CONFIDENTIAL

Request for Proposal for undertaking market studies for ONDC

Introduction

Open Network for Digital Commerce (ONDC) has been established to democratise and fundamentally
revolutionise how digital commerce is conducted. This construct is different from the platform model,
where all the various functionalities are vertically integrated within a centralised entity - to a
decentralised format where different functions involved in an end-to-end e-commerce transaction can
be performed by different entities. This breaking up of the value chain to different, granular micro
activities is what is referred to as ‘unbundling’. Herein lies ONDC’s role as an enabler, in providing an
interoperable framework for these different entities to seamlessly communicate with one another,
towards the end of ensuring service delivery to both Buyers and Sellers.

Background and Objectives

ONDC aims to revolutionise how digital commerce will fundamentally operate, by providing an
opportunity to shift from the centralised platform-based approach to a decentralised and unbundled
environment. The interoperability enabling framework is the obvious value proposition that ONDC
offers which will help stimulate a healthy, fair and competitive ecosystem for the eventual benefit of
Buyers and Sellers. However, the platform model of e-commerce which has been prevalent for the last
2 decades, has set standards and defined the behaviour of Buyers, Sellers, Platforms and other
stakeholders which are involved in the e-commerce value chain (Logistics, Services, Manufacturing
etc). This has accordingly also set business models and marketing strategies for businesses in the e-
commerce space, which are primarily dominated centrally through platforms, where small businesses
have usually had little to no say.

Redefining and reimagining the status quo of the digital commerce ecosystem is therefore imperative,
to remould thinking on how businesses will operate in a decentralised, unbundled environment. The
ONDC Model will prominently cause the following two phenomena to evolve on the Network

i. Emerging new market opportunities and the subsequent impact on the commerce value chain,
supply chains and the economy
ii. The continuous evolution of the cost structure, guided by monetary incentives of Network
Participants, economies of scale and market forces

A. Emerging Market Opportunity from ONDC’s disruption of the digital commerce ecosystem

Decentralisation of operational control and open standards & interoperability will lead to the lifting of
entry barriers which will result in the blooming of new participants. The consequent stimulation of
competition and more importantly a level playing field driven by choices will lead to fostering
innovation and creating new business models. New entrants in the ecosystem will also now have an
opportunity to target and achieve scale, which previously was only possible for big platforms. ONDC
recognizes that its role goes beyond just enabling a transaction on the Network, but also creating a
conducive environment to help realise this immense emerging market opportunity. It is also vital to
remould the previously held understanding of market dynamics in the platform model and sensitise
relevant stakeholders especially businesses to help them realise the vast potential and market
opportunity that is set to emerge with ONDC’s disruption of the digital commerce space. To this end,

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ONDC seeks to conduct a study [to be published as a co-branded market-facing report by ONDC and
the consulting firm] which will broadly address the following objectives

a) Present a long-term quantitative and qualitative assessment of the emerging market

opportunity due to ONDC’s disruption of the digital commerce space, and the larger impact it
will have on the economy and the market
b) Assess the category-wise and value-chain business innovations and models that will emerge
due to this disruption
c) Present a compelling case for businesses to transform and align their business strategy with the
ONDC model for digital commerce

B. Understanding incentives and commercial terms for all participants on the ONDC Network

Large platforms in the e-commerce space are vertically integrated in the sense that has been able to
build capabilities for different functions such as demand generation, and provide fulfilment through
logistics, warehousing, onboarding sellers etc. within one centralised entity. A single platform
maintaining all operational controls centrally means that costs of operations were also centrally born,
and on occasions, a premium is charged for the services.

The ONDC model, however, will disperse all the above-mentioned functions between the various
decentralised participants of the Network from a control/value concentration standpoint. This
essentially means that a central platform from the platform model of e-commerce is broken into
different modular entities such as a Buyer App, Seller App, Logistics Service Provider, Gateway etc. A
Buyer App which is buyer facing interface is responsible for demand generation, providing a seamless
buying experience and interface, acknowledging and helping resolve customer issues etc. Meanwhile,
a Seller App is responsible for onboarding sellers, making their products/services discoverable,
resolving and handling buyer, and seller issues etc. A Logistics Service Provider will perform the
fulfilment of an order or pick up returns from buyers, collect cash payment from buyers etc. A Gateway
performs the unique role of relaying information between a Buyer App and a Seller App.

