The ONDC needs to boost e-commerce and increase profits
The e-commerce space in India’s food delivery market has been dominated by a few big players, most notably Zomato and Swiggy. However, efforts to democratize the industry with the launch of the Government-backed Open Network for Digital Commerce (ONDC) have been slow. Nonetheless, recent news suggests that the platform is slowly making its presence felt, particularly in the food delivery market.
ONDC has been playing the role of a price warrior in the market, challenging the duopoly grip that Zomato and Swiggy have held for a long time. Many buyers across big cities in India have noted cheaper bills on food ordered through ONDC compared to private apps. This intensified competition could serve a key purpose by easing the dominance of Zomato and Swiggy, ensuring that market power does not unduly tilt away from buyers and eateries in need of online sales avenues. Any market gains that ONDC makes could be salutary in this regard.
What sets ONDC apart is that it is an open e-commerce platform based on open protocols, allowing for wider participation. This gives users of apps like Paytm, PhonePe, and Magicpin access to food suppliers with a smaller cut of the deal than private app intermediaries. This results in lower doorstep prices for customers.
As major private platforms roll back cash burners and focus on profits instead of habit creation, capital becomes more expensive. This limits their ability to increase their share of the value pie without risking a loss of volumes. ONDC, with its open protocols and lower cost structure, could offer an attractive alternative for both buyers and sellers, leading to a more competitive and fairer e-commerce market in India.
