Menu gadgets from main meals chains, together with McDonald’s, Taco Bell, Behrouz Biryani, Wow Momo, Pizza Hut and Cafe Coffee Day, can be found at a 30-80% low cost on ONDC platforms akin to Paytm and Magicpin in comparison with Swiggy and Zomato, ET reported on May 8. (Zomato has about 16% stake in Magicpin.)
What is ONDC?
Launched in late 2021 underneath the Department for Promotion of Industry and Internal Trade (DPIIT) as a part of the Digital India push, ONDC works as a community of interconnected e-marketplaces by which sellers, together with manufacturers, can record and promote their merchandise on to clients.
Also learn |Government’s ONDC arrives with a value conflict taking over food-delivery majors Zomato, Swiggy
After a pilot in Bengaluru throughout 16 pin codes, the ONDC platform has gone stay in a number of cities.
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It clocked 11,100 retail orders, its highest thus far per day, on Apr 20, a yr after its launch, ET reported on May 3.
ONDC vs Swiggy, Zomato
The platform is being pegged as a serious disruptor within the meals supply area as ONDC permits eating places to promote meals on to customers by purchaser apps.
It additionally fees lower than half of the commissions charged by Swiggy and Zomato, which vary between 18% and 25%, enabling eating places and meals chains to higher value their choices.
Orders are delivered by third-party suppliers akin to Shadowfax, Dunzo and Loadshare for a price paid by the eating places.
ETtechAccording to the platform’s web site, ONDC is presently operational in 236 cities, together with Mumbai, Pune, Bangalore, Noida, Kolkata and Chennai. It additionally claims to have onboarded over 29,000 sellers, who promote greater than 36 lakh merchandise on the platform.
Paytm, Phonepe’s Pincode, Meesho, Magicpin and Mystore are among the many purchaser apps which have joined the platform.
Alpino, Bitlsila, Bizom, BoAt, Delhivery, and Digiit, are a few of the vendor apps stay on the community, amongst many others.
As per a current report by American consulting agency McKinsey, ONDC has the potential to extend India’s digital consumption by 5 instances to round $340 billion by 2030.
“ONDC will also help push up the number of digital transacting consumers by three to four times from 165-190 million to 450-500 million users during the same period,” it mentioned, as reported by ET.
ETtechHow large is the risk?
While the impression of the challenges posed by ONDC is but to be decided, the risk to the Swiggy-Zomato duopoly comes at a time when each corporations are coping with mounting losses.
According to a current HSBC Global Research observe, Zomato commanded a 54% market share within the food-delivery area for the October-December 2022 quarter, whereas Swiggy held the remaining 46%.
Amid a slowdown within the food-delivery business and pressures on profitability, Zomato, in February, approached a number of restaurant chains in search of a 2-6% enhance in commissions. For the previous two years, Zomato has been charging a fee of 18-25% per order for deliveries, relying on its association with restaurant companions.
Swiggy, however, just lately introduced that it has began charging a “platform fee” of Rs 2 from clients for each meals supply order in cities akin to Bengaluru and Hyderabad. The platform price is levied along with the supply cost.
Swiggy cofounder and CEO Sriharsha Majety, in an inside observe to staff in January, mentioned the food-delivery business’s development had not been consistent with projections.
Both corporations have additionally executed mass layoffs to rein in prices. Swiggy let go about 380 staff as a part of companywide restructuring in January, whereas Zomato fired 3% of its whole headcount in November 2022.
Zomato and Swiggy are additionally coping with different challenges akin to a number of top-level exits and a steep fall in valuations.
ET reported on May 8 that Swiggy investor Invesco has slashed the corporate’s valuation by 33% to $5.5 billion from $8.2 billion final October, when it had first trimmed the corporate’s share worth.
Zomato, too, has seen its inventory plummet over 50% since its market debut nearly two years in the past. On Tuesday, Zomato’s shares plunged practically 5% on the NSE as buyers weighed the impression of ONDC on the prospects of the food-delivery platform.
ETtechMeanwhile, business physique National Restaurants Association of India (NRAI), which represents over 500,000 restaurant manufacturers, has additionally urged its single and multi-chain restaurant companions to start out exploring the ONDC platform in its place channel however cautioned that they need to think about long-term sustainability.
Expert converse
Experts have questioned the sustainability of the “deep discount” technique opted by ONDC but additionally famous that it poses a problem to the Zomato-Swiggy duopoly.
According to Abhishek Banerjee, vice-president, ICICI Securities, ONDC can restrict the fee charges that meals aggregators cost. “ONDC at this point might be taking away the cake from the aggregators … it kind of limits the upside on the commission rates that a lot of these aggregators can probably charge and get away with. That in my view is the impact that ONDC could have on food aggregator platforms,” he mentioned.
Deepak Shenoy, founder, Capital Mind, mentioned that it was “way too early” to say whether or not ONDC would have an effect on Zomato’s and Swiggy’s business. “Of course, it is a challenge. It is a threat. I am sure they have seen other threats like this before. And you will see if this competition changes their path to profitability. Blinkit is a bigger problem for Zomato compared to what ONDC will do on the food side of the business,” Shenoy added.
“ONDC needs to ensure consumer and merchant use case satisfaction + long promotions. At 0 usage cost,” mentioned Amrish Rau, CEO of funds main Pine Labs.
Source: economictimes.indiatimes.com