Currently hosting 65 participants, including buyer-side and seller-side apps, logistics players, and approximately three lakh merchants and service providers, the government based e-commerce network ONDC (Open Network for Digital Commerce) is still working towards achieving mass adoption.
In an effort to challenge venture-capital backed e-commerce giants on their home the ONDC appears to be adopting strategies akin to its private counterparts, including high cash burn and frequent fundraising.
ONDC is currently in the process of securing additional funds and is engaged in discussions with both new and existing investors, according to reports. Launched as part of the digital public infrastructure India Stack in 2022, ONDC had previously raised Rs 180 crore in 2021-22 from private and public institutions, including banks, stock exchanges, and government organizations like SIDBI and NABARD.
Despite concerns regarding ONDC’s burn rate, the platform, aimed at disrupting and unbundling e-commerce in India, continues to offer various incentives to participants to boost transaction volumes. This includes recent announcements of incentives of up to Rs 100 per order on food, beverages, and grocery sales, along with additional incentives for categories such as fashion, beauty, and electronics. These incentives are intended for buyer-side apps recording under 10,000 orders a week, with reductions as volumes improve.
Critics question ONDC’s aggressive spending approach, drawing parallels with industry leaders like Swiggy and Zomato. However, proponents argue that such incentives are crucial for scaling ONDC and attracting a larger consumer base.
While its mobility business, primarily driven by Juspay, is witnessing increased scale, concerns persist about ONDC’s sustainability as a fund-consuming entity, especially when competing against VC-backed rivals with cost-cutting measures.