ONDC's 'marketing intervention' rises 28 times to Rs 92 crore in FY24

In FY24, ONDC raised Rs 569 crore from the issue of equity shares

As the Open Network for Digital Commerce (ONDC) disbursed sizable incentives to e-commerce players on its network like Ola, Magicpin, Paytm and others over the past year, its cost of 'marketing interventions' rose 28 times to Rs 91.73 crore in FY24, compared to Rs 3.27 crore in FY23, according to the non-profit company's latest audited financials.

In order to provide an initial thrust to the network and generate awareness amongst the end buyer, ONDC shares certain part of the incentive or discounting cost which the network participants offer to their end buyers. This is broadly the marketing intervention cost, but also includes expenses for other promotional campaigns.

However, ONDC has been decreasing the magnitude of its incentive payouts over the last few months.

Ahead of the festive season starting in October, it has told network players via a memo that the maximum limit of incentives each of them can claim for the current month is Rs 40 lakh — which is a 84 percent reduction from the maximum of Rs 2.5 crore they could avail of till the previous month.

According to the audit report, ONDC's 'deficit' (a term used in place of 'loss' for non-profit companies) jumped from Rs 46.76 crore in FY23 to Rs 195.61 crore in FY24. It recorded zero revenue during the period.

This happened even as its expenses rose across the board -- on marketing interventions, employee benefits, network maintenance charges, etc. A source close to the developments said that ONDC's board is looking to devise a strategy to start earning revenues so that the network becomes self-sustainable.

In FY24, ONDC raised Rs 569 crore from the issue of equity shares to RBL Bank and Canara Bank. ONDC's cap table is equally distributed among more than a dozen Indian banks such as SBI, NABARD, ICICI and Kotak, apart from organisations like the Quality Council of India, CDSL and NSDL, among others.

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

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.

ONDC recorded a 5 percent month-on-month growth in transactions in August to 12.58 million, compared to a 21 percent surge in July, amid a tightening of cash incentives for mature segments like food and grocery by the government-backed interoperable network.

Out of the total, 4.74 million transactions were in the mobility category through Uber, Ola challenger Namma Yatri and the rest 7.84 million were in the non-mobility category, which included retail purchases made by consumers and on-network logistics transactions to deliver those orders.