Could ONDC kill Swiggy and Zomato?

ONDC is touted as the big revolution in India's E-commerce sector, and in this video, we take a look at how it's impacting the food delivery space.

Currently, India's food delivery space is dominated by two players, Swiggy and Zomato.

Both these players have a similar business model: They onboard all the restaurants on one platform and take orders from customers on their app. The company has a fleet of delivery partners, who fulfil these orders.

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00:00 Intro
00:12 How ONDC will have the same effect as UPI
01:51 Why ONDC won't have any effect on Swiggy and Zomato
02:55 Why Swiggy and Zomato will have to move to ONDC
07:05 What is the objective of ONDC?
09:32 Is ONDC cheaper than Swiggy and Zomato?
11:49 Which companies will end up replacing Swiggy and Zomato?
15:03 Predicting the future of ONDC
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How does ONDC work?

Unlike Swiggy and Zomato, ONDC is not an app or a platform. It is an open-source network that connects sellers, buyers and logistic players to fulfil an order.

Currently, there are seller partners such as Paytm, Magicpin, PhonePe, etc that host ONDC on their apps – they are the storefront from where the consumer can place an order for food, grocery, etc.

This is also where the business (restaurants in this case) list themselves with their catalogue (or menu). Once you place an order, it is passed on to the business, which then fulfils the order and there is a third-party logistics partner like Shadowfax, Dunzo or Shiprocket that can deliver the order. The restaurant can choose to fulfil the order themselves as well.

The Economics

In terms of economics, the platform provider (Paytm, for instance) charges a commission and the logistics partner charges a fee to the business.

While Swiggy/Zomato charge a commission of anywhere between 18-25 percent from restaurants, the platform partners charge only 2-6 percent and around Rs 35 as a delivery fee should they choose to use the service of a third-party logistics provider.

Current Scenario

Recently, there was a lot of hype about ONDC as people compared the prices between Swiggy/Zomato and ONDC.

ONDC is definitely cheaper than ordering from Swiggy and Zomato, but it has it's own challenges.

Firstly, it has to solve the trust factor. Currently, Swiggy/Zomato ensure fair delivery of an order and also resolve the issues, but in case of ONDC, there doesn't seem to an authority that will resolve these disputes.

Secondly, restaurants will have to take care of things like their tech and delivery which is really a big hassle.

It will be really interesting to see how ONDC plays out in next few years and does it really revolutionise the e-commerce space, as it has been envisioned?

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