ONDC hopes to reach 100,000 retail orders per day, In the coming months
By siliconindia | Wednesday, 24 May 2023, 14:54 IST
Open Network for Digital Commerce (ONDC) aims to hit 100,000 daily orders in the retail segment in the next few months as it prepares to launch a second iteration of its network design and agreements, which is expected to add new features and significantly improve customer experience, according to people aware of the developments. “The announcement of the target of 100,000 orders was made at the ONDC Elevate event earlier this week where all the network participants (NPs) and bigwigs from the government were present,” said an industry source.
“This is expected to happen over the next few months as NPs adopt a new set of network specs. The 1.1 version has been in use till now and the forthcoming 1.2 version would improve order tracking, provide for more order fulfillment options like in-store pick-ups by customers, and automate the grievance redressal process to a greater extent, among other things,” he added.
The 1.1 version of ONDC specs was rolled out in March as a basic template to get the network going with a minimum set of features and technical requirements for NPs. The next version is expected to be released in a few weeks. “The plan seems to be that the 1.2 version will get implemented by June and then work will begin on the 1.3 version for a September release, just ahead of the festive sales season. I think that version will be even more fine-tuned in terms of network design and get the customer experience level on ONDC to the level of the Amazons and Flipkarts of the world,” said a second industry source who is aware of the discussions.
An report stated that retail orders on ONDC fell by more than 50 percent to around 12,000 last on May 15, compared to the previous weekend, after large discounts for users on logistics came down due to a revision of incentives disbursed by the network last week. Sources said that the issue of discounts came up for discussions at the ONDC event earlier this week as a top government official said on the stage that the network will eventually shed its reliance on big incentives for customers as such practices by large e-commerce platforms have hurt small sellers in the country.
Another important matter that came up was related to the nature of integration of large e-commerce players with ONDC. The government had earlier said that platforms that only bring their buyers or sellers to the network by building an ONDC-specific app should not be allowed. “A group of NPs asked for more clarification on the matter during the event. We were told that no exclusionary rules might be framed as such. However, as a rule of thumb, all large platforms are expected to build a give-and-take relationship with ONDC by bringing their buyers, sellers and logistics to the network,” said a person who attended the gathering.
“The sentiment seems to be that a take-only approach where you are not bringing your best to the table will be frowned upon, but not formally excluded,” he added. Since March, the transaction volume on ONDC has been growing at a fast pace. The retail segment showed a peak daily volume of over 25,000 orders, in addition to 34,000 rides per day in mobility during the first week. This growth was significantly aided by introductory incentives by ONDC, discounting schemes floated by network participants such as Paytm, PhonePe, Magicpin, and even some sellers.
With the flexibility available for the sellers and participants, many participants and sellers have taken to evolving individual discounting-led marketing campaigns. While this is one of the salient features of the network model, last weekend's issues show that a close-coordination would be required between different players in the network at least in the initial stages to prevent breakdowns.
The government-backed interoperable commerce network is seen to be emerging as a threat to the duopoly of Swiggy and Zomato in the Indian food delivery market. While the platform commissions charged to restaurants by the duo could range between 20 percent to 30 percent, the same on ONDC is around 8-9 percent as of now.
According to ONDC, lower commissions on the network will translate to more affordable prices as sellers like restaurants, grocery shops, and electronics brands are expected to pass on the benefits to the consumers. When listing prices of food items on the network appeared to be substantially lower than Zomato and Swiggy earlier this month, many thought it to be the proof of the pudding. But, analysts of different brokerage firms and industry experts have pointed out that the lower prices on ONDC in the recent past have been on account of large discounts offered by network participants like seller-side apps, buyer-side apps and ONDC itself which may not be sustainable in the long run.
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