ONDC starts giving discounts to scale transactions to 5,000 per day

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The Open Network for Digital Commerce (ONDC) has initiated a strategy to boost purchases of food, grocery, and home decor items by providing discount coupons to users on the network. It plans to run the discounts through March so as to scale the number of transactions per day on the network to 5,000 from the current 200, according to people close to the developments.

“It is one of the mechanisms to ensure that more transactions happen. We have not decided on how much we will spend. Ultimately, it is the network participants who would need to give such discounts to attract more users,” said a source.

The network, which is backed by the Indian government and seeks to break the dominance of a few large platforms in e-commerce and food delivery sectors like Amazon, Flipkart, Swiggy and Zomato, has aggressively ramped up its seller base to more than 10,000 at present from just about 1,000 at the end of last year.

This comes even as ONDC started an incentive scheme for seller-side apps to onboard more merchants in December. Later, the incentive scheme was revised to include discounts for buyers and sellers as well.

ONDC comprises of buyer-side apps where consumers can place orders, seller-side apps that onboard merchants and display their listings, and logistics platforms that handle deliveries.

According to the new incentive programme, ONDC will also set up monitoring systems to check for the mis-utilisation of incentives. There would also be audits conducted by ONDC to check the hygiene of the programmes and the buyer app will have to raise claims for the incentive on a monthly basis.

It will reimburse live buyer applications up to Rs 50 per successful transaction for discounts/cashback offered to buyers. However, the minimum order value for eligible transactions, including shipping charges, should be Rs 100.

In addition, the network will reimburse seller applications up to Rs 40 per successful delivery by an on-network logistics provider, which must be passed on to the buyer in the form of a discount on delivery charges.  This part of the discount programme would be run by the seller apps and they would have the authority on structuring the programme for the buyers, sellers and on-network logistics provider.

The open network seeks to increase e-commerce penetration in the country to 25 percent in the next two years, reaching 900 million buyers and 1.2 million sellers through the network and reaching 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.

In April 2022, the network piloted a soft launch in five cities – Bengaluru, Delhi NCR, Shillong, Bhopal and Coimbatore. Since then, ONDC has also started a Beta pilot in Bengaluru and other tier-2 cities.

Top FMCG players like Unilever, ITC, Dabur and Nivea and banks like Kotak Mahindra and IDFC First are in various stages of integrating with the network.

Built on the guardrails of software designed by the Beckn Foundation, a non-profit backed by Infosys chairman Nandan Nilekani, ONDC wants to replicate the success of the United Payments Interface (UPI) in digital payments for digital commerce in India.