ONDC is Destroying Swiggy-Zomato and People are Happy About It!

The Open Network for Digital Commerce, known as ONDC, plans to revolutionize online delivery. Compared to other food delivery services, using these apps to order food is at least 20% less expensive. Find out what’s the hype about ONDC.

The two major companies, Zomato and Swiggy, presently control India’s online meal delivery market. However, a new competitor has emerged and has already begun dominating the market.

With the help of the ONDC platform, restaurants can offer food to customers directly, that is, without the involvement of a mediator. A customer may purchase groceries, movie tickets, groceries, clothing, meals, taxis, and even electronics with just a click.

This government-owned food technology platform has been operational since September 2022, but only recently has it become more well-known. According to a report in Livemint, this portal has surpassed the threshold of 10,000 daily orders.

What Exactly is ONDC?

To provide open networks for e-commerce, the Indian government’s Department for Promotion of Industry and Internal Trade founded the private, nonprofit organization Open Network for Digital Commerce. It was started in April 2022. It primarily consists of a network of numerous big and small e-commerce businesses to compete with Amazon, Flipkart, Zomato, and Swiggy’s hegemony in India.

In contrast to popular food delivery apps like Swiggy and Zomato, ONDC takes a unique approach. Rather than being a standalone app or platform, ONDC operates as an open-source network designed to facilitate seamless order fulfillment by connecting sellers, buyers, and logistics players.

Notably, ONDC collaborates with various seller partners such as Paytm, Meesho, Magicpin, Mystore, Craftsvilla, Pincode, and Spicesmart Shop, who incorporate the ONDC functionality within their own apps. These partners effectively serve as virtual storefronts through which consumers can conveniently place orders for a range of items including food, groceries, and more.

According to a recent report on a joint investigation conducted by ONDC and McKinsey & Company, ONDC could accelerate the anticipated 5x growth in digital consumer goods and services by 2030.

“There was a reason why not all pin codes were covered for food delivery and e-commerce, and not all products/services were provided by the incumbents. ONDC, in due time, will equalize the field enough to allow anyone agile enough to ride on these protocols to build net new markets. But like payments, here too, ONDC will coexist and thrive with the incumbents,” said Nikhil Kurhe, co-founder and CEO of Finarkein Analytics.

How is it Cheaper Compared to Swiggy and Zomato?

Ondc is a newcomer to the meal delivery industry. The business has maintained cheap prices using a different strategy than its rivals. Ondc depends on outside delivery partners, unlike Swiggy and Zomato, which operate their delivery fleets. As a result, Ondc saves a lot on overhead costs by not having to invest in purchasing and maintaining a delivery fleet.

In contrast to Swiggy and Zomato, who typically impose commissions ranging from 18 to 25 percent on restaurants, the platform partners of ONDC operate on a significantly lower commission model. These partners charge only 2 to 6 percent as commissions, offering a more cost-effective solution for restaurants.

Moreover, if a restaurant opts to utilize the services of a third-party logistics provider associated with ONDC, it may incur a delivery fee of approximately Rs 35. This comparatively reduced cost structure presents an attractive proposition for restaurants looking to maximize their profitability while utilizing the ONDC network.

How to Use ONDC?

There needs to be a dedicated ONDC app. Users must use one of ONDC’s partner apps, such as Paytm or Magicpin, to order food. Mystore, Pincode, Spice Money, and other ONDC apps are other options for ordering meals. The ONDC’s meal ordering service is currently operational in many cities, including Delhi and Bangalore.

The platform aggregates goods and services, including electronics, food, apparel, and other goods and services. Customers can benefit from ONDC’s current promotion by applying the promo code ONDC50 to their order to instantly earn a discount.

Due to its inexpensive pricing, ONDC is a well-liked option for consumers looking for low-cost meal delivery services. Even while Swiggy and Zomato continue to rule the Indian food delivery market, Ondc’s distinct pricing strategy could provide it with a competitive advantage in the future.

What’s the Future of ONDC?

While the lower commission and pricing offered by ONDC seem promising for both consumers and restaurants, experts caution that the situation may be more complex than it appears, and it is still too early to make definitive predictions.

They highlight the importance of ONDC expanding its market beyond the current reach of Swiggy and Zomato, capturing consumers in tier 2, 3, and smaller towns to attract more Indians to the platform.

Madhukar Sinha, Founding Partner of India Quotient, explains that success in the food delivery industry depends on multiple factors, including delivery speed, supply management, technology, and customer trust.

Sinha views ONDC as a supplementary option for businesses and customers, particularly for repeat orders from familiar restaurants. He believes that while consumers may prefer ordering from well-known platforms like Swiggy and Zomato, ONDC could find a niche in repeat purchases where customers are already familiar with the restaurant.

Experts suggest that superior technology will be crucial for ONDC to handle food delivery efficiently, especially during high-volume periods. Daryani emphasizes the importance of knowing and understanding the customer to make a real difference, as the data collected can help restaurateurs enhance the customer experience.

Managing delivery times is also highlighted as a critical factor, with Sinha noting that speed of delivery is vital in the food delivery sector. While Swiggy and Zomato have invested in creating a seamless experience and absorbed losses to ensure reasonable delivery rates, it remains to be seen how ONDC will address this aspect.

Experts acknowledge ONDC as an additional option for restaurant owners, providing them with an alternative to Swiggy and Zomato. They anticipate that a portion of orders, particularly from customers already familiar with a specific restaurant, may come through ONDC, allowing restaurants to deliver directly and save on customer acquisition costs.