While this open network went live as a beta in September 2022, several consumers seem to have discovered food and grocery delivery via ONDC over the past few days.
Many have taken to Twitter to point out the price difference in ordering food from ONDC as against Swiggy & Zomato. One user pointed out that a McDonald’s burger on ONDC costs less than half of what a consumer pays on Swiggy and Zomato, and another user pointed out how the same pizza was 20 percent cheaper on ONDC
First, let’s look at how food delivery works on ONDC.
Unlike Swiggy and Zomato, ONDC is not an app or a platform. It is an open-source network that connects sellers, buyers and logistic players to fulfil an order.
Currently, there are seller partners such as Paytm, Magicpin, PhonePe, etc that host ONDC on their apps – they are the storefront from where the consumer can place an order for food, grocery, etc.
This is also where the business (restaurants in this case) list themselves with their catalogue (or menu). Once you place an order, it is passed on to the business, which then fulfils the order and there is a third-party logistics partner like Shadowfax, Dunzo or Shiprocket that can deliver the order. The restaurant can choose to fulfil the order themselves as well.
r charges a fee to the business. While Swiggy/Zomato charge a commission of anywhere between 18-25 percent from restaurants, the platform partners charge only 2-6 percent and around Rs 35 as a delivery fee should they choose to use the service of a third-party logistics provider.
ONDC says that while it clocked about 10,000 orders as of April-end, it has reached about 20,000 orders in the past few days.
The lower commission makes orders through ONDC a better proposition for restaurants. Sagar Daryani, Vice President of the National Restaurant Association of India (NRAI) says that restaurants currently don’t make money on delivery due to high commissions.
With commissions as low as 2-4 percent on ONDC, Daryani says the unit economics are better for restaurants, and they can pass on the savings to consumers in terms of lower prices.
