The ONDC is likely to hit the business model of major food delivery platforms due to excessive competitive pricing offered by the open network platform
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The ONDC is likely to hit the businesses of several food delivery platforms and aggregators like Swiggy and Zomato because of extremely competitive pricing offered by the platform.
The Open Network for Digital Commerce (ONDC) which was launched in Nov 2021 by Department for Promotion of Industry and Internal Trade (DPIIT) is a non-profit organization by the government of India to end the dominance of large tech platforms and to provide opportunities to small retail stores and integrate them to the e-commerce industry.
ONDC is not a single platform available in the form of application but it is a network-centric model that intends to bring buyers and sellers on a single platform. The ONDC has tie-ups with platforms such as paytm, mystore etc. which allow access and allow orders on ONDC. In simple terms ONDC lists all the products offered by different sellers and allows the buyers to choose from them. Thus democratizing the entire buying procedure.
As of now the open network platform is only available in select cities and is currently in its Beta version for testing the feasibility. The Govt expects to expand it further in 100 cities soon.
What experts believe to be a UPI moment for the e-commerce services, the ONDC is seen to be a threat to the existing food delivery models of food aggregators such as Zomato and Swiggy which command 55% and 45% share respectively in their field. Thus ending the duopoly.
As reported by the several users of ONDC, they have found a stark contrast between the food process on ONDC compared with that of Swiggy and Zomato. The McDonalds Burger which is available for 282Rs in existing platforms is available for just 109Rs on ONDC. The same is with many other food items.
One of the main reasons cited for this price difference is the commission fee, delivery charges and tax charged on Restaurants using Swiggy and Zomato. As of today these platforms charge 20-25% commission along with food delivery charges excluded.
But on the other hand ONDC charges just 3-4% commission with free food delivery. Thus decreasing the overall cost of food. The restaurants had been long complaining of the huge commission charged decreasing their margins. But now due to ONDC they do not need to compromise on margins.
Currently the food delivery market in India is valued at 2.3 billion dollars which is expected to be expanded to 13 billion $ by the end of 2025. Thus there is a lot of potential for the restaurant owners to tap into the food delivery space and earn profits. Once fully operational the customers can order food from restaurants which may be delivered by delivery apps such as Dunzo and Blinket (if registered). Thus democratizing the business.
Many platforms are now expected to be integrated with ONDC thus expanding it to every facet of life.
How to Use ONDC
Currently ONDC can only be used in select cities such as Bengaluru, Delhi, Mumbai, Shillong etc. To order items, one must open Paytm. Mystore and other apps integrated with ONDC and search for ONDC. Then one can order any item from the list comparing the prices. Once the order is placed it shall be delivered in appropriate time.
