Flipkart is reportedly gearing up to enter the food and beverage (F&B) sector via the Indian government-backed Open Network for Digital Commerce (ONDC). Some of the top executives of the Walmart-owned e-commerce giant recently engaged with ONDC officials for the integration. Once ONDC seamlessly integrates into the Flipkart app, users can order food from a broader selection of restaurants and fast-food outlets.
Flipkart integration with ONDC promises not only more food variety but also potentially more competitive pricing compared to established food delivery platforms like Swiggy and Zomato.
Additionally, by leveraging ONDC’s network, Flipkart avoids the need to invest in a dedicated delivery fleet or convince restaurants to list exclusively on its platform. This strategic approach will reduce the company’s operational overheads, potentially leading to more competitive pricing for consumers.
But here the question arises: Is Flipkart evolving into a one-stop destination for all needs?
This is evident from the fact that Flipkart has been expanding its service portfolio from traditional e-commerce to soon-to-be-launching quick commerce, food and beverage, fintech, supply chain and more.
Indian Government Pushing ONDC
Flipkart’s decision to integrate with ONDC couldn’t have come at a better time, perfectly coinciding with the remarkable growth of the platform.
In May 2024, ONDC achieved a significant milestone, processing 8.9 million transactions across retail and ride-hailing sectors, an impressive 23% MoM increase.
Within retail, the ONDC Network handled a record-breaking 5 million orders, marking a 39% month-over-month increase. Notably, both grocery and food delivery surpassed 1 million orders for the first time, while home and kitchen saw 630,000 orders and fashion registered 330,000 orders. Other retail sub-categories contributed a combined 2 million orders.
Another noteworthy fact is that despite food and beverage being one of the most popular categories on ONDC, its share of total retail orders has dramatically dropped from 76% a year ago to 20% in May. This decline, however, shows that the platform is expanding its offerings beyond traditional F&B, welcoming a variety of retail services.
The Indian government aims to increase e-commerce penetration to 25% in the next few years, targeting a gross merchandise value of $48 billion. This presents a lucrative opportunity for businesses to expand their reach and capitalize on the thriving digital landscape.
By levelling the playing field, ONDC eliminates the dominance of large e-commerce players, enabling smaller retailers and restaurants to partake in online commerce. This encourages competition and potentially leads to better deals for consumers.
In April this year, the Indian government took decisive action, urging e-commerce titans Amazon and Flipkart to establish ONDC storefronts on their home pages. This directive has sparked a significant influx of companies joining the ONDC network, either to expand their existing operations or introduce new services such as food delivery and ticket booking.
Among the leading Indian companies that have seamlessly integrated with ONDC are Ola, PhonePe, Delhivery, Dainik Jagran, Uber, IDFC Bank, Kotak, Dunzo, and Tata Neu. Last month, the Department for Promotion of Industry and Internal Trade (DPIIT) revealed that 12 Indian unicorn startups, including EaseMyTrip, OfBusiness, Zerodha, and PhysicsWallah, have signed letters of intent to join the ONDC.
As more players power themselves with ONDC, deep-discounting becomes a significant differentiator. All players will enjoy a similar level of backend support, be it fleet cost or product pricing. Companies will have to play on their margins in a bid to stay ahead of their competitors. Therefore, it would be interesting to see what strategies these players on the ONDC network employ to keep their customers glued to their apps.
Flipkart ONDC-powered food delivery represents a significant step towards a more inclusive and competitive e-commerce ecosystem in India. This collaboration between businesses and the government opens the door to a future where consumers have greater choices at lower prices and businesses of all sizes can thrive online.
