ONDC: The New Name That Can Trigger War In The Online Food Delivery Industry!
Prices for brands like Taco Bell, McDonald's, Behrouz Biryani, Pizza Hut, Wow Momo, and Cafe Coffee Day are reduced by up to 80% on ONDC ordering systems such as Paytm, Magicpin, and PhonePe as compared to Swiggy and Zomato.
The Indian food delivery duopoly of Zomato and Swiggy is under threat as a new e-commerce delivery platform supported by the government sparks a pricing war. According to industry officials, the Open Network for Digital Commerce (ONDC), which lets restaurants sell food directly to customers via buyer applications, might be the most significant disruptor in food delivery if it maintains aggressive pricing and profitability.
The thing which is occurring is a paradigm change; it is about allowing merchants to determine their discounts and other conditions, according to T Koshy, CEO of ONDC. It is also about giving customers the ability to make their own decisions.
How will ONDC oomph up the game?
Prices for brands like Taco Bell, McDonald’s, Behrouz Biryani, Pizza Hut, Wow Momo, and Cafe Coffee Day are reduced by up to 80% on ONDC ordering systems such as Paytm, Magicpin, and PhonePe as compared to Swiggy and Zomato.
The platform is unquestionably a path to profitability. However, what is now taking place is a short-term discount battle, according to Sagar Daryani, vice president of the National Restaurants Association of India (NRAI), which represents over 500,000 restaurant brands. ONDC does not yet charge consumers delivery costs and charges less than half the commissions from restaurants that established aggregators do, according to officials.
This differential pricing results from significant discounts financed by the ONDC system or other companies and platforms backed by ONDC. Daryani, a co-founder of Wow! Momo Foods explained. For ONDC to make a long-term, meaningful difference for restaurants, it must permit growth to new consumers, sustain profitability, and reduce commissions.
NRAI urged single and multi-chain restaurant partners to investigate the ONDC platform as an alternate channel for stronger commercials but cautioned them to consider long-term sustainability. Restaurants have expressed an interest in experimenting with the platform as an extra route for delivering to customers. They are working quickly with ONDC and other ecosystem partners to remain available for consumers and continue to provide attractive value, said Rajeev Ranjan, managing director of McDonald’s India North and East.
What is ONDC?
The platform was launched by the Department for Promotion of Industry and Internal Trade (DPIIT) in late 2021, and allows consumer-facing firms to gain access to technology and solutions utilised by e-commerce platforms, such as listing, order management, and delivery. Following beta testing in Bengaluru over 16 pin codes, the platform has gone live in several cities, allowing customers to purchase meals and groceries.
Deliveries are made by third-party last-mile service companies like Shadowfax, Dunzo, and Loadshare for a charge paid by the restaurants, depending on which platforms applications like Paytm and Magicpin have tie-ups with.
How will the new platform compete with the already existing dominion platform, Swiggy and Zomato?
While Swiggy and Zomato charge 18% to 25% fees from eateries, charges on the ONDC platform would be less than half that, at 8-10%, according to an executive representing NRAI. He claims that commission savings might be passed on to customers through direct discounts.
Onboarding buyer-side applications such as Paytm, Magicpin, Meesho, and PhonePe has allowed ONDC to save money on client acquisition because these apps already have millions of active users.
Zomato-backed Magicpin said last week that it is now processing over 10,000 orders per day on ONDC, up from 1,000 orders two weeks earlier.
Swiggy and Zomato have a sizeable captive share of the online food delivery fleet and have well-established discoverability on food menus on buyer-end applications.
Future of India’s food service industry.
According to research by consulting company Francorp, India’s food service industry is expected to reach $79.65 billion by 2028, rising 11.19% per year from $41.1 billion in 2022.
ONDC’s breakthrough comes when Swiggy and Zomato are suffering from stacking losses. While Swiggy recently discontinued its premium food delivery service Handpicked, it has also begun collecting a platform charge of Rs 2 for every order.
Access to data on the ONDC platform, according to executives, might be another appeal for restaurant firms, a key point of contention between restaurant companies and aggregators, with the former arguing that Swiggy and Zomato hide data. The matter is now being heard by the Competition Commission of India (CCI).
Conclusion.
Let us all wish for this model to succeed and end Swiggy and Zomato’s supremacy. Many people argue that both of them promise to delay time and then fail to deliver; also, the rates charged are outrageous, and small eateries are the ultimate sufferers. Hoping this new model works.
