Onboarding some of the larger incumbents early might actually provide ONDC the much-needed scale as well as credibility with buyers and sellers, it said.
The best-case scenario for ONDC – the government’s ecommerce initiative – would be to work along with incumbents Amazon and Flipkart, JM Financials has said in a report.
This, despite Open Network for Digital Commerce (ONDC) being initially perceived as a “giant killer”.
Onboarding some of the larger incumbents early might actually provide ONDC the much-needed scale as well as credibility with buyers and sellers, it said.
“From these companies’ perspective, we advocate them joining the network as any lowering of take rates (due to sharing with other network participants) can be amply compensated by boost in volumes along with the option value in case ONDC picks up traction similar to UPI,” according to the report.
ET was the first to report that Flipkart, Amazon and Reliance may join the network in May.
Flipkart’s e-kart, its payment app PhonePe, and Reliance’s Grab has already integrated with ONDC.
Early signs
Currently, ONDC is going through pilot projects in multiple cities and is expected to be open to the public soon.
JM Financials did a data analysis based on the pilot and found that the median overall take-rates are expected to be 20-30% lower for ONDC compared to ecommerce platforms.
In food tech, price comparison of some products across a few restaurants in Bengaluru suggests that the final order value on ONDC is on par or sometimes even higher than on other apps.
However, discounts and other offers on the Zomato platform can make it a better value proposition for the customer compared to ordering on ONDC.
Similarly, in the groceries category, ONDC has most products listed on MRP and delivery fees is charged on all orders, whereas the same products on quick commerce apps (Swiggy Instamart and Dunzo) are offered at a discount and free delivery is offered above a certain order value.
For example, a basket of goods in the grocery category cost Rs 940 on ONDC whereas the same basket cost only Rs 896 on Swiggy’s Instamart and Rs 890 on Dunzo.
“Moreover, wide range of SKUs, more defined categorisation and better user interface make quick commerce apps an obvious choice for ordering over ONDC,” the report said.
Lucrative option
According to the report, the commission on ONDC could be 8-15% depending on the category.
Sources have told ET that over 300 players have signed up to integrate with the network on the buyer and seller side, as well as in logistics.
“The opportunity to monetise a large user base is understandably also the reason why major Indian banks, BSE, National Securities Depository Ltd (NSDL) and National Payments Corporation of India (NPCI) have bought a stake in ONDC with 20 government and private organisations having confirmed investments worth Rs 250 crore,” the report said.
ET reported on September 1 that NPCI, the body in charge of operating the Unified Payments Interface (UPI) railroad, is set to buy a 10% stake in ONDC.
Source : https://retail.economictimes.indiatimes.com/news/e-commerce/e-tailing/onboarding-flipkart-amazon-may-provide-ondc-scale-and-credibility-report/94005723