Will ONDC disrupt Swiggy and Zomato’s business and the online food delivery landscape?

The online food delivery landscape is currently controlled by Swiggy and Zomato. (Photo: Rowan Freeman via Unsplash)

When hunger strikes at 2 am, who do you reach out to for ordering food online? Swiggy or Zomato have become buzzwords for hunger and late-night cravings. But now there's another option — ONDC, a new player gradually gaining ground in the field of online meal delivery. ONDC, a platform funded by the government, is all set to challenge Swiggy and Zomato’s hegemony.

What is ONDC?
ONDC stands for Open Network for Digital Commerce. The platform went live in Beta format in September last year and is currently available in around 180 cities. The network includes various small and large-scale e-commerce players and is designed to challenge the market dominance of large players such as Amazon and Flipkart in India. ONDC offers a number of services such as "Sell on ONDC/Create a Seller Experience", "Create a Buyer Experience", "Provide Software as Service", "Provide Other Services" and "Buy on ONDC". Though it does not have its own app for food ordering, customers can order food through partner apps like Paytm, Magicpin and others. Apart from food, the platform also delivers groceries, home décor, cleaning essentials, etc.

According to a press statement issued by ONDC, its main aim is to dramatically increase e-commerce penetration in the country by enabling population-scale inclusion of all types and sizes of sellers. "By facilitating scalable and cost-effective e-commerce through the open protocol, ONDC will empower startups to grow collaboratively," ONDC stated. The platform has already gained popularity with transactions clocking at 10,000 orders a day. According to Nandan Nilekani, Infosys cofounder and now a member of ONDC advisory counsel as ONDC onboards more and more customers, it has the potential to disrupt not just food delivery but also all kinds of e-commerce in India.

There is palpable excitement on the restaurant front, too. “ONDC will change the entire ball game. Since it’s a direct link between businesses and consumers, restaurants such as ours will be much relieved from the high commissions that were being charged so far. It will also be super convenient for both restaurants and consumer in terms of dealing with any food complaints and delivery issue since the direct link will manifest a quicker response that was otherwise going through a big loop of intermediary chains. It will mainly benefit restaurants like us who are running a self-owned fleet as we will be able to make a good use of our fleet to serve customers over the ONDC platform,” says Debaditya Choudhary, managing director, Chowman chain of restaurants. The group which owns 29 Chowman outlets across Kolkata, Bengaluru and Delhi NCR is all set to onboard the platform.

How to order on ONDC?

ONDC can be accessed via Paytm app on the mobile phone. (Photo: Muneeb Syed via Unsplash)

All you have to do is go on the ONDC website and click on the tap which says Shop on ONDC. Subsequently, a number of partner apps such as Paytm, Mystore, Pincode and Magicpin will spring up on the screen. You can click on the partner app and select from the categories of food and groceries online. Put your address, place your order and pay online. Or you could simply open the Paytm app on your phone and click on search and search for ONDC. You will see numerous stores and restaurants that you can order from. Click on the food you want to order, add the address, place your order and pay online. You can even track the order to see the status of the delivery.

Is ordering on ONDC cheaper than on Zomato & Swiggy?

Apart from food, ONDC also delivers groceries, home décor, cleaning essentials, etc. (Photo: Maria Lin Kim via Unsplash)

ONDC has been making waves in the industry with its promise of providing cheaper food to customers. Social media is abuzz with screen shots of price differentials of food ordered from popular food-delivery platforms such as Swiggy and Zomato versus ONDC which is ranging up to 60 per cent. At least, for now! “I have been ordering from the platform and it’s a much better deal than Swiggy and Zomato. The app is very easy to use and the food reaches on time,” says Bengaluru resident Sudha Iyer.

So, what makes food cheaper on ONDC as compared to Swiggy and Zomato? While Swiggy and Zomato charge a 25-30 per cent commission from restaurants on every order, ONDC charges only 2-4 per cent per order. So, the lower commission makes orders through ONDC a better proposition for restaurants and ultimately cheaper for consumers. Additionally, ONDC offers a flat discount of Rs 50 while ordering. However, industry experts say it may be too early to rejoice. According to ONDC chief T Koshy, the platform “will provide limited support for a period of time to the network participants to give a jumpstart to the network.” This means the discounting will be a short-term strategy to get users on board and get them hooked to the system. Remember, ONDC is a privately owned company which has raised over Rs 180 crore from multiple investors   such as the State Bank of India, HDFC Bank, Kotak Mahindra Bank, BSE Investments, and NSDL. So, they do have investors to answer to. The platform has now revised their discounting strategy and added some T&C after witnessing daily transactions increase from 100 to 10,000 a day. The Rs 50 discount on Paytm is capped at 2,000 orders per day. So, if your order happens to be order number 2,001 for the day, you’ll be out of luck. Also, the Rs 75 incentive on delivery will be capped as soon as a particular restaurant makes up Rs 3,750 worth of deliveries for the day. Beyond that, you’ll see a delivery-fee pop up. So, the deep discounts that we see now could slowly vanish and prices could go up on ONDC, too.

Wait and watch

According to industry watchers it may be too early to write off Swiggy and Zomato. While ONDC is still in its initial days, the other two giants have built a strong network and a loyal base of customers in the online food business. There have also been a few complaints regarding the ordering process on ONDC, including erroneous orders and late deliveries. Additionally, there is currently no customer service representative to connect everything together because this experience is split among several businesses. Zomato and Swiggy have a huge advantage over there as they control the end-to-end experience.

Will ONDC be a game changer in the food delivery landscape in India? Can it disrupt the online food delivery eco-system? Only time will tell. For now, this food tech platform is definitely creating a storm in the e-commerce industry just like UPI did.

Deliver the goods

Mumbai hotels have come up with their own online platform for food delivery — Waayu, which promises to be 15 to 20 per cent cheaper than other aggregators. Waayu is founded by tech entrepreneurs Anirudha Kotgire and Mandar Lande and has the support of Mumbai-based Indian Hotel and Restaurant Association (AHAR) and other industry bodies. It is a software as a service (SaaS) platform that connects customers with more than 1,000 Mumbai restaurants, including Bhagat Tarachand, Mahesh Lunch Home, Banana Leaf, Shiv Sagar, Guru Kripa, Kirti Mahal, Persian Darbar and Ladu Samrat. The food delivery app is said to address the issues faced by restaurants and customers with existing online food delivery services, such as high commissions, unfair rankings, biased reviews, and poor quality and support.