Ola Consumer nears 1 lakh daily orders on ONDC; Bengaluru food delivery at 20% of Swiggy-Zomato's scale: Bhavish Aggarwal

Bhavish Aggarwal, founder and chairman Ola

Ola Consumer is now processing nearly 100,000 orders daily across food delivery, quick commerce, and hyperlocal logistics via the Open Network for Digital Commerce (ONDC), founder and CEO Bhavish Aggarwal told Moneycontrol

Aggarwal is the founder of three companies. He runs Ola Consumer (formerly called Ola Cabs) where businesses like ride-hailing, credit, ONDC and more are housed. Next is Ola Electric, the EV company that went public earlier this month. Aggarwal's third company is Krutrim AI, the artificial intelligence startup that is valued at $1 billion.

Ola Consumer hopped on to ONDC in September last year and has scaled in size since then. Aggarwal, a big proponent of the open ecosystem, said all companies should leverage the alternate commerce world as it is the future of e-commerce.

“Today, a very relevant concern is about the future of commerce in India and what it will look like. Will it be defined as closed walled gardens of a few large companies, be it Indian or global? Or will it be a more open ecosystem? An open ecosystem will benefit everybody , including kiranas, modern trade (MT), other general trade (GT) direct to consumer (D2C) brands, etc.,” Aggarwal told Moneycontrol in an interview.

“We have the solution, it's called ONDC. It’s an opportunity where we build an alternative e-commerce world, which is open and can benefit the broader ecosystem for everybody, that is ONDC,” he added.

Even Ola Electric plans to leverage ONDC as a sales channel, with the company set to start selling its scooters on the platform in the coming weeks.

Ola currently has three propositions on ONDC: food delivery, quick commerce and hyperlocal logistics – none of which is an uncharted territory for the company. While Aggarwal said Ola Consumer clocks one lakh orders on ONDC each day, he did not shed light on the split of orders for each unit.

Food delivery

Of the total orders that Ola Consumer currently clocks on ONDC, food delivery accounts for the largest chunk of the pie.

While the offering is largely Bengaluru-focussed, it has grown 20X in the past four months, Aggarwal said. “On ONDC, our food delivery is largely limited to Bengaluru. We are now almost 20 percent the size of a Swiggy or a Zomato, the unit is fairly sizable,” he added.

Across India, Zomato does around 20 lakh (2 million) orders each day and Swiggy does another 17 lakh (1.7 million) daily orders. Both the companies – which command around 95 percent of the food delivery market in the country – count Bengaluru as a top market. Food companies and restaurants clock another 60,000 orders on ONDC, as per several media reports. In all, ONDC does 12-13 million orders each day across mobility, groceries, food and more.

While it’s a start, food delivery on ONDC is yet to scale massively and challenge the duopoly of Zomato-Swiggy. The adoption has, however, positively surprised analysts.

In a client note in May, BofA said 60 percent of e-commerce users have tried food delivery on ONDC, thanks to apps like Ola, Magicpin, Paytm, among others. Even as users are returning to ONDC to place food orders, players like Ola Consumer want adoption to be quicker and are providing incentives during the initial days.

Whose discount is it anyway? 

While ONDC has built a small cash chest, of around Rs 180 crore, to fund discounts on the network to increase adoption, the burden is now being divided between all stakeholders.

Of the total discount amount, around 50 percent is borne by players like Ola Consumer, about 25 percent by the restaurant partners (sellers) and the remaining 25 percent by ONDC, Aggarwal said. He, however, added that these are ballpark estimates and that discounts will continue to taper off as the user base grows.

Sellers and restaurant partners are willing to offer discounts because they want an alternate channel like ONDC, over and above Zomato-Swiggy. “A Zomato or a Swiggy takes anywhere between 20 and 30 percent as commissions plus ad spends. But on ONDC, the commissions are around 5-10 percent. “A lower commission allows a restaurant to willingly offer customer discounts because they also want an alternate channel,” Aggarwal said.

Quick commerce

Quick commerce is a red-hot sector in India right now, and Ola Consumer aims to capture a share of the market, prompting Aggarwal to relaunch quick commerce on August 15 despite previous failed attempts.

While still embryonic, Ola Consumer competes with Zomato-owned Blinkit, Swiggy Instamart, Zepto, Tata’s BB Now, Walmart’s Flipkart Minutes, among others.

Even as most quick commerce companies sell products through a network of dark stores spread across the top Indian cities, Ola Consumer has a different approach for now.

The company partners with modern trade (MT) players like Spar, More and others and delivers to customers once they place their orders. This model is similar to what hyperlocal company Dunzo initially did and currently does.

Unlike the key players, Ola Consumer does not operate dark stores currently. Come Diwali, that will change.

On August 15, Aggarwal said Ola Consumer will launch automated dark stores that will be open to all stakeholders from kiranas to D2C brands and modern trade to manufacturers.

A seller can rent space in these automated dark stores based on stock keeping units (SKUs). “Because it will be a marketplace, it will be compliant with the laws of the land and not be a walled garden,” Aggarwal told Moneycontrol.

Those comments come at a time when the quick commerce sector has come on the Indian government’s radar and in a worst-case scenario, players can be probed for potential foreign direct investment (FDI) violations.

ALSO READ: Quick commerce wars to intensify as Ola enters Blinkit, Swiggy Instamart, Zepto and Flipkart Minutes' turf

“Think of Ola’s dark stores like a typical marketplace or a Fulfilled by Amazon style arrangement, just that it will not be long haul logistics, it will actually be micro logistics,” he added.

Aggarwal will fully move away from modern trade partnerships and begin servicing orders from these automated dark stores from around Diwali in October.

Logistics

Hyperlocal logistics is Ola Consumer’s third and final big bet on ONDC for now.

“The third thing we are doing on ONDC is our logistics service for any network participant. It's a very large scale operation. The beauty is that some of our competitors may be using Ola Consumer’s logistics and that's brilliant because now it's a full stack offering. Different people can use different parts of the stack,” Aggarwal said. Rapido, Porter, Uber Package are a few players in the space.

Speaking on Ola Consumer’s overall performance on ONDC and how the company fares when compared to others like Paytm, PhonePe’s Pincode, Magicpin and other key players, Aggarwal said his company is the largest already. “We would be bigger than these guys in terms of the scale for a buyer app. I don't have the metrics to say…But like I said, we are about 20-25 percent of ONDC’s overall business,” Aggarwal concluded.