The Indian government has launched a new platform, the Open Network for Digital Commerce (ONDC), as a non-profit initiative to provide facilities to both sellers and buyers in the e-commerce space. While sellers can offer anything on this platform, ONDC is increasingly being used for food offerings, as buyers have noticed that they can get the same food from the same restaurant at 2% to 40% cheaper prices than other food delivery apps. This is the reason why Zomato’s share prices have also gone down.
So, is ONDC now a threat to food delivery apps like Zomato and Swiggy?
To find out, we decided to order a pizza from Pizza Hut in Navi Mumbai today May 15. We placed the order on both ONDC and Swiggy, with the same address and the same Schezwan Margherita – Pan order. It cost INR 208 on ONDC and INR 219 on Swiggy. After adding delivery fees and taxes, the total amount on ONDC came to INR 312.75 and INR 316 on Swiggy, which was almost INR 4 more. However, we found a coupon code for Swiggy, “SWIGGIT,” which brought the price down to INR 247. But, this coupon code was not always available.
Then, we went to Behrouz Biryani to order Murgh Malai Kebab (6 pc), which was priced at INR 399 on both ONDC and Swiggy. But, after adding extra charges, the total amount on ONDC was INR 529 and INR 524 on Swiggy. We found a coupon code worth INR 125 in the offers section, which brought the total amount on Swiggy down to INR 395.
So, if Swiggy and Zomato offer such coupon codes, it doesn’t seem like ONDC poses a threat to them. But if ONDC also offers such discounts, the competition could become intense. After all, buyers will always choose the platform that offers cheaper prices.
Currently, food delivery on ONDC is being done through Zomato-backed Magicpin. But if Pizza Hut and Behrouz Biryani directly come to ONDC, Zomato and Swiggy may face some difficulties, especially when delivery fees are lower or zero. Otherwise, the rates are almost the same, and in such situations, buyers and sellers don’t care much. Some people have talked about “no delivery fees” on ONDC, but we didn’t get that option. In fact, for quite a few orders, we got something like this, “Fulfillment Agent Unavailable!”
Can ONDC offer more discounts than Zomato and Swiggy?
There are various screenshots on the Internet showing ONDC is cheaper than Swiggy and Zomato. However, if you notice everywhere the Delivery Fee is nill there. However, the delivery fee charged to us was a bomb – more than the food delivery apps charged – which justifies why ONDC could give cheaper earlier than today in a few places (Bengaluru mostly!). However, this cannot go on forever.
In reality, it would be highly unsustainable for ONDC-enabled apps to offer higher discounts or lower delivery charges without incentives funded by the platform. There is a lot of talk in the market that Zomato and Swiggy overcharge, but despite their scale and take-rate rise, both are hardly making any profits.
Currently, ONDC seems promising, but it will take time for it to become viable. Its sustainability will depend on how it performs and how it fares. The way things are, it cannot be said that ONDC poses a threat to Swiggy and Zomato. And, think about it, why would the government launch a platform that prevents private and startups from running? It’s food for thought.
Well, stock analysts and many brokerage firms are saying the same thing.
