ONDC jazzes up incentive scheme with week-on-week growth 'multiplier' 

Buyer apps are required to submit to ONDC a monthly MIS of the actual incentive/discount rolled out to buyers and its effectiveness within 15 days of the end of the month

Open Network for Digital Commerce (ONDC) has come up with a fresh incentive structure to reward its constituent e-commerce platforms not just on the basis of order volumes, but also on the rate of order growth as the government-backed network seeks to grow daily transactions by 10 times over the next one year.

Earlier, buyer side platforms on the network would get an incentive per order on the basis of the total volume of transactions during the past week. Now, ONDC has introduced a growth ‘multiplier’ on top — which means a platform can get more money on the basis of their week-on-week rate of growth.

However, there is no multiplier for growth rates of under 10 percent. It is 1.1 for 10-20 percent growth, 1.15 for 20-30 percent growth and 1.2 for more than 30 percent growth.

For example, if a network participant (NP) has successfully delivered an average of 20,000 food orders in the last 12 weeks and accomplishes 23,000 orders in the current week, the NP will receive an incentive of Rs 88 per order. This incentive includes a base amount of Rs 80 and a kicker of Rs 8 (1.1 multiplier applied due to a 15 percent growth).

ONDC expects that platforms will transfer these financial benefits to end users to boost the network's adoption. Buyer apps are required to submit a monthly report to ONDC detailing the actual incentives/discounts provided to buyers and assessing their effectiveness within 15 days of the end of each month.

In the 10th version of its incentive scheme, ONDC has also restricted financial dole-outs to merchants who are related parties of seller-side platforms on the network, according to a communication sent to NPs seen by Moneycontrol.

This assumes significance as big consumer brands like Domino’s, Unilever, ITC are joining the network through their in-house seller-side platforms.

“Sellers from a related party (as defined in the Companies Act 2013) of the Marketplace Seller Network Participant will not be eligible for the incentive,” the ONDC communique said.

Another important change is that NPs whose holding company (defined as per Companies Act 2013) had a positive ‘Profit Before Tax’ in the previous financial year are not eligible for the incentive programme.

Over the past year and a half, multiple new-age companies such as Paytm, Ola, PhonePe, Meesho, Magicpin and Shiprocket, have taken a bet on the government-backed ONDC that is aimed at breaking the stranglehold of a few players like Amazon, Flipkart, Zomato and Swiggy on online retail in the country.

For the first time, ONDC surpassed 3 million retail purchases in a month in January, indicating an average of over 100,000 transactions per day.

Further, ONDC clocked 3.5 million mobility (ride-hailing) bookings during the month, taking the network's total transactions across categories to over 6.5 million in January. This was a month-on-month growth of 18 percent, compared to the 5.5 million transactions seen by the network in December.

In December, Paytm founder and chief executive officer Vijay Shekhar Sharma said that ONDC will open up the e-commerce opportunity for a lot of players as it breaks down different parts of a transaction such as seller, logistics, and payment into separate parts. In effect, a single player doesn’t need large amounts of funding to build all the parts to break into the ecosystem.

In mid-January 2024, the network successfully conducted a series of transactions for personal loans with Easypay and DMI Finance. As the technology undergoes testing and optimisation, other financial services participants are scheduled to go live in the near future.