Will ONDC Disrupt Online Food Delivery Landscape Dominated by Swiggy and Zomato?

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Apurva Dhamankar

5/17/20232 min read

The online food delivery market has experienced significant growth in recent years, with platforms like Swiggy and Zomato dominating the industry. Swiggy and Zomato have a more than 80% combined market share in the Indian online food delivery sector. The arrival of the Open Network for Digital Commerce (ONDC) could threaten this duopoly.

Digital commerce platforms known as ONDC platforms make use of technology to enable smooth interactions and transactions between customers, businesses, and services. By giving small and medium-sized enterprises an equal opportunity to compete with big firms and access a larger customer base, these platforms hope to level the playing field for them.

ONDC is a government-backed digital commerce platform in India that has introduced its meal delivery service in a number of cities. It is well-positioned to challenge Swiggy and Zomato's supremacy in the food delivery sector and promote digital consumption due to its direct-to-consumer business model and lower commission costs. ONDC does not have its own app but it serves through platforms like Paytm, Phonepe's Pincode, Meesho, Magicpin, and Mystore, and seller apps like Alpino, Bitlsila, Bizom, BoAt, Delhivery, and Digiit are already operational.

Swiggy and Zomato have achieved higher penetration in the food delivery market due to their early entrants, investment in technology infrastructure, logistics, customer service, and partnerships with restaurants and marketing strategies. These factors have enabled them to build strong brand recognition and consumer trust.

Despite being active in the food delivery market, Magicpin does not have the same level of adoption as Swiggy and Zomato. With a primary focus on offering consumers deals and discounts, Magicpin primarily functions as a local discovery and rewards platform. Although it is becoming more well-known in certain markets, it is still not as widely used as Swiggy and Zomato in the meal delivery industry.

With considerably lower commission costs than its rivals, ONDC is poised to upend the food delivery business by enabling restaurants to sell food straight to customers through a variety of buyer apps. According to ETtech, ONDC platforms like Paytm and Magicpin are selling food items at a discount of up to 80% as compared to Swiggy and Zomato's costs. Notably, Zomato owns a stake in Magicpin that amounts to around 16 percent. The ONDC is presently active in over 236 cities, including Mumbai, Pune, Bangalore, Noida, Kolkata, and Chennai, according to the official website.

With its emphasis on facilitating direct interactions between customers and local businesses, ONDC platforms can draw clients looking for distinctive offerings, customized experiences, and support for neighborhood companies. However, the delivery infrastructure, wide-ranging alliances, and existing networks of Swiggy and Zomato provide a hurdle for ONDC platforms.

The ONDC will increase the number of digital transacting consumers in India from 165-190 million to 450-500 million by 2030 due to the democratization of e-commerce. This will create a virtuous cycle of growth, providing consumers with a wider range of choices and better prices, while also helping India become a leading digital economy in the world.

Thank you.

Regards,

Pratiksha Thombre,

Kautilya, IBS Mumbai.

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