Transactions on the Open Network for Digital Commerce (ONDC) have surged past 68 million since its inception, the Economic Survey 2023-24 revealed on July 22.
Backed by the government, the ONDC is an interoperable commerce network that aims to break the stranglehold of a few platforms like Amazon, Flipkart, Swiggy, Zomato, Ola and Uber on different segments of e-commerce in India. The network started its transactions in 2022 with Bengaluru.
"The network offers cost-effective benefits to restaurant partners, easing the burden of high fees charged by dominant aggregators. During Q4 FY24, there was an 18 per cent rise in orders owing to a strong network of over 95,000 restaurants and top brands serving 347 cities. Big names like Tata Neu, Dominos, and Ola have added food services to their apps, while others like MagicPin and Paytm focus on competitive pricing and special deals. The network is expanding its reach by training 350 street food vendors in Delhi-NCR and Lucknow," the survey said.
In Q4 FY24, a growth of 52 percent in grocery orders was achieved, facilitated by a network of 12,585 sellers catering to over 665 cities. Leading players such as Paytm and Otipy are investing in advanced digital storefronts and QR code technology, the report said.
It added that collaborations with brands like Catch are enhancing product offerings, which currently include 6.3 million stock-keeping units (SKUs). Initiatives such as Kiko Live are actively digitising local Kirana stores, supported by major corporations like Hindustan Unilever Limited and ITC, who are advancing strategies to digitise 1.3 million kirana stores on the ONDC platform.
Fast growth
Moneycontrol reported in July that ONDC saw a 12 percent month-on-month growth in transactions in June to 9.95 million, compared to 8.9 million in the previous month, helped by a spurt in retail category purchases.
The retail category has been growing at a fast pace in the first six months of 2024 as players like Ola, Paytm and Magicpin have pushed on the pedal. For comparison, the number of retail orders on ONDC in December 2023 was 2.1 million, which means that monthly purchases have almost tripled in the past six months.
In June, food orders grew 40 percent month-on-month to hit 1.4 million, grocery orders decreased from 1.02 million to 870,000 and fashion fell from 630,000 to 580,000. Remaining orders were from smaller segments like beauty and personal care, electronics and gift cards.
The retail category’s growth as a whole grew 20 percent month–on-month from 5 million in May. As such, the food segment’s contribution to the retail category marginally rose from 20 percent in May to 23 percent in June.
With ONDC, the government hopes to increase e-commerce penetration in the country to 25 percent in the next couple of years, reaching a gross merchandise value of $48 billion.
Amid the retail category’s fast growth, ONDC has announced a phased reduction of up to 75 percent in financial incentives for network participants by the September quarter. Network participants have also been advised against adjusting the incentive payouts against their goods and services tax calculation.
The network has been giving financial incentives to network players depending on order volumes and categories. This money is in turn used to fund discounts and offers for customers to promote rapid adoption of the government-backed network.
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