Govt-backed ONDC looks to take a bite from Zomato and Swiggy plate

ONDC is offering low prices for the same food compared to Swiggy, Zomato

Food aggregator platforms Swiggy and Zomato are facing stiff competition from government-backed Open Network for Digital Commerce (ONDC), which is offering users cheaper prices for the same food items.

ONDC is a non-profit platform set up by the Department for Promotion of Industry and Internal Trade (DPIIT) as an alternative for online shopping. The network is not an app but a facilitative platform designed to “revolutionise” digital commerce.

Since ONDC does not have its own app, customers looking to order food need to do so using either the Paytm or Magicpin app. Currently, the network also counts other platforms like Meesho, Craftsvilla, Mystore, and Pincode as its buyer applications.

A Business Standard analysis showed an 8 per cent price difference between orders placed on Swiggy versus ONDC — via the Magicpin app in Bengaluru.

The order — comprising ‘lemon basil chicken’, ‘chicken Singapore noodles’ and ‘veg butter garlic noodles’ — from restaurant Beijing Bites cost Rs 907 on Swiggy. However, the price for the same order from the same restaurant through ONDC was Rs 833.

The price difference observed was without using discount coupons available on Swiggy — on the baseline prices of food items. Applying these discount coupons narrows the gap in prices. These discounts are not available for every restaurant.

Since ONDC is in its nascent stages, Swiggy and Zomato offer a larger roster of restaurants to choose from.

A similar trend was observed in New Delhi, where an order for a ‘Cheese Max Box – Veg’ from Taco Bell was priced at Rs 394 on ONDC via the Paytm app. This compares to Rs 498 for the same order on Zomato, without applying any discount coupons.

ONDC acts as a direct bridge between consumers and sellers. Restaurant partners on the network deliver orders using their own delivery fleet, which can be slower than traditional food aggregator platforms. 

However, ONDC is not limited to just food delivery and can be also used as an e-commerce channel to compete with Amazon and Flipkart.  

The online food delivery space is currently a settled duopoly. Zomato is the top player in the market with a 56 per cent share, while Swiggy commands a 44 per cent share. This is as of Q4 of FY23, according to analysts at HSBC.

ONDC is touted to upset this duopoly by cutting out the middlemen between restaurants and customers. The current market leaders reportedly charge higher commissions of around 20-25 per cent. This has drawn the ire of restaurants. Commissions on ONDC, on the other hand, are much lower at around 3-5 per cent.

Dumbfounded customers have recently taken to Twitter to share instances of price difference.

“Mindblown!! Ordered food from ONDC (via Paytm)..same restaurant, same dish, bill is 25 per cent cheaper than Zomato,” tweeted Nitin Agarwal, CEO, Torus Oro AMC.

He shared a screenshot of the same order costing Rs 472 on Zomato compared to Rs 347 on ONDC.

Another customer from Bengaluru, who paid Rs 358 on ONDC and Rs 430 on Zomato for the same order, tweeted, “Same food, same restaurant, big price difference! (Swiggy is) charging almost 2x the restaurant’s (price).”

“The difference between ONDC and Zomato is night and day,” tweeted another Delhi resident, who used Paytm as the ONDC buyer app.

“At this moment, it’s irrational to use Swiggy and Zomato,” he wrote, citing a payment of Rs 163 on Zomato versus Rs 92 on ONDC.

A customer from Bhubaneswar said the same order was priced at Rs 153 on ONDC through the Paytm app, in contrast to Rs 273 on Zomato.

Through Magicpin, ONDC is fulfilling more than 10,000 orders a day. The company had joined the network two weeks ago, scaling from less than 1,000 orders to the current number.