PhonePe scales up its shopping app to compete with large e-commerce firms

Walmart-owned fintech firm PhonePe is scaling up the operations of its e-commerce platform Pincode as an increasing number of local businesses go online to compete with large online retailers. Pincode, launched in April this year, competes with Flipkart, Amazon, Reliance's JioMart and Tata-owned BigBasket in the e-commerce space, which is forecasted to grow to $350 billion by 2030. Pincode is live in ten cities, including Bengaluru, Mumbai, Delhi, and Chennai, and is planning to expand across Tier-II and Tier-III cities in the country. The initial response and rapid consumer adoption of Pincode have given the team the confidence to expand its services.

"We are experimenting with a couple of smaller cities," said Vivek Lohcheb, chief executive officer of Pincode, in an interview. "If the seller and the buyer ecosystem are ready for it, we would accordingly decide to penetrate such cities."

The firm wants to tap other places such as Coimbatore, Udupi, and Bhopal. PhonePe forayed into e-commerce in April, launching Pincode on the government-backed Open Network for Digital Commerce (ONDC) platform. The app focuses on hyperlocal commerce. Among other things, it sells groceries, pharma, fashion, and electronic products. Overall, registered users in about six months have crossed 1.2 million. About 75,000 stores have been onboarded. The total orders placed since the launch are about 6 lakh.

Pincode offers consumers the opportunity to browse and order directly from their favourite local shops and restaurants. These include local brands such as Society Stores in Mumbai, Khan Chacha in Delhi, Ajfan Dates and Nuts in Chennai, and Paradise Biryani in Hyderabad.

Pincode said it provides attractive discounts and ensures a seamless shopping experience with the convenience of hassle-free refunds and returns.

"For small merchants, the only way they could compete with players like BigBasket and Instamart is to build their own apps and websites," said Lohcheb. "It is expensive to acquire and retain customers and to have the technology know-how. With Pincode, they can focus on their core business. We take care of customer acquisition and retention and the technology part of it."

For scaling up its services and expansion, Pincode is planning to go live with its own 'Seller App' in the next few weeks. Lohcheb said this would be key to being able to create more demand and opening up more cities.

"We are dependent on other seller platforms to create supply in those cities. We need a critical mass of sellers to open in any particular city," said Lohcheb. "So we are working with some of the ecosystem players for that."

He said the collaboration with ONDC has enabled the platform to attract a huge number of merchants. This includes reducing the time for them to integrate with Pincode. ONDC is also enabling everyone for a faster rollout.

"We are also trying to create a product which enables any merchant to come on to ONDC on their own, rather than anybody else doing the integration," said Lohcheb.

ONDC is a non-profit, facilitative platform set up by the government's Department for Promotion of Industry and Internal Trade (DPIIT) as an alternative for online shopping. It is an alternative to the prevalent app-centric e-commerce models. ONDC helps consumers directly connect with sellers and transact on any buyer app on the network, reducing the entry barriers for small businesses to compete with larger rivals. Unlike the dark store model of online retailers, Lohcheb said Pincode is leveraging the supply chain of the existing stores and giving them the platform to grow and compete with e-commerce players.

"Our strategy is not quick or late delivery or being price-sensitive. Our strategy is to fulfil the offerings of offline businesses, with online convenience," said Lohcheb.