ONDC doubles incentives for food orders on Asia Cup 2023 final day

The incentive level was raised from Rs 50 per order to Rs 100 for food and beverage purchases above Rs 200

The Open Network for Digital Commerce (ONDC) doubled its incentive for buyer-side apps on September 17, on the final day of Asia Cup 2023, in which India knocked out Sri Lanka, a notification sent by the government-backed network to its participants has revealed.

The incentive level was raised from Rs 50 per order to Rs 100 for food and beverage purchases above Rs 200. In the letter sent to network participants that Moneycontrol has reviewed, ONDC stated that the higher incentive level was just for one day and provided for A/B testing of customer response.

In business parlance, A/B testing is a method where different visitors to an app or website could be shown two or more products or campaigns to measure which performs better.

"Any big cricket match day is a good time to test out various marketing campaigns and see what sticks better. Weekends are typically significantly higher volume affairs and the final game means there would be even more orders," said a food aggregator executive who didn't want to be named.

However, it couldn't be ascertained how much higher demand for food ordering there was on September 17. Given that the match ended prematurely due to a poor batting performance by Sri Lanka, ONDC players may not have been able to attract as many consumers as planned.

Also Read | Understanding ONDC, the open network billed to be the UPI of e-commerce

Earlier this month, ONDC revised the structure of its incentive scheme to offer more flexibility to buyer-side apps on how they disburse discounts to consumers, lowered the average subsidies given in the food category by half to Rs 50 per order, and provided for a boost to the density of merchants on the network in 45 non-metro districts.

To be sure, that revised structure would apply again from September 18, in which the average incentive has been lowered to Rs 50 per order for order values greater than Rs 200 in the F&B category, kept at Rs 100 per order for order values greater than Rs 200 for grocery, beauty and personal care, and Rs 100 per order for order values between Rs 200 and Rs 1,000 for electronics, etc.

In the previous version of the scheme, there was no category-based differentiation on the maximum incentive per order and the number was fixed at a flat Rs 100.

Most importantly, the number of transactions for which a buyer can avail incentives per week has been capped at two from the five earlier.

ONDC had capped incentives per order to Rs 100 in June after it was criticised for trying to gain market share by heavy discounting in the food and beverage category.

Now, the government-backed e-commerce network has taken the staggered approach of incentives on the seller-side app front as well — for example, platforms will get up to Rs 6,000 for onboarding each seller in the metros, up to Rs 7,500 in the focus tier-2, -3 cities, and Rs 5,000 in all other cities when the number of stock-keeping units is greater than 5,000 in the grocery category.

These incentive levels will also change based on the number of stock-keeping units that an onboarded seller has and the category it plays in.

Backed by the government, ONDC seeks to prevent the dominance of a few large platforms, such as Amazon, Flipkart, Swiggy, and Zomato, in the e-commerce and food delivery sectors.

The government hopes to boost e-commerce penetration in the country to 25 percent over the next two years, reaching 900 million buyers and 1.2 million sellers through the network. It is projected to generate a gross merchandise value of $48 billion.

ONDC is banking on three key pillars to reduce the cost of doing business for everyone, including retailers: dynamic pricing, inventory management, and delivery cost optimisation.