The restaurants live on the Open Network for Digital Commerce (ONDC) hit the 50,000 mark on 23rd August. The official handle of the network shared the feat on X (formerly known as Twitter).
Key Highlights
- More than 50,000 restaurants joined the ONDC.
- The network aims to increase the number of restaurants live by the year-end.
- Effects of ONDC on Zomato, Swiggy.
The ONDC platform recently crossed the mark of hosting more than 50,000 restaurants on the network. Starting out its operations in 2022 in a pilot phase, the network has expanded to 172 cities till August 2023.
Speaking specifically on the food delivery component of the network, T Koshy, the CEO and MD at ONDC mentioned how the network fulfilled its first order in September 2022 and has grown exponentially since then. He also mentioned that the network aims to double the number of restaurants live on the network by the year-end.
This feat also puts it in an unavoidable competition with the Food giants, namely Zomato and Swiggy.
The growth of ONDC may hit the market share of apps like Zomato, Swiggy that charge hefty fees from restaurants on each order. Several restaurants have been protesting the charges from these apps for a long time now.
Effects of ONDC on Zomato, Swiggy
While the ONDC has been rapidly expanding and even taking away customers away from Zomato and Swiggy with better pricing, restaurants still heavily rely on the two giants to get online orders.
The aggregators still enjoy the market conditions of a duopoly, with JM Financial, a brokerage firm noting that the restaurants still get around 30% of their revenue from online orders routed through the aggregators.
While Zomato has seen a rally in its share price due to the first-ever quarterly profit, Tiger Global Management has exited the startup in a block deal, insinuating that the venture fund does not see much growth beyond this point.
At the same time, Swiggy has been adding new verticals to the bouquet of services it offers so as to survive in the market, with its recently launched vertical being Maxx.
While ONDC may prima facie threaten the food delivery giants, the comparison is not based upon intelligible differentia since ONDC is not a platform but a network. Thus, Zomato or Swiggy too have the option to join the network in future and leverage the technology to provide their services.
This essentially means that the apps could still survive the competition offered by the network, or even capitalise upon it, albeit by seceding some power they currently enjoy.
