There has been so much talks and discussions happening over last few days comparing food delivery majors Zomato and Swiggy to ONDC, a government backed network that has been around since September 2022. As per reports, ONDC has surpassed the 10,000 daily order mark and that’s when Netizens have started comparing the food delivery prices offered by ONDC, Swiggy, and Zomato and have found ONDC cheaper.
The Broader Picture
“ONDC seems to be a creative proposal on the part of the government wherein this platform enables us to sell our food straight to consumers. This platform has an edge over Swiggy and Zomato because of the following reasons - The CAC that exists in Zomato and Swiggy may not exist at all on a network like ONDC. Restaurants listed on ONDC will have access to the data of the customers ordering through this platform,” shared Vikrant Batra, Co-Founder, Dhansoo Cafe, Gurugram who is also of the view that a clear and full picture would only happen if the shift happens at a larger national scale.
Though, people might find this website cheaper to order at this juncture but if you really start ordering from it regularly you would notice that they are charging a price that is equivalent or even higher in some cases to that of other food aggregators. As per a brokerage firm Motilal Oswal, the delivery on ONDC apps is only free for the first order. In the case of a discounted /free delivery, this cost has to be borne by the restaurant (possibly to increase competitive advantage against incumbent duopoly) and is not sustainable. Also, after the first free delivery, in some cases, delivery charges are higher than Zomato/Swiggy.
“ONDC does have some shortcomings like the restaurants going on ONDC must have their own runners and delivery boys for this task. Also, ONDC does not provide the benefit of comparative analysis of different food joints to take a quick decision. Also there is no info on details like time of delivery, expected wait time etc. So, even though the costs are lower in ONDC but we will see the full impact only when it is launched in a full-fledged way,” added Batra.
Commenting on the same, Debaditya Chaudhury, MD, Chowman, Oudh 1590 & Chapter 2 mentioned, “I think that this new ONDC initiative by the Government will change the entire ball game. Acting as medium for a direct link between the business and consumers, businessmen like us will be much relieved from the high commissions that were being charged so far. Also I think it will be super convenient for both the restaurant and consumer parties in terms of dealing with any food complaint and delivery issue, since the direct link will manifest a quicker response that were otherwise going through a big loop of intermediary chain.”
Entering the Delivery Game: ONDC vs Swiggy/Zomato
The online food delivery market is valued at 2.9bn USD where Zomato and Swiggy, both acquiring local players as part of their expansion drive. Others in the market include delivery service by international QSR chains ike McDonald’s that also seen a 60% boom in its delivery business in last 2-3 years, followed by KFC, Domino’s, Burger King and cloud-kitchen brands like Rebels Foods and Curefoods amongst others.
But there’s no denying that Zomato and Swiggy enjoy a duopoly when it comes to online food delivery business in India getting your favourite food delivered at the comfort of the home, they are also criticised for the “middleman cut”, which further increases the price.
“ONDC is the way forward and a step towards a non-partial system where the consumer and vendor/restaurant both gets the benefit. It is more about convenience and transparency. Today’s consumer is far more evolved and aware as are the restaurants. Profit margins are not what they used to be pre-pandemic hence the need to work with a more transparent system and rework dynamics with aggregators where commissions take over,” pointed Vishal Anand, Founder, Moonshine Food Ventures, Gurugram that operates SAGA, NUSH MUSH, CAFE STAYWOKE by adding that ONDC is definitely an initiative that will be beneficial for the guest and the restaurant.
Commenting on the same, Pawan Shahri, Co-Founder, Chrome Hospitality said, “India is on the crux of leading the food and beverage landscape. With the introduction of technology, India's F&B industry is expected to grow and an effort like this from the government is always welcomed. A few years ago, we too had piloted a concept to evade the heavy commission fee charged by third party delivery platforms. This is always favorable from a restaurateur's perspective.”
The experts were also of the opinion that this also opens the opportunity for restaurants to control their own discounts and will not be pushed for any platform discounts. This helps restaurants to build a viable connect with the end customer. For third-party vendors too, this will change the game, they will be pushed to rework their commission models and serve better to both restaurants and customers alike.
“This is a great way to introduce some level of standardization in the overall scheme of things. It is very encouraging to see these efforts by the government, this will definitely boost overall scale in the F&B sector,” added Shahri.
Hence, we can say that though it may become beneficial for restaurants that are running self-owned fleet where they too will be able to make a good use of their fleet to serve customers over ONDC platform. But we really need to keep in mind that other aggregators like Swiggy and Zomato have created a duopoly with a huge investment and good marketing strategy. So, it might take some time and strategies for ONDC to really match up to that.