The ONDC commercial structure allows these ‘function-performing’ entities to charge a certain fee for
providing the corresponding service as part of a transaction. A Buyer App charges a Demand
generation Fee, a Seller App charges a Seller App Fee, a Logistics Service Provider charges a delivery
fee for performing fulfilment and a Gateway charges a Gateway Fee for providing smooth information
relaying service between a Buyer App and Seller App. What is important to keep in mind is that these
are all independent businesses and participate on the Network as Network participants. ONDC may
also charge Network Participants an ONDC Fee for enabling and maintaining the health of the
Network. To conclude, the commercial structure essentially guides the monetary incentives for the
entities to provide their services throughout a transaction.

The commercial structure can also be determined by the type of supply chain intermediary (retailer,
distributor, wholesaler etc.) played and the business model adopted by the Network Participant in the
e-commerce value chain. Commercial structures will also vary with the business economics involved in
different categories. Cost components for logistics such as delivery charges have also undergone rapid
evolution with increasingly rising demand for hyperlocal fulfilment and rapid deliveries. Another
significant determinant of the commercial structure in a decentralised environment will be the impact
of market forces and scale on the Network.

A commercial structure in terms of fees charged by different entities in a decentralised environment is

bound to be different from a commercial structure which is centrally controlled by a single entity. From
a unit economics point of view, it needs to be seen how these structures will evolve and will in a
decentralised environment the sum of parts be more or less than the consolidated costs incurred

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centrally by a single platform when at scale and when one entity is not responsible for stitching the
entire value chain. Decentralisation in the ONDC construct will offer entities a chance to operate their
digital business at scale, which will bring down these unit costs significantly, however, this assumption
needs to be tested.

Given the dynamic complexities and nuances involved in the commercial structure, which will rapidly
evolve as the Network continues to expand, it only became imperative to understand how monetary
incentives will drive participants’ actions on the Network. Capturing all the possible scenarios of
monetary terms asserted by participants will also provide crucial insight for ONDC to accordingly
define structures, which will uphold the health of the Network, and provide a conducive environment
for Network Participants to target optimal business outcomes. ONDC seeks an assessment report [this
will be an internal report for consumption of ONDC] which must broadly address the following:

a) A comprehensive review of the commercial terms which will be adopted by Buyer Apps, Seller
Apps (Marketplace Entities and Inventory Sellers) and Logistics Service Providers
b) How will these commercial structures and business models evolve on the Network for different
participants, varying with category and keeping in mind the influence of market forces on the
Network
c) At what stage of the value chain in any commerce value chain will participating in a network
like ONDC makes commercial sense (and this could and will vary across domains & categories)
d) Recommendation and detailed analysis of the commercial structure that could be adopted by
various participants [focussing on options of commercial models]. While this would be done
across the value chain a specific emphasis needs to be laid on the options of commercial models
that gateways and ONDC could adopt

Detailed Scope of Work

With the objectives of the reports set out above, this section outlines the specific details which must
be covered as part of the two reports:

1. Report 1: Market report on the emerging ONDC opportunity

Factoring in the background and context given earlier, the study would focus on the larger market
opportunity that is set to result from the disruption of the e-commerce ecosystem. The report must
present a qualitative and quantitative analysis in presenting a comprehensive understanding of
transformation in the digital commerce ecosystem and the potential it offers at scale.

▪ Market impact of disruption of the Digital Commerce Ecosystem: The e-commerce ecosystem is
currently dominated by big platforms which can centrally dictate rules of engagement, thereby
restricting new players from achieving scale. However, the decentralisation of e-commerce
which ONDC seeks enables attempts to solve this exact challenge for many new entrants. How
will this shift from the platform model to a decentralised paradigm help fuel growth in the digital
commerce segment? The report should be modelled for certain specific scenarios which may
evolve over the next 7-10 years. The coverage must include
○ Category-specific challenges which had been plaguing the digital commerce space,
especially for the following categories
■ Retail e-commerce - Grocery, Electronics, Fashion, Apparel, Home Decor,
Consumer Durables, Beauty & Personal Care
■ Food & Beverage
■ Travel & Tourism
■ Mobility and Public Transport

