The world has already ushered in a new paradigm of interoperable open network concepts with introduction of open protocols such as HTTP and SMTP, however, the e-commerce ecosystem still operates in closed, non-interoperable platforms, resulting in significant concentration of data and services. This has led to market inefficiencies, amalgamation of power in the hands of a few players in the space, thereby creating large entry barriers for medium and small-scale players to participate in the digital commerce ecosystem.
As a side effect of such inefficiencies, the consumers are also being subject to limited choices of products/sellers/services where options are limited to only the enabled categories and onboarded sellers and services. This requires buyers to use different apps for buying different products and services, being restricted for delivery time and cost only to the enabled logistics, and being dependent on the platforms for what is visible. India is a vast and diverse country and no platform has been able to do justice to this diversity. No surprise e-commerce penetration is at a mere 6%.
Open Protocol responds to these challenges by manifesting open networks based on the principles of interoperability and decentralisation. Open Protocol consists of open API specifications to enable seamless communication between consumers and providers across diverse platforms. These specifications provide common grammar for communication between two distinct platforms and create a decentralised, yet interoperable framework.
The commerce protocol and infrastructure that make up ONDC Network consist of two layers.
A. Base layer Protocol developed by Beckn that allows four phases to be completed:
- Fulfilment and
- Post-fulfilment phase.
B. Network layer that allows completion of
- Category level exchange (called API contracts) of information
- Handling of services like Grievance Management, Financial Settlements
- Resources and network infrastructure like Open Data, Network Policies and Registry, Gateway
The schematics below provide more details on the ONDC Network structure. In the follow up blog we will explain some of those components in greater detail.