New Delhi: The Open Network for Digital Commerce (ONDC) has recently revised its incentive scheme for network participants, aiming to reduce dependency on discounts for adoption. This move addresses concerns regarding ONDC’s ability to break the duopoly of Zomato and Swiggy. However, these reduced incentives have resulted in a significant decline in daily order values, which have dropped by approximately 64 percent to 9,000 from the peak.
Various internet analysts have highlighted the unsustainability of the initial food delivery volumes on ONDC. Jefferies and Motilal Oswal Financial Services Ltd (MOFSL) previously stated that ONDC would not be able to disrupt the duopoly of Zomato and Swiggy. Now, analysts at JM Financial have further emphasized that ONDC, in its current state, poses no threat to any player’s business, particularly in the absence of discounts.
The revised incentives will be implemented on June 1, 2023, replacing the program that was initially launched on January 30, 2023. The program’s current phase will remain active until June 28, 2023.
Several changes are being introduced to ONDC, some of which may discourage buyers from utilizing the network. ONDC will only fulfill orders if the minimum threshold is met. The minimum cart value required for food and beverage orders is Rs 200. At the same time, it is higher at Rs 300 for all other categories, including shipping charges, as per the official communication between ONDC and network participants.
Moreover, buyers will now be eligible for incentives on a maximum of five monthly transactions. Previously, buyers could avail of discounts on three orders per day, with a total cap of 30 orders. The maximum incentives per order will be capped at Rs 100, reduced from the previous amount of around Rs 125. Considering all prices involved, it is also important to note that overall discounts should not exceed 50 percent of the total order value.
According to ONDC’s communication, the incentive program was initially conceived when the network was receiving fewer than 100 orders per day. With the implementation of the stimulus, the volume of orders increased to over 13,000 per day, prompting adjustments to the incentives and assessing their impact. However, daily order volumes have now declined to an average of 9,000, representing a 64 percent decrease from the peak of 25,000 achieved earlier this month.
ONDC currently averages over 9,000 orders per day, demonstrating that interoperable unbundled e-commerce is not only viable but can also maintain momentum beyond the stimulus period. Considering the current stage of growth, ONDC has made the decision to revamp its incentive program, as mentioned in the letter.
In summary, ONDC has revised its incentive scheme to reduce reliance on discounts and address concerns about its potential to challenge the dominance of Zomato and Swiggy. The revised incentives will take effect from June 1, 2023, and discourage buyers through minimum thresholds and limitations on the number of transactions eligible for incentives. ONDC aims to sustain its growth momentum and prove the viability of interoperable unbundled e-commerce.