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 ■ Financial Services
■ Agri Products
○ How will these category-specific challenges evolve in the context of the ONDC
construct and what are some new challenges which could emerge in the ONDC model
of e-commerce, especially over the next 7-10 years?
○ Impact on the brick and mortar and traditional, offline commerce space How has the
platform model of e-commerce impacted conventional, offline commerce and what will
be the nature of impact due to the ONDC Construct over the next 7-10 years?
▪ Emerging market opportunity due to ONDC: How big is the market opportunity, in terms of sizing,
expected to emerge in the ONDC construct? Whether this market opportunity will emerge due to
businesses integrating as a participant on the Network? What is the opportunity that will emerge
due to the re-defining of supply chains if at all due to ONDC?
▪ Innovation: Not only will decentralisation help new entrants to emerge but should also result in
new types of business models taking shape, stimulating innovation and improving value for Buyers,
Sellers and Network Participants, due to the increase in competition and availability of choices.
The assessment must contain a deep dive into the opportunities for innovation and new business
models which will evolve across different categories, over the next 7-10 years. This should cover
aspects related to:
○ Building ONDC
○ Building on top of ONDC
○ Building around ONDC
▪ Transformation in Business Operations: How will the ONDC construct fundamentally change how
businesses operate, including how will businesses realign their supply chains
▪ Sectoral Impact: Which sectors are expected to be the most significantly impacted over the next
7-10 years due to the disruption (if any) caused by ONDC? Whether the ONDC construct could
encourage digital participation and the introduction of certain sectors at a scale that has been
historically averse to conducting business over digital means? What should ONDC do to fasten
the speed and rate of adoption in such sectors?
▪ Impact in the B2B Space What will be the impact of ONDC’s disruption in the B2B space,
substantiated by the manner and quantitative impact in this space?
▪ Impact on Foreign Trade: How will the market opportunity created due to ONDC’s disruption
impact India’s foreign trade for goods/services?
▪ Outlook towards Open Data Frameworks What is the outlook of businesses including their
opportunities, and concerns towards the introduction of open data frameworks in e-commerce?
▪ Opportunity for more inclusive Financial Services and linkages to other initiatives/open
networks: Specific outlook of businesses at large on open network frameworks such as Open
Credit Enablement Network (OCEN) and Account Aggregator (AA), built specifically for seamless
delivery of financial services. How can these frameworks potentially interact with ONDC in
providing complementary services, and potential opportunities which can arise to deepen the
adoption of financial services and be more inclusive? What is the nature of offerings such networks
would encourage and what will be its impact? What opportunities does this create for the start-
up ecosystem
▪ Insights from Industry Leaders on ONDC: The report should capture the views of 10 Indian and
Global Business Leaders (CXOs) (from Fortune 200 companies) on how the market is expected to
evolve with such open network-based frameworks and is their directional view on disruptions such
frameworks could cause which business leaders should be aware of.

ONDC as an enabler of market opportunity

▪ In driving this transformation in the e-commerce ecosystem and enabling the creation of this new
market opportunity, what are some institutional drivers/structures which ONDC must establish to

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 operationalise this market opportunity to be captured? These recommendations must crucially
bear in mind the central objectives and focus which has been chalked out for ONDC.
▪ How will these structures translate into action in the market, in terms of scale and market size?
▪ What are some of the risks one can foresee while implementing these structures on the ground
and what could be some countermeasures which can be put in place to mitigate this risk?

Larger impact on Domestic and Global Economy

▪ Assessment of the multi-fold impact through new business opportunities, creation of new jobs and
the broader macroeconomic impact expected due to ONDC’s disruption
▪ Assessment of the ripple effects which will be caused across other related auxiliary industries such
as manufacturing, logistics, services, infrastructure etc.
▪ Assessment of ripple effects with a particular focus on the Financial Services Sector and how the
sector will interact with the digital commerce ecosystem after disruption from ONDC.
▪ The economic and market impact that will be felt globally due to ONDC’s disruption and the
transformation of the digital commerce ecosystem

