ONDC’s CEO T Koshy: Scaling Up Not Viable through Discounts
- ByStartupStory | June 6, 2023
The government-supported open network for digital commerce (ONDC) has garnered significant attention by initiating a price battle against Zomato and Swiggy. With substantial investments in discounts, ONDC anticipates that the network’s reliance on giveaways cannot be sustained and will be terminated in the coming months. TOI interviews T Koshy, the Managing Director and CEO of ONDC, regarding the growth strategy and the potential involvement of prominent e-commerce companies in the network.
We currently operate in over 240 cities with approximately 47 network participants. Among these participants, seven are logistics providers, 12 are buyers, and the rest are seller apps. In the initial week of January, we witnessed around 50 daily transactions in the food and grocery sector. Presently, that number has escalated to a range of 10,000 to 20,000 daily transactions.
We have recently expanded our services to include domains such as fashion and electronics. We anticipate an increase in transaction volumes for these categories in the upcoming months as more merchants join our network. Leading companies like Snapdeal, Boat, and Sangeetha Mobiles have already joined as early adopters. We expect a growing number of sellers to join us soon as they witness the benefits of our platform.
Unlike the existing platform-centric model where platforms dictate the terms and conditions, ONDC shifts control to the end-points, allowing merchants to present their own terms and conditions. Additionally, we have plans to introduce financial products on the network within the next three to four months.
ONDC adopts a strategy of using incentives to initiate the network by incentivizing trial orders. While individual network participants have the freedom to offer their own schemes and promotions, ONDC ensures that its own offers are thoughtfully curated to encourage a diverse range of merchants to participate and attract a wider audience. To avoid the concentration of offers among a select few merchants or products, upper caps have been implemented. It’s important to note that these discounts and incentives will only be available for a limited duration, spanning a few months.
ONDC offers sellers the freedom to avoid exclusive partnerships with any particular platform. Various types of platforms are joining the network, attracting diverse sellers. This diversity will facilitate specialization and innovation, leading to improved efficiencies and reduced cost structures in supply chains. Merchants are experiencing a newfound sense of liberation as they gain access to their own consumer data.
The freedom and flexibility provided by ONDC, as a democratic network, is preferred by many merchants and brands. There is a growing interest from international brands with operations in India to join ONDC. Additionally, several banks are in advanced stages of integration with the network.
If a seller platform does not adhere to proper behavior, the buyer platform retains the right to reject orders. In the food sector, the majority of deliveries are completed within one hour, although occasional delays have been observed. All participants are actively improving their processes and refining their operations, driven by the incentive to do so.
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