Tata Neu readies to enter Swiggy, Zomato territory via ONDC route

The people said Tata Neu is working closely with Zomato-backed Magicpin on its ONDC integration.

In what could be the first instance of a legacy Indian corporate house entering the online food ordering sector, salt-to-steel conglomerate Tata Group’s super app — Tata Neu — is gearing up to start the service by piggybacking on the Open Network for Digital Commerce (ONDC), according to four people aware of the developments.

“It is likely to be launched for closed-user group trials in the next few days. But the feature may still be a month or more away from going live for the broader public,” said one person.

A second person said the idea behind the entry into food ordering is to develop a ‘high-frequency use case’ to bring consumers back to the app regularly.

“This will give a chance to Tata Neu to cross-sell its other products on the app — across categories like apparel, jewellery, grocery, electronics, flights and more,” the person added.

Another person said the app might eventually be integrated with ONDC for other categories, depending on how consumers receive it.

Greater access

To be sure, there is a food category tab on the Tata Neu app. But on clicking it, the option only shows menus from restaurants of the Tata Group’s hotel company that runs the Taj brand. With the ONDC integration, the app will get access to tens of thousands of eateries across cities already on the network.

At present, Swiggy and Zomato account for more than 95 percent of the food delivery market and serviced a cumulative gross order value of almost $6 billion in FY23.

The people said the ONDC project at Tata Neu is led by Gaurav Porwal, a senior vice president at Tata Digital, the arm in the sprawling conglomerate that houses its acquired consumer internet businesses such as online grocer BigBasket and online pharmacy 1mg.

Amid reports of the conglomerate planning a fresh billion-dollar fund infusion in Tata Digital, the company’s net loss widened to Rs 5,553 crore in FY23 from Rs 2,945 crore in FY22. Its revenue rose 69 percent to Rs 26,984 crore in FY23 from Rs 15,996 crore in FY22, according to its annual financials filings sourced from PrivateCircle Research.

Although the Tata Group super app went live in April 2022 amid much fanfare, industry players said it has not lived up to the hype. While some are of the view that it lacks the ‘move fast and break things’ culture of the internet world, others pointed out that the ‘super app’ idea was flawed to begin with.

Meanwhile, the company has also been plagued with a series of top-level exits — Pavan Podila, chief software architect, and Samir Aksekar, chief information security officer, are set to leave in the coming weeks, Moneycontrol reported on February 5.

With this, the two join a growing list of senior executives who have left the new-age internet unit of the conglomerate. Rajiv Subramanian (head of travel), Gunjan Ghai (chief business officer), Prateek Mehta (head of investments and neobanking), Sharath Bulusu (chief product officer), and Shivcharan Pulugurtha (chief strategy and business officer) have all quit Tata Digital in the past 12-18 months.

ONDC as a cost-effective play

To be sure, Tata Neu has signed up to play the business-to-consumer role of a buyer-side app in ONDC. This would make its food-ordering entry cost-effective as it won’t have to deploy a fleet of delivery riders or convince restaurants to sell on the app.

In the government-backed network, a single player is not required to carry out an entire e-commerce transaction by itself — different participants can take customer orders, handle the logistics and onboard merchants.

The people said Tata Neu is working closely with Zomato-backed Magicpin on its ONDC integration. The Gurgaon-based startup is helping the Tata company as a technology service provider for the frontend as it did with fintech major Paytm and cab aggregator Ola with their ONDC integration.

Moreover, Magicpin is also the largest seller-side platform on ONDC in terms of restaurant onboarding, having brought more than 50,000 eateries to the network. It has signed up on ONDC for three roles — technology services provider, seller-side app and buyer-side app.

Retail purchases on ONDC have been getting diversified. While more than 90 percent of retail purchases on the network used to be food orders 4-5 months ago, the category now accounts for about 35 percent of the orders.

This happened as ONDC onboarded sellers in newer categories including fashion, electronics, beauty and homecare and incentivised users to make purchases in these categories through discounts.

Around April and May last year, ONDC kicked up a controversy when it was found that it had been heavily discounting food orders. Experts asked if the government’s idea of tackling the issue of deep discounting in e-commerce was to itself engage in deep discounting.

However, the network clarified that the incentives had been deployed to woo consumers and give a jumpstart to the network. Moreover, ONDC’s funds don’t come from the taxpayer as most of its shareholders are large banks.

Moneycontrol reported earlier that ONDC clocked a fresh high of 6.5 million transactions in January — of which 3.5 million were ride bookings on the Namma Yatri app and the rest were retail purchases through apps such as Paytm, Snapdeal, Magicpin and Ola.