The Open Network for Digital Commerce (ONDC), a government-backed attempt to modernize India’s e-commerce business, achieved a significant milestone in May 2024. The platform saw 89 lakh transactions across its retail and ride-hailing divisions, representing a 23% month-on-month increase.
Retail Segment Drives Growth
The retail sector emerged as the key engine of ONDC’s development, with a new high of 50 lakh orders in May. This represents a 39% increase on a month-to-month basis over the 35.9 lakh orders placed in April 2024. Notably, ONDC had a single-day record of 2 lakh retail transactions this month.
Grocery and Food Delivery Lead the Way
The grocery and meal delivery categories emerged as market leaders in the ONDC retail segment, with both breaking the 10 lakh order threshold for the first time in May 2024. This demonstrates an increasing consumer preference for using ONDC for crucial transactions.
Diversification Beyond Food
The ONDC press statement emphasized a crucial trend: “Categories like grocery, fashion, home, and kitchen have seen rising shares, indicating diversification of ONDC’s retail business.” This diversity is further reflected in the data. While the home and kitchen sub-segment saw 6.3 lakh orders, the fashion area saw 3.3 lakh transactions. Other retail subsegments contributed for the remaining 20 lakh orders.
“With the increase in contribution by other categories, the food segment accounted for around 20% of total retail orders in May compared to 76% a year ago, when food (was) the only category,” the statement further elaborated. This data suggests a significant shift towards a more balanced product portfolio on ONDC.
Ride-Hailing Segment Shows Steady Growth
While the retail sector witnessed a significant surge, the ride-hailing segment on ONDC exhibited moderate growth. The platform recorded 38 lakh trips in May compared to 36 lakh transactions in April. It’s worth noting that ONDC’s ride-hailing segment achieved its peak in March 2024 with 40 lakh trips.
Geographic Reach Expands
In terms of geographical distribution, Delhi, Uttar Pradesh, and Maharashtra had the most ONDC orders. This shows a growing user base in these areas. Beyond transaction volume, ONDC’s seller network continues to expand. The marketplace currently has 5.35 lakh dealers spread across 1,200 cities nationwide. Notably, 84% of these suppliers are designated as “small sellers,” accounting for a whopping 56% of all orders done through ONDC. This highlights the platform’s potential to empower small and medium-sized businesses (SMBs) and ensure a level playing field in the e-commerce industry.
E-commerce Giants Embrace ONDC
The Indian e-commerce landscape is witnessing a growing trend of major players integrating with ONDC. Prominent companies like Paytm, Ola, PhonePe, and Shiprocket have joined the ONDC network in the past year and a half.
Strategic Integrations Drive User Engagement
Several e-commerce giants are leveraging ONDC to expand their service offerings. For instance, reports surfaced in April 2024 suggesting that Ola was developing functionality to enable users to purchase groceries, fashion, and apparel directly through its app. Similarly, PhonePe has introduced services like food delivery and ticket booking via ONDC.
Widespread ONDC Adoption
The ONDC platform’s reach goes beyond standard e-commerce categories. Companies such as Delhivery, Dainik Jagran, Uber, IDFC Bank, Kotak Mahindra Bank, Dunzo, and Tata Neu have also partnered with ONDC. Furthermore, speculations say that the Gautam Adani-led Adani Group may be considering an e-commerce and financial venture through ONDC.
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