The Open Network for Digital Commerce (ONDC) is hailed as a game-changer for small businesses in India, enabling them to compete with major retail chains by providing access to the digital marketplace. However, along with these newfound opportunities, ONDC introduces a labyrinth of compliance obligations, turning sellers into tightrope-walking entrepreneurs navigating the complex regulatory landscape. Sellers on ONDC will need to adhere to several compliance obligations, which can be daunting for small retailers who are new to the world of e-commerce. While ONDC offers a digital platform for transactions, the physical fulfillment of orders—including the authenticity, quality, packaging, and delivery of products—falls squarely on the sellers. This shift presents challenges, as sellers will now have to deal with issues like returns, shipping damage, fraud, and consumer complaints.
Key regulations that sellers on ONDC need to be aware of include:
Consumer Protection Act, 2019 (CPA): The CPA holds sellers accountable for product liability and bans unfair trade practices, allowing consumers to raise complaints directly against sellers.
Consumer Protection (E-Commerce) Rules, 2020: These rules mandate specific disclosures by sellers, ensuring that buyers can make informed decisions. Sellers must also establish a grievance redressal mechanism.
Legal Metrology (Packaged Commodities) Rules, 2011: These rules dictate that specific information, such as the manufacturing date, price, and size, must be displayed on product packaging.
Payments and Settlement Systems Act, 2007: This act provides the framework for payment settlements based on guidelines from the Reserve Bank of India (RBI). Sellers must navigate multiple stakeholders for ensuring payment and settlement, as ONDC does not involve direct relationships between buyers, sellers, or the platform.
As ONDC exposes small retailers to a much broader audience, the pressure to comply with these laws increases significantly. Failure to meet these obligations can lead to hefty fines, reputational damage, and even legal action. For small retailers, particularly those who have only operated locally, adapting to ONDC’s regulatory framework will be a significant hurdle. Traditionally, these retailers relied on trust-based relationships within their communities, without worrying about packaging, shipping details, or consumer data. ONDC thrusts them into a world where strict packaging requirements, high return rates, and the need to manage personal data are the norm.
Without proper preparation, small retailers may face massive losses due to damaged goods in transit, poor product quality, and non-compliance with e-commerce regulations. The increased exposure to remote buyers also heightens the risk of fraudulent orders and disputes, adding further complexity. One way for sellers to overcome these challenges is by enlisting the help of digital technologies and trained staff. Investing in compliance management systems can help sellers keep track of obligations, manage consumer data securely, and ensure the safe delivery of products. As the size of their business grows, so too will their compliance obligations. But with the right tools, they can stay ahead of the curve and avoid costly penalties.
ONDC places significant responsibility on sellers to ensure consumer safety, data privacy, and service quality. Sellers are now responsible for safeguarding sensitive buyer information, such as names, addresses, and contact details, and must comply with data protection laws when storing, processing, and disposing of this information. Additionally, sellers must ensure that their products are properly packaged and meet quality standards before being handed over to logistics partners. If a product is damaged in transit, sellers may be held responsible unless they can prove otherwise. This affects not only their profitability but also their reputation on the platform, which in turn impacts future sales. By taking a proactive approach to compliance and maintaining high standards in product quality and data protection, sellers can build trust with consumers and reduce the risk of disputes.
ONDC regulates its participants through three main levers: network policy, protocol specifications, and transaction-level contracts (TLCs). These measures ensure interoperability between participants and assign clear responsibilities. Sellers must be vigilant in addressing customer complaints, resolving issues in a timely manner, and ensuring compliance with TLCs to avoid penalties.
To navigate the intricate web of compliance requirements on ONDC, sellers must establish a robust compliance management system. This system should prioritize regulatory obligations based on risk and track all applicable compliance tasks, including returns, refunds, and consumer data protection. Digital compliance management systems can streamline this process, helping sellers stay organized and compliant with ONDC regulations, reducing the risk of non-compliance and legal action.