Initially devised to challenge the dominant market positions of Amazon and Flipkart, ONDC was put into effect.
The Indian government is expected to expand ONDC, the Open Network for Digital Commerce, by integrating it into the platforms of Amazon and Flipkart. This integration will involve featuring ONDC stores on the homepages of these platforms. According to sources familiar with the matter, this move aims to support the growth of the government-backed network and improve its distribution capabilities.
The executives clarified that the primary objectives are to enhance order fulfillment rates, optimize the operational efficiency of ONDC, and address any issues related to glitches and delays.
T Koshy, the managing director of ONDC, the network is, “in active discussion with Amazon and Flipkart for a phased participation and that results could be expected soon.”
As of now, neither Flipkart nor Amazon have issued any official statements regarding the matter. This development holds significance given that ONDC was initially introduced as a response to the market dominance of Amazon and Flipkart in the Indian e-commerce sector. ONDC commenced operations in January 2022.
Amazon boasts a significant presence in India, with a vast network of more than 1.1 million merchants, the majority of whom are located in tier 2 towns and cities across the country.
In February of last year, Amazon revealed its plans to integrate its extensive logistics network, encompassing pickup, delivery, and all intermediary steps, with ONDC’s SmartCommerce capabilities. Amazon’s SmartCommerce software facilitates the launch and expansion of small and medium-sized businesses in India across various digital platforms.
“These small businesses will now be able to use it to join the ONDC network,” Amazon stated.
Simultaneously with Amazon’s announcement, Flipkart’s logistics subsidiary Ekart made considerable progress in integrating with ONDC. Flipkart’s logistics division had already successfully joined the network.
There are speculations that Amazon’s initial collaboration with ONDC was solely intended to offer last-mile deliveries through Amazon Transport Services, with no plans in place to connect Amazon India’s primary marketplace with the government-sponsored network.
Customers of the company will gain access to a diverse array of product catalogs from more than 105,000 non-mobility sellers currently operating on the network if Amazon decides to fully integrate its core marketplace with ONDC. Through this interface, smaller businesses would have the opportunity to join the marketplace without encountering hefty commission fees or undergoing separate onboarding processes with Amazon.
ONDC has established itself in various industries, including groceries, fast-moving consumer goods, food and beverage, ride-hailing, agriculture products, fashion and apparel, health and wellness, beauty and personal care, electronics and appliances, home and kitchen, business-to-business transactions, exports, metro ticketing, and financial products.
The network has experienced substantial growth, with 622 “countable cities” in the January-March quarter, referring to cities that generate over 100 orders monthly. The National Restaurants Association of India (NRAI), representing over 500,000 restaurants across the country, is currently engaged in negotiations with ONDC. Leaders in the food services sector indicate that the discussions are aimed at establishing a seamless last-mile connection for food delivery services, including features such as order tracking and discoverability.
ONDC, in collaboration with NRAI, has established a Champion Council comprising prominent individuals from various segments of the restaurant industry, such as casual and fine-dining chains, quick-service restaurants, cloud kitchens, cafes, and regional establishments. As per an official associated with the council, the objective is to ensure expansion and facilitate greater industry participation seamlessly and comprehensively.
ONDC, a government-backed network competing directly with independent food delivery aggregators like Swiggy and Zomato, has successfully integrated end-to-end services for early adopter buyer and seller platforms such as Magicpin and Paytm.
In the past 14 months, ONDC has experienced substantial growth, with network participants increasing from 24 to 81. The network now encompasses thirteen domain categories, compared to the previous three, and several buyer apps—Paytm, Snapdeal, Magicpin, Pincode, Mystore, Rapidor, NoBrokerHood, Ola, and nStore—are generating a significant volume of orders.
Since its official launch in January 2022, ONDC has facilitated over 49.79 million transactions. Mobility services, primarily ride-hailing applications like Namma Yatri, comprise more than half of all monthly orders. Between February 2022 and March 2023, mobility services accounted for over 32.2 million orders, while non-mobility services accounted for over 17.5 million orders during the same period.
During this period, the food and beverage sector saw over 5.78 million orders, while the grocery category recorded 1.74 million orders. Additionally, the fashion category experienced 2.64 million orders, and the home and kitchen category had 1.35 million orders placed.
The network currently encompasses various renowned businesses and platforms across different sectors: Wow Momo, P&G, and Hindustan Unilever in the FMCG sector; Namma Yatri, Kochi Open Mobility Network, and Ola in the mobility sector; and McDonald’s, Domino’s Pizza, and Marico in the food and beverage sector. Additionally, large brands like Barbeque Nation and Rebel Foods, the cloud kitchen aggregator behind Behrouz Biryani, Oven Story Pizza, and Faasos, have recently become part of ONDC.
In April 2022, ONDC conducted live transaction tests with a limited group of vendors and buyers in five locations as part of its alpha rollout.