Domino’s Prepares for Debut on ONDC Platform
- ByStartupStory | May 19, 2023
In an earnings call, Jubilant FoodWorks announced its plans to launch Domino’s Pizza on the Open Network for Digital Commerce (ONDC) platform established by the government.
“We are organising ourselves to launch Domino’s on ONDC. Wherever customers are, we want to serve them with Domino’s Pizza,” Sameer Batra, president and chief business officer at Jubilant FoodWorks, said, adding that the company was working on tech integration ahead of the debut on ONDC. Batra, however, did not specify a timeline for the launch.
According to industry experts, the ONDC platform has emerged as a significant disruptor in the restaurant industry, posing a challenge to the dominant duopoly of food delivery partners like Swiggy and Zomato in recent months.
According to analysts, popular aggregators like Swiggy and Zomato typically impose platform commissions ranging from 20% to 30% on restaurants. In contrast, the commissions on the ONDC platform are estimated to be around 8% to 9%.
Industry sources have revealed that major restaurant chains including McDonald’s, Biryani Blues, and Wow! Momo have either already joined or are in the process of joining the ONDC platform.
The adoption of substantial discounts has led to a significant increase in ONDC’s daily orders, reaching a notable milestone of 25,000 per week. However, retail experts caution that this surge is primarily a short-term strategy.
“On the face of it, lower prices make ONDC compelling. However, this does not seem to be based on the principle of inefficiency elimination, but on the fair amount of subsidy (up to `125 per order) that ONDC offers,” brokerage house Jefferies said in a recent report on ONDC.
Once ONDC withdraws the incentive scheme, either the restaurants or the customers will have to pay for delivery, Jefferies said.
The brokerage further noted that if ONDC chooses to absorb a significant portion of the delivery costs, it would necessitate charging higher commissions from restaurants. This, in turn, could lead to higher listing prices and potentially impact the volume of orders.
In addition, ONDC sets itself apart from competitors by not maintaining large delivery fleets. Instead, it relies on third-party delivery platforms such as Shadowfax for order deliveries. This strategic approach eliminates the operational expenses associated with managing and expanding a dedicated delivery fleet, as stated in the report.
According to experts, Jubilant FoodWorks holds an advantage in this scenario as it handles its own pizza deliveries, even for orders placed through food aggregator apps, guaranteeing a delivery timeline of 30 minutes. The company has initiated trial runs for 20-minute pizza deliveries in Bengaluru, leveraging its network of 175 physical stores under the Domino’s brand. The plan is to progressively expand this swift service to 6-7 other major metropolitan cities, including Mumbai and Delhi.
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