The Open Network for Digital Commerce (ONDC), an interoperability project backed by the government to break the stranglehold of duopolies Amazon and Walmart on e-commerce, has crossed 100 million transactions in under 18 months.
Also, Google-backed Namma Yatri, a ride-hailing platform on the ONDC and considered a challenger to Ola and Uber, has topped a cumulative $100 million in driver earnings and 50 million trips since its inception.
“ONDC has been established with a very ambitious mission of the democratisation of e-commerce. It means that every cross section of society — whether on the merchant side or the buyer side – should be able to participate with equal ease,” ONDC chief executive officer (CEO) T Koshy said on September 11.
“Imagine if the Infinity Mall or Palika Bazaar is just owned by two enterprises. In that case, they will determine who to sell to, what to sell, how the goods should be presented — everything. Diversity in digital commerce is only possible when we unbundle (the e-commerce value chain).”
Over the past 18 months, multiple new-age companies such as Paytm, Ola, PhonePe, Snapdeal, Magicpin and Shiprocket have taken to ONDC. Although Ola has joined the network for its foray into food and grocery deliveries, it is yet to integrate for ride-hailing.
With the interoperable network, the government hopes to increase e-commerce penetration in the country to 25 percent over the next couple of years, reaching a gross merchandise value of $48 billion.
For driving the next stage of adoption in Tier 2 and beyond, ONDC has launched Saarthi, a reference application to assist businesses in creating customised buyer-side apps.
Developed with Bhashini, a government-backed language translation programme, Saarthi will help small businesses in building buyer apps with multilingual features. The application will initially support five languages — Hindi, English, Marathi, Bangla and Tamil, with plans to scale to all 22 languages offered by Bhashini.
Hitting a speed bump
ONDC saw a 5 percent month-on-month growth in transactions in August to 12.58 million, compared to 11.98 million a month ago, amid a tightening of cash incentives for the so-called mature categories such as food and grocery by the government-backed network.
Of the total, 4.74 million transactions were in the mobility category through Uber and Ola challenger Namma Yatri and the remaining 7.84 million were in the non-mobility category, which included retail purchases and on-network logistics transactions to deliver those orders.
Until a few months back, most of the ONDC orders were delivered by sellers off the network. It changed rapidly as logistics services provided on the network by companies such as Ola, Loadshare, Pidge and Shadowfax ramped up their offerings. On-network logistics transactions continued to surge in August, growing 20 percent from the previous month to hit 1.7 million.
While the number of orders in the grocery segment surged 61 percent in July, it contracted 11 percent to 1.28 million in August. The volume of food and beverage orders rose 12.5 percent month-on-month to 1.89 million.
Fashion accounted for 650,000 transactions in August, home & kitchen 570,000 and the remaining 1.75 million orders were from other categories such as gift cards and electronics.
Amid the retail category’s fast growth, ONDC has announced a phased reduction of up to 75 percent in financial incentives for participants by the end of the September quarter.
The network has been giving incentives to network players depending on order volumes and categories. The money is used to fund discounts and offers for customers to promote adoption of ONDC.
The latest incentive structure has also reduced the maximum monthly limit of incentives that can be availed by a player to Rs 2.5 crore from Rs 3 crore. It has also designated a quarterly limit of Rs 6 crore.
In this structure, the highest drop in incentives is for the food and beverages and grocery categories, which together make up a sizeable share of the network’s monthly retail order volumes.
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