For the month of August, Open Network for Digital Commerce (ONDC) recorded a 5 percent month-on-month growth in transactions to 12.58 million.
ONDC Witnessing Slow Growth
In comparison to the revenues, the company registered a 21 percent surge in July.
This seems to be affected by the tightening of cash incentives for mature segments like food and grocery by the government-backed interoperable network.
In a closer look, 4.74 million transactions were in the mobility category through Uber, Ola challenger Namma Yatri.
While the rest 7.84 million were in the non-mobility category including retail purchases made by consumers and on-network logistics transactions to deliver those orders.
Most of the orders placed on ONDC were delivered by sellers off the network, just a few months back.
But soon, the scenario has changed as logistics services provided on the network by companies like Ola, Loadshare, Pidge, and Shadowfax have ramped up the offering in the past few months.
In the meantime, on-network logistics transactions for orders continued its surge during August and grew 20 percent month-on-month to 1.7 million.
Surge In Food & Beverage Orders
There was a surge with the number of orders in the grocery segment by 61 percent in July, it contracted 11 percent to 1.28 million orders in August.
Similarly, there is an increase with food and beverage orders, it rose 12.5 percent month-on-month to 1.89 million.
When it comes to Fashion, it contributed 650,000 transactions in August.
Home Kitchen accounted for 570,000, and the balance 1.75 million orders were cumulatively from other categories like gift cards and electronics.
As we have witnessed that multiple new-age companies such as Paytm, Ola, PhonePe, Meesho, Magicpin and Shiprocket have taken to ONDC over the past year-and-a-half.
They are aimed at breaking the stranglehold of a few players such as Amazon, Flipkart, Zomato and Swiggy on online retail in the country.
Now, the government hopes to increase e-commerce penetration in the country to 25 percent in the next couple of years.
With the help of ONDC they are planning to reach a gross merchandise value of $48 billion.
Considering the retail category’s fast growth, ONDC has announced a phased reduction of up to 75 percent in financial incentives for network participants by the September quarter.
Besides this, the network participants have also been advised against adjusting the incentive payouts for their goods and services tax calculation.
It appears that the network has been giving financial incentives to network players as per their order volumes and categories.
Basically, this money is further utilized in funding the discounts and offers for customers to promote rapid adoption of the government-backed network.
In this new incentive structure, they have reduced the maximum monthly limit of incentives that can be availed of by a player to Rs 2.5 crore from Rs 3 crore earlier.
It also comes with a designated quarterly limit of Rs 6 crore.
In a closer look, the new structure has the highest drop in incentives for the food and beverages (F&B) and grocery categories which together make up a large share of the network’s monthly retail order volumes at present.
