Food aggregator platforms Swiggy and Zomato are facing stiff competition from government-backed Open Network for Digital Commerce (ONDC), which is offering users cheaper prices for the same food items.
ONDC is a non-profit platform set up by the Department for Promotion of Industry and Internal Trade (DPIIT) as an alternative for online shopping. The network is not an app but a facilitative platform designed to ‘revolutionise’ digital commerce.
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Since ONDC does not have its own app, customers looking to order food need to do so using either the Paytm or Magicpin app. Currently, the network also counts other platforms like Meesho, Craftsvilla, Mystore, and Pincode as its buyer applications.
A Business Standard analysis showed an 8 per cent price difference between orders placed on Swiggy versus ONDC — via the Magicpin app in Bengaluru.
The order — comprising ‘lemon basil chicken’, ‘chicken Singapore noodles’ and ‘veg butter garlic noodles’ — from restaurant Beijing Bites cost Rs 907 on Swiggy. However, the price for the same order from the same restaurant through ONDC was Rs 833.The price difference observed was without using discount coupons available on Swiggy — on the baseline prices of food items. Applying these discount coupons narrows the gap in prices. These discounts are not available for every restaurant.
Since ONDC is in its nascent stages, Swiggy and Zomato offer a larger roster of restaurants to choose from.
A similar trend was observed in New Delhi, where an order for a ‘Cheese Max Box — Veg’ from Taco Bell was priced at Rs 394 on ONDC via the Paytm app. This compares to Rs 498 for the same order on Zomato, without applying any discount coupons.
ONDC acts as a direct bridge between consumers and sellers. Restaurant partners on the network deliver orders using their own delivery fleet, which can be slower than traditional food aggregator platforms. However, ONDC is not limited to just food delivery and can be also used as an e-commerce channel to compete with Amazon and Flipkart.
The online food delivery space is currently a settled duopoly. Zomato is the top player in the market with a 56 per cent share, while Swiggy commands a 44 per cent share. This is as of Q4 of FY23, according to analysts at HSBC.ONDC is touted to upset this duopoly by cutting out the middlemen between restaurants and customers. The current market leaders reportedly charge higher commissions of around 20-25 per cent. This has drawn the ire of restaurants. Commissions on ONDC, on the other hand, are much lower at around 3-5 per cent.
Through Magicpin, ONDC is fulfilling more than 10,000 orders a day. The company had joined the network two weeks ago, scaling from less than 1,000 orders to the current number.
