Arriving with a price battle against the two biggest meal delivery services, Zomato and Swiggy
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The duopoly of Zomato and Swiggy in the Indian food delivery space is under threat with a new ecommerce delivery platform backed by the government triggering a price war.
Open Network for Digital Commerce (ONDC), which allows restaurants to sell food directly to consumers through buyer apps, could turn out to be the biggest disruptor in food delivery if it sustains aggressive pricing and profitability, industry executives said.
āWhat is happening is a paradigm shift; it is about empowering merchants to choose their strategies on discounts and other parameters,ā said T Koshy, chief executive of ONDC. āIt is also about empowering consumers to make their own choices,ā he told ReTale.
Prices on brands such as McDonaldās, Taco Bell, Behrouz Biryani, Wow Momo, Pizza Hut and Cafe Coffee Day are at 30-80% discounts on ONDC ordering platforms including Paytm, Magicpin and PhonePe compared to what consumers have to pay for the same items at Swiggy and Zomato.
āThe ONDC platform is definitely a journey towards profitability. But whatās happening now is a short-term discount war,ā said Sagar Daryani, vice president at industry body National Restaurants Association of India (NRAI), which represents over 500,000 restaurant brands.
ONDC is not charging delivery fees from consumers as of now, and less than half the commissions from restaurants as compared to what the established aggregators charge, executives said.
āAll this differential pricing is due to the heavy discounts being funded by the ONDC system, or other players and platforms powered via ONDC,ā Daryani, also co-founder at Wow! Momo Foods, said.
NRAI said it has advised single and multi-chain restaurant partners to start exploring the ONDC platform as an alternative channel for better commercials, but cautioned that they should consider long-term sustainability. Restaurant companies ReTale spoke with said they are keen on experimenting with the platform as an additional channel to deliver to consumers.
āWe are expeditiously working with ONDC and other stakeholders of the ecosystem to be available for our customers, and continue to serve customers with irresistible value,ā said Rajeev Ranjan, managing director of McDonald’s India North and East.
Launched in late 2021 under the Department for Promotion of Industry and Internal Trade (DPIIT), ONDC enables consumer-facing enterprises to access technologies and solutions used by ecommerce platforms, including listing, order management and delivery.
After beta testing in Bengaluru across 16 pin codes, the ONDC platform has gone live in multiple cities where consumers can order food and groceries.
Deliveries are being done through third-party last mile service providers such as Shadowfax, Dunzo and Loadshare for a fee paid by the restaurants, depending on which platforms apps such as Paytm and Magicpin have tieups with.
While commissions charged by Swiggy and Zomato from restaurants range from 18% to 25%, commissions on the ONDC platform would be less than half, at 8-10%, an executive representing NRAI said. He said the savings on commissions can be passed on to consumers by way of direct discounts.
Onboarding buyer-side apps like Paytm, Magicpin, Meesho and PhonePe have enabled ONDC to save on customer acquisition costs since these apps already have lakhs of active users.