ONDC's Struggles, Airtel’s AI System, and Namma Yatri’s Troubles

A few large platforms such as Amazon, Flipkart etc. have traditionally run India's e-commerce sector. Then, the government launched ONDC (Open Network for Digital Commerce), to create an open space where everyone could trade freely without powerful middlemen dictating terms. But recently, we have seen some high-profile exits from ONDC, which made us want to understand what’s really going on.

The idea behind ONDC was bold - it wanted to do for e-commerce what UPI did for digital payments. UPI connected banks and payment apps so that anyone could send or receive money from any app or bank. ONDC tried to do something similar for buying and selling online. Instead of having sellers and buyers locked into one app, ONDC wanted to create a shared digital infrastructure where any seller could list products and any buyer could purchase them, regardless of the platform they were using.

The idea quickly became popular, and government backing gave it a strong start. Logistics startups like Shiprocket, and payment players like PhonePe joined ONDC. Buyers saw discounts, and sellers saw a new channel beyond Flipkart and Amazon. The number of orders grew quickly in food delivery, groceries, and fashion. The public narrative was that ONDC would allow small kirana stores to sell online and end the dominance of large tech firms.

But momentum is hard to maintain when execution lags. ONDC started facing problems. The discounts were deep, but unsustainable. Most of them came from ONDC’s own pocket, not the market. Without the discounts, buyer activity dropped. Sellers also struggled with bad interfaces, clunky dashboards, poor discovery, and delayed payments. Therefore, many sellers left. ONDC paused incentives, leading to drop in engagement. A few categories like mobility in Bengaluru worked better. But overall, the hope was slowly dying.

Competitors like Flipkart and Amazon were watching, but not worried. ONDC was supposed to bring open access and reduce dependency on these large platforms. But the experience on ONDC was not smooth, and private players continued to lead the market. Instead of challenging Amazon or Flipkart, ONDC was fighting for basic product-market fit.

Then, the leaders started to leave ONDC. T Koshy, the CEO from the beginning, left. Chief business officer, Shireesh Joshi also quit. Independent director Arvind Gupta has stepped down. The fact that important team members are leaving raises concerns. Why are key people walking away at a time when the platform needs rebuilding? Could it be due to immense pressure, or perhaps a change in direction, or some other concerns?

ONDC is not a startup. It is a government-backed entity with many stakeholders, from ministries to private players. Decision-making is slower. Flexibility is limited, and public scrutiny is high. Over time, innovations stall because of too much complexity.

Other countries have tried similar efforts. In Japan, the METI-backed "Digital Marketplace Infrastructure" aims to open up access to e-commerce for smaller businesses. But it focuses first on building standards and then slowly onboarding players. In Europe, the EU-backed GAIA-X is trying to build a federated cloud and data infrastructure. Progress is slow, but steady. One thing common across these examples is patient execution and limited public pressure. India attempted to accelerate ONDC, but perhaps the market wasn't prepared enough, or the on-the-ground strategy wasn't clear.

The operational model of ONDC is also complex. It separates the buyer and seller apps. The buyer orders from one app, while the seller uses another. Logistics and payments come from different service providers. In theory, this unbundling gives more choice. In practice, it needs strong coordination and technology. This has created issues such as search results not matching, and orders getting lost in handoffs. Refunds can also get delayed. All of this created a bad user experience. We ordered food through ONDC, and it took an hour and a half to be delivered, which Zomato could’ve handled in 25 mins.

But we would not call ONDC a failure. It is a bold experiment that still has massive potential. Like UPI, its success depends on standards, infrastructure, and incentives. And unlike UPI, which immediately offered benefits to users and banks, ONDC is still working to prove its usefulness. A kirana store may not see the value in going online unless it's already bringing in customers. A buyer may not switch from Amazon unless the experience is better.

The incoming leadership's main tasks will be to restore confidence among employees and the public, and to enhance the product. They need to focus on specific categories that show traction. The vision is still important - build an open, democratic layer for commerce.

We think ONDC should pick three areas where it can go deep - food delivery, mobility, and B2B trade. They should build strong flows, repeat usage, and real value. They should test it in a few locations first to make sure it is successful before launching it everywhere. They should partner with startups who understand execution. And don’t compete with Flipkart or Amazon directly, but compete on access, transparency, and long-term value.

We strongly believe that ONDC can become India’s open commerce backbone. It needs some fixes, steady hands, and patient execution. Vision is not enough - execution is everything.

Let’s go through what else is happening in Indian startup world - Grab your simmering cup of StartupChai.in and unwind with our hand-brewed memes.

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