'Until now ONDC had to push people...': How Paytm, PhonePe support led to 100x growth for govt-backed platform

Open Network for Digital Commerce (ONDC), the government backed initiative that aims to democratise e-commerce in India, has achieved an impressive 100-fold growth in the past one month, surpassing its June target by reaching a daily order volume of about 20,000-25,000 ahead of schedule in mid-May.

The Section 8 company’s initial target was to hit one lakh orders by year-end. As per people close to the organisation, ONDC has now set its sights even higher, hoping to reach this target by end of July, thanks in large part to the aggressive marketing efforts of buyer applications.

“After PhonePe’s arrival, Paytm has also become very active. Buyer apps are now running multiple promotions, including cash backs. ONDC is also giving discount on delivery fees. Since then, orders have grown significantly, to the tune of 100X in about a month’s time,” founder of a seller-side application said.

As expected, Walmart-owned fintech company PhonePe’s arrival in early April with a dedicated app named Pincode triggered a surge in orders. Subsequently, both PhonePe and Paytm, the other large buyer app on the network, began marketing it aggressively.

“Before, Pincode, it was about 200-300 orders a day. After Pincode, it become like 3000. It woke up Paytm. ONDC has also began running various campaigns and promotions. As a result, the numbers have grown to over 20,000 a day and by this month, they (ONDC) should be doing at least 30,000 daily orders. Internally, they were looking at one lakh orders by the year end.  The momentum is there. It shouldn’t be that hard for them to grow orders 3x in the next couple of months,” said a person close to the organisation.

Sources familiar with the network suggest that Paytm, which had been sluggish in investing in the ONDC vertical, has taken a keen interest since the arrival of PhonePe with Pincode. The Vijay Shekhar Sharma–founded company is pushing seller apps to resolve catalogue and inventory related issues to improve order fulfilment besides spending on marketing. Paytm has registered 10,000 orders on weekends and Pincode sees a similar number daily on a consistent basis while the remaining orders are split among other buyer applications.

PhonePe aims to hit a daily order volume of one lakh by the end of 2023, while Paytm has a similar target, if not earlier. As per sources, PhonePe is expected to continue its marketing efforts through the end of the year, which could push Paytm to follow suit.

The remarkable growth cannot be solely attributed to the marketing efforts of buyer apps. ONDC features exclusive sellers and a range of unique products which are not available on other marketplaces. Kudumbashree, a Kerala-government backed community organization of neighborhood groups of women, received 250 orders from across India over the last weekend, which cannot be attributed to the hyper-local focused promotion by buyer apps. Since launching on ONDC in March, Kudumbashree has received over 1000 orders.

According to the founder of a company in the ONDC network, while the government is quite supportive of the initiative, there have been hints that Prime Minister Narendra Modi will actively promote it once it crosses one lakh orders per day.

Currently, food and grocery account for 80 per cent of the total orders on ONDC, with Bengaluru contributing to about 70 per cent of the orders followed by Delhi. Bengaluru-based auto booking app Namma Yatri is also growing at substantial rate, contributing to the overall numbers of ONDC.

Meanwhile, ONDC is also partnering with various government-aligned entities, such as SIDBI, to encourage employee purchases. As the seller app network continues to add more vendors on onto the network, including some of the largest retailers and D2C sellers in the country, demand will only continue to increase.

Version 1.2 of the product, which is being implemented now, has brought in a host of customer experience improvements around delivery time, returns, conflict resolutions and more. The next version, 2.0, is expected to address a lot more specific problems and bring in additional functionalities which will help ONDC to compete with giants like Amazon and Flipkart.

“Until now, ONDC had to push people, because the sales were also not significant. A lot of inbound is happening now, people now want to join. However, there are some issues to be sorted around logistics, inventory management, catalogue accuracy, fulfilment SLAs, and other braches. With the next major update, a lot of these will be solved including improving search and images besides upgrading the conflict resolutions framework and introducing an integrated grievance management. More cities will be launched and more stores will be added. This will take the network closer to the quality of marketplaces,” said one of the aforementioned people.

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