2. Report 2: Internal report on evolving commercial structures on ONDC

Commercial Structure of Network Participants and Ecosystem Participants

▪ Review the commercial structure in the current offline and online approaches followed across
categories and domains mentioned earlier [modern trade, general trade, D2C, social commerce,
platform approach etc.) and provide a detailed analysis of the same. This assessment should
include the margin structure across product categories the existing value chains work with and the
operating challenges in these commercial structures
▪ Comparison of the Commercial Structure: How do the commercial structures in an ONDC
construct compare with the cost structure which is followed in the point above? This comparison
must reflect a comparison for the following categories i.e., Retail e-commerce - Grocery,
Electronics, Fashion, Apparel, Home Decor, Consumer Durables, Beauty & Personal Care, Food &
Beverage, Travel & Tourism, Mobility and Public Transport, Financial Services and Agri Products.
▪ Evolution of the Commercial Structure on the Network: How will the commercial structure evolve
as the Network continues to mature especially for Buyer Apps, Seller Apps Logistics Service
Providers and other Network participants?
○ How and what will be the impact of the distribution of the cost and fee structures to
each of the Network Participants at scale?
○ What are the new opportunities and possibilities due to ONDC and what will be its
impact on the cost structures (e.g., more options and choices, more hyperlocal play, no
need to stitch the entire value chain, focussing on what you are good at, lower demand
generation costs? etc.)
○ What will be the range of the fees which the Network Participants will charge for
performing their respective functions in the course of a transaction, so it makes viable
business sense for such Network Participants?
○ What will be the influence of market forces on the commercial terms being asserted by
Network Participants?
○ At what stage of the commerce value chain will the commercial model be viable and
sustainable across the categories and domains? And for what would it be not viable and
sustainable?
○ What will be the impact of business size on the commercial terms which will be asserted
by Network Participants? In which case how will small businesses compete with large
businesses, which could charge less and command traffic on the Network?

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 ○ How can asserting commercial terms in a manner result in anticompetitive behaviour in
the Network (such as possible observations of collusion)? What indicators concerning
commercial terms should evoke suspicion of bad behaviour on the Network?
○ The assessment should be conducted separately for the following categories
■ Retail e-commerce - Grocery, Electronics, Fashion, Apparel, Home Decor,
Consumer Durables, Beauty & Personal Care
■ Food & Beverage
■ Travel & Tourism
■ Mobility and Public Transport
■ Financial Services
■ Agri Products
▪ Business viability for participants across the value chain: The report must also assess how the
commercial terms will evolve for different intermediaries of the e-commerce value chain i.e.,
distributor, wholesaler, retailer etc. across various categories such as Retail e-commerce - Grocery,
Electronics, Fashion, Apparel, Home Decor, Consumer Durables, Beauty & Personal Care, Food &
Beverage, Travel & Tourism, Mobility and Public Transport, Financial Services and Agri Products.
Further, the report should present a category-wise model for under what conditions will
integration on the ONDC Network make viable business sense for these intermediaries mentioned
above.

Commercial Structure of Gateways and ONDC

Unlike the role of other Network Participants, gateways only perform the role of relaying information
requests and responses and play no other distinct role in influencing the success of a particular
transaction. However, the gateway can offer value-added services till such time it adheres to the design
principles of the network. A gateway will charge a fee to sustain its operations by providing a seamless
information exchange interface to a Buyer App and a Seller App.
o Keeping in mind the general mandate and role of a Gateway in the completion of the
transaction, what will be the optimal fee structure that a Gateway could adopt for sustaining
its operations – factoring various approaches Network participants could adopt e.g., caching
versus each time hitting the gateway for a search or other options
o Projections of how the gateway fees will evolve on the Network, as ONDC matures
o Whether the Gateway Fee should vary with a different type of categories which will be enabled
on the Network?
o What other commercial structures apart can be possible for Gateways to perform and sustain
their operations on the Network

ONDC plays a limited role in the actual completion of a transaction on the Network. ONDC’s role is
“broadly” limited to being a facilitator and providing a protocol for Network Participants to
communicate and agree on the terms of the transaction (in addition to maintaining a registry). ONDC
is also a Section 8 Company registered under the Companies Act, 2013, and doesn’t have a profit-
maximising mandate.

o Accordingly, what are the various options for ONDC to make revenue to sustain its operations?
What are the corresponding commercial models for such revenue – a detailed analysis of all
such options and models and a recommendation of what model makes maximum sense given
the objective, role and evolution of ONDC from a long-term perspective.
o How will the ONDC Fee evolve as the Network gets bigger and what will be an optimal fee
structure which ONDC must follow to sustain operations?
o Projections of the ONDC fee for different scenarios of commercial structures which have been
discussed above

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 o Whether ONDC can pursue alternate commercial models, which will ensure sustained
operations and the viability of such alternate models?
o Whether there is a scenario where ONDC may not have to charge a fee directly, and still ensure
continue sustained operations viably?
o For each of the recommendations/suggestions, it should be substantiated with detailed models,
analysis and projections

