ONDC’s Growing Network: Is It Really Helping Small Businesses?

India’s Open Network for Digital Commerce (ONDC) launched in 2021‑22 with a bold goal: break the grip of big e‑commerce platforms and give small businesses a fair shot online. Its open‑protocol setup lets sellers appear across buyer apps like Paytm and Snapdeal, pick logistics options, and manage payments—all without getting locked into a single platform. The idea is to decentralize digital commerce and slash the fees paid to marketplaces. Some early data looks promising—but how well is it working for small businesses?

✔ What’s Working

🔻 Lower Costs and Well‑Priced Discovery

Traditional platforms charge sellers hefty commissions (18‑40 percent), plus preferences for paid listings. ONDC instead charges around 3 percent buyer‑side fees, while seller app commissions vary but are usually far lower and negotiable invypro.com+4SME Street+4The Law Reporters+4. That cut in costs alone opens up possibilities for small vendors.

Small businesses are also getting visibility in new markets without ads, since ONDC lets them list across multiple buyer apps. A textile seller in Jabalpur reported 25 percent more monthly sales after joining ONDC, and a grocery store in Mysuru started delivering to four neighboring districts—thanks to the network’s wider reach The Law Reporters.

🚀 Fast Growth for MSMEs

ONDC claims over 7 lakh sellers onboarded by early 2025, with more than 70 percent from Tier II/III cities. Transactions have crossed 150 million total, covering 1,100+ towns and cities The Statesman+5Munsif Daily+5Finance Saathi+5. MSMEs in smaller cities report average revenue boosts of 20 percent post‑onboarding, with some seeing jump of 15‑30 percent in just three months The Times of India+14The Law Reporters+14The Statesman+14.

Programs like ONDC‑Meta’s digital upskill drive aim to train 5 lakh MSMEs on WhatsApp and business apps, helping small stores get online even without tech support Wikipedia+2The Statesman+2Munsif Daily+2. Tools like DigiReady certification help non‑technical sellers become e‑commerce ready at their own pace Finance Saathi+5Wikipedia+5The Law Reporters+5.

🌾 Boosting Rural & Farmer Participation

A number of FPOs (farmer‑producer organizations) now sell through ONDC—over 5,000 were onboarded by early 2024, serving 35 lakh farmers with value‑added products across India The Statesman+4Wikipedia+4Munsif Daily+4. That gives producers direct market access and better margins than conventional channels.

The eSamudaay initiative in small towns offers “business‑in‑a‑box” tools powered by ONDC and India Stack. It’s supporting 2,500+ micro‑entrepreneurs across eight towns, helping vendors from street food sellers to pharmacies digitize and earn credit via UPI trails The Times of IndiaFinancial Times+1The Law Reporters+1.

⚠️ What’s Still a Problem

🧩 Poor User Experience, Customer Frustrations

Despite price savings, many users have a bad experience. A May 2025 Local Circles survey found only 15 percent of e‑commerce users tried ONDC. 54 percent reported poor UX and 35 percent cited bad customer service Wikipedia+3The Pioneer+3The Law Reporters+3. Reddit users detail delivery failures, missing refunds, unclear support channels, and delayed orders—making the small savings not worth the hassle RedditReddit.

📉 Declining Order Volume in Key Categories

Early expectations were high, but order volumes dipped. Retail orders dropped from 6.5 million in Oct 2024 to 4.6 million by early 2025, shrinking retail’s share of total orders from 47 percent to 29 percent The Pioneer. And food delivery faces headwinds—ONDC is considering re‑introducing ~₹100‑150 crore in subsidies to revive interest in that sector The Economic Times+1The Times of India+1.

🏗️ Logistics, Compliance and Scaling Hurdles

ONDC doesn’t run its own delivery. Sellers must integrate with logistics providers themselves—a challenge for businesses that lack supply chain experience or scale The Law Reporters+9SME Street+9Shopaver+9. Dispute resolution is also fragmented—buyers and sellers go through their own apps, and there’s no unified grievance process hindustantimes.com.

Data privacy and counterfeit issues have legal experts worried. ONDC’s open network makes IP enforcement harder and raises questions on algorithmic transparency. Existing rules under the Consumer Protection Act and the upcoming Digital Personal Data Protection Act may not fully cover these gaps hindustantimes.com+1The Law Reporters+1.

And while millions of sellers have signed up, digital literacy remains low—many offline businesses still struggle to manage a digital storefront, especially without handholding or onboarding help SME Street.

🚦 Verdict: Good Move in the Works, but Bumps Ahead

ONDC is definitely doing something useful: cutting gatekeeping fees, opening new markets, enabling financial inclusion, and giving small businesses options beyond Flipkart or Amazon. MSMEs in smaller towns are seeing real revenue upticks and new visibility.

But execution matters. If orders decline, customer frustration mounts, and tech onboarding stays patchy, that early promise risks fading. Subsidies help short‑term, but long‑term growth depends on strong user experience, reliable logistics, better dispute resolution, and more awareness from customers that ONDC exists.

For small businesses, ONDC is worth a shot—but it won't replace big marketplaces anytime soon. It’s strongest in corner cases: rural towns, kirana stores, FPOs, self‑help groups—not so strong yet in quick commerce or brand awareness.

🔍 What Would Help Next

• Improve UX across buyer and seller apps with standardized guidelines

• Build a network‑wide grievance system for disputes and refunds

• Partner with big corporates to drive MSME procurement via ONDC (with tax or ESG incentives) WikipediaThe Law ReportersThe Statesman+2The Pioneer+2SME Street+2

• Expand digital training via initiatives like ONDC Academy, DigiReady, Meta drives

• Strengthen data compliance, IP protection, and logistics planning support

Small businesses are cautiously hanging their hopes on ONDC. If the network smooths out the rough bits, doubles down on seller support, and grows user awareness, it could become a real force for choice and competition in Indian e‑commerce.

In short: ONDC is helping small business, but the network still needs to fix the frictions before it becomes their go‑to platform.