The government-backed Open Network for Digital Commerce (ONDC) has created quite a stir and is threatening to disrupt the Indian food delivery market. ONDC, launched in September 2022, is a unified payment interface-type protocol created for retailers to sell their products directly to consumers. This helps smaller merchants to break away from the monopoly and dominance of large e-commerce platforms such as Amazon and Walmart. ONDC is currently operational in 236 cities, including Mumbai, Pune, Bangalore, Noida, Kolkata, and Chennai, and has reportedly onboarded over 35,000 retain merchants, with more than 36 lakh products on sale.
How ONDC scores over Swiggy and Zomato
The ONDC platform has recently started seeing some traction in the food delivery space and is rapidly gaining popularity. The main reason for this is the low pricing it provides to both customers and restaurants, enabling restaurants and food chains to better price their offerings. ONDC allows restaurants to sell food directly to consumers through buyer apps such as Paytm and Magicpin. Interestingly, it charges less than half of the commissions charged by other popular platforms such as Swiggy and Zomato, which can range anywhere between 18% and 25%. It offers dishes from popular food chains such as McDonald’s, Taco Bell, Pizza Hut, and Cafe Coffee Day at a 30-80% discount on Swiggy and Zomato’s rates.
For instance, an order that costs Rs 209 and Rs 212 on Swiggy and Zomato respectively costs only Rs 147 on ONDC
So how come everything looks cheaper on ONDC?
ONDC is able to provide such strikingly low prices by applying discounts. ONDC has been giving out a discount of Rs 50 to buyer apps like Paytm, and this gets passed on to customers. There is also a Rs 75 incentive offered for companies like Shadowfax that deliver the food to the customer. But with the number of orders shooting up from 100 to more than 10,000 per day, they have re-evaluated their pricing strategy and have decided to bring in a cap on the incentives. This will reduce the price difference between ONDC and Swiggy/Zomato in the coming days.
With many Indians now starting to lean towards ONDC, these apps are making major headway in the hyperlocal market by providing end-to-end delivery of orders and logistical support. The industry body National Restaurants Association of India (NRAI) has also urged its restaurant partners to start exploring the ONDC platform as an alternative channel. The state-run Indian postal service, which has a wide network of nearly 160,000 post offices, will also join the ONDC network to provide logistics services to small traders across the country. ONDC has also begun making inroads into e-mobility by offering ride-hailing at zero commission.
Will ONDC be the Swiggy/Zomato killer?
Though there are some complaints of wrong orders and delayed deliveries, ONDC poses a serious threat to the likes of Swiggy and Zomato which are already reeling under pressure to make profits.
The ONDC network is rising slowly and steadily with transactions increasing day by day. Whether it will ultimately lead to the downfall of Swiggy and Zomato is a question that remains unanswered at this point in time. But what is certain is that competition in the food delivery sector is heating up and triggering rapid innovation for the food-loving masses!
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