The rise and rise of ONDC: How the platform is looking to maintain its growth momentum

In a remarkable display of progress, the Open Network for Digital Commerce (ONDC) has witnessed a 100x increase in orders within a month, with daily order volumes hitting 20,000-25,000. But, the network confronts many challenges in sustaining its growth momentum.

For instance, it recently announced new caps on incentives for seller apps. A senior executive from a partner app says the limits were imposed as the network had exhausted its monthly budget for incentives, driven by a rapid surge in orders. The revision has now led to a significant decline in orders for network participants. “The drop has been significant. ONDC was not ready for this scale. It is now fixing its issues... to get ready for the next wave,” he says.

People working with buyer apps have confirmed the drop in orders, with some seeing a decline of up to 50 per cent, compared to peak order volumes. While ONDC has released a new incentive structure to bring back the momentum, network participants find the revised incentive structure too complex to implement and communicate to consumers.

“The revised incentive construct is very complex. Earlier it was flat, where ONDC would fund the logistics part with Rs 75 per order, and everybody offered free delivery. The revised plan still promises free delivery, but for each seller app, it is capped at a fixed amount,” said another network participant. “Now buyer apps are not sure how soon it will get exhausted and are unable to run a campaign based on it.”

Meanwhile, ONDC is working on an easier incentives structure, likely to be released soon. The upcoming Version 2.0 is expected to fix many issues, to improve delivery times, returns, conflict resolution, etc. Heightened awareness about the network, robust marketing by leading buyer apps, and the imminent launch of Version 2.0 to address specific issues, along with the introduction of additional functionalities and more participants, are expected to fuel the network’s growth momentum. 

@binu_t_paul