional marketplaces.
Which categories are growing the fastest? Grocery, meal delivery, and home & kitchen items.
To go further: What e-commerce strategy for a small brand under $100,000/month? - Qstomy, Why use social media for e-commerce customer service? - Qstomy, What e-commerce marketing strategy without an ad budget? - Qstomy, How to create a payment gateway for an e-commerce site? - Qstomy, How to drive traffic to an online store (SEO, ads, social media)? - Qstomy, Training an e-commerce chatbot with Shopify: using the right data without creating wrong answers - Qstomy, Which e-commerce platform to choose for a small business? - Qstomy.
Enzo
October 1, 2026