Project Details and instructions for proposal submission

▪ Project Timeline: 3 months for the completion of each report. Both reports should be worked on
in parallel. The completion date of both reports should be no later than January 15, 2023
▪ The first report (Report 1) on assessing the emerging market opportunity will be a market report to
be released publicly by ONDC and consulting organisation onboarded – A co-branded report
▪ The second report (Report 2) on assessing the commercial structure of ONDC will be an assessment
report which will remain confidential and for internal consumption within ONDC only. However,
ONDC reserves the right to publish the same for public consumption.
▪ Both reports will be written in English.
▪ The final deliverables for both reports would include:
o Executive summary – in word and ppt
o Detailed report – in word and a corresponding ppt

▪ Submission of profiles of Team members

o While the consulting firms may have a team working on the assignment, for ONDC the
interactions shall be with 2 key people who are driving the engagement from an expertise
standpoint [Not Project Management]. Accordingly, ONDC will evaluate the profiles of the 2
“Key team members” who will be spending the majority of their time on this study and be the
single point of contact for ONDC for the report
o Accordingly, for each report (Report 1 and Report 2), the organisation must submit profiles of
two key personnel, who will be jointly responsible for the assignment.
o These 2 team members could be the same for both reports as well
o The consulting firm should ensure that the profiles are of experts who can drive the assignment
from a subject matter expertise and have enough expertise and experience in undertaking such
assignments
o Both the resources assigned for the completion of the report must be experts who can match
the requirements as set out, and achieve the target within the required project timelines. Both
the resources assigned for each report will be required to spend the majority of their time on
the study and will be available for all discussions with ONDC.
o The consulting firms are not required to submit the profiles of the remaining team members
who would be working on the assignment. However, if they wish to, they can
▪ Submission of Credential:
o The consulting firm is expected to submit one credential each for both projects of a project
executed by the firm that comes closest to the nature of the scope of work. The previous
report/project must be similar to that of the ONDC project, in the sense that it must be a first-
of-its-kind concept and the unknowns that come with it, a technology-driven mandate and
something that had/has the potential to disrupt the segment
o There should be one credential submitted for both reports. If the firm intends to submit more
credentials, it should under no circumstances exceed 2 credentials
o It would be preferred (not mandatory), that the expert team member proposed was part of the
study credential being proposed, as that would help build further confidence while selecting
the firm

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 o The credential should be detailed so it provides complete clarity on the coverage, scope and
approach adopted including the challenges encountered and methods adopted to overcome
the same
▪ Request for Proposal:
o ONDC is seeking 2 separate commercial proposals from your organisation for the end-to-end
delivery of the two reports (Report 1 and Report 2) respectively.
o A consulting firm is required to quote for both projects. There are a lot of synergies in both
studies including the knowledge transfer and interactions with the ONDC team. In an ideal
state, preference would be given to a firm which proposes to undertake both reports.
o The quotation must be a consolidated amount inclusive of any costs incurred for conducting
market research and analysis, literature review, drafting, consolidating, formatting and
publishing - as required. The quotation must also include any out-of-pocket pocket costs which
may be incurred. The firms are required to estimate the out-of-pocket expenses and bundle
them into the fee. GST for the quotation must be mentioned separately. The quotation must
be submitted as per the format given in this document
o The timelines are to be strictly adhered to as provided earlier and in case the consulting firm
cannot complete the study in the given timeframe the same should be stated, so it is factored
into the evaluation

Individual
Quotation for
preparing the
Profiles of 2
report (incl. of Sum Total of
GST for the Team
all possible Quotation and Credential details
Report members for
expenses Taxes
each report
involved in
report
preparation)

Report 1: Profile 1
Emerging Profile 2
Market
Opportunity

Report 2: Profile 3
Assessment Profile 4
Report of the
Commercial
Structure on
ONDC

Timeline for submission of the proposal

o Confirmation email of participation in the RFP process to be sent by 6 pm on 10th October’22

(Monday)
o Comments for clarification/queries on any enhancement are to be sent by 6 pm on 11th October’22
(Tuesday)
o ONDC will share the revised RFP with changes incorporated, if any, by 6 pm on 12th October’22
(Wednesday)
o Consultants are to submit the proposals for consideration by 6 pm on 17th October’22
o Comments and the final proposals should be sent by email to vibhor@ondc.org

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