ONDC can start a price war in India’s e-commerce market with growing user base, says report

The non-profit e-commerce platform, Open Network for Digital Commerce (ONDC), can trigger a price war as the disruptive platform gains critical mass with more vendors and consumers signing up, according to a recent data.

"ONDC can trigger a price war in the Indian e-commerce market, which is set to cross the $100 billion milestone by 2024," the report by GlobalData, a data and analytics company, said.

The report further stated that while ONDC has received a large number of users since its launch in 2022, it has a long way to go before it can match the technological and service capabilities of companies like Amazon, Flipkart, Swiggy, Zomato, and others.

The ONDC is the latest initiative of the Indian government to build a digital economy -- after BHIM unified payment interface and the RuPay credit card. The government launched the ONDC as an open online sales platform for large, medium, and small-scale businesses.

"As it operates as a direct-to-consumer sales platform for manufacturers, traders, and foodservice operators, the ONDC can accelerate the digitalisation of India’s huge unorganised sector," Bobby Verghese, Consumer Analyst, GlobalData, said.

Since the beta version of the website was launched in September 2022, the ONDC has been gradually expanding its network of vendors and users. It operates as a website or application that can be integrated into other online shopping or food-ordering apps, such as Paytm, PhonePe, Magicpin, and Meesho.

As ONDC operates an open market without charging any third-party service fees, both vendors and consumers can realise considerable cost savings on their transactions.

"As the platform’s user base acquires critical mass, it can serve as a benchmark for price discovery for both vendors and consumers, instead of allowing the leading online retailers and food aggregators to dictate prices," Francis Gabriel Godad, Consumer Business Development Manager, GlobalData India, stated.

He further added that ONDC can become a disruptor in the Indian online food ordering and delivery market, where food service operators and food aggregators are tussling over service charges.

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