Is this end for dominating food delivery apps? You already know the names of these 2 companies that have successfully acquired the Indian market for online food delivery. No doubt they are Zomato and Swiggy. Since 2014, many food delivery apps came into the Indian market but failed to survive, unlike Swiggy and Zomato. Examples are Eatsure, Food Panda, Ubereats, etc. But, really the same threat is disrupting the business of Zomato and Swiggy? Let's find this out in today's blog.
A new competitor has entered the market and terrified everyone with their business. Since it has been a long time it started in September 2022 but gained popularity now and today they are getting 10000 orders daily! This company is also backed by Government. Now I hope you have guessed the company, its ONDC (Open Network for Digital Commerce). ONDC is funded by 19 institutional banks including Bank of India invested 10 cr as a 5.56 % stake.
ONDC works as the middle person between Sellers and customers and charges very low fees as commission. If we compare it with other food delivery apps then Zomato and Swiggy charge between 25% to 30% whereas ONDC is charging just 2% to 4% from the sellers! So this is a huge relief for sellers to pay the commission.
Currently, the ONDC is operating in limited cities and has yet to acquire the whole nation. It is available in Bangalore, Delhi, Kolkata, Noida, and Chennai. This app will not affect only food delivery apps like Zomato and Swiggy, but it can or we guess it is creating a threat to e-commerce giants Amazon and Flipkart as this model is not focusing on Food Delivery only but it is classified into various categories such as Clothing, Groceries, Movies, and Cabs as well. So is this end of monopolies in India?
Due to the gaining popularity of ONDC in the country, it is also effectively negative to the Stock Price of Zomato as it has fallen 5% this week to Rs. 62.60/-. Not only this event has affected the prices of Zomato shares but also there is a newcomer in the market on food delivery apps which is also trending nowadays. This app will be launched by the Veteran Bollywood Actor Suniel Shetty - WAAYU. Here the app claims to be 15%-20% less expensive than other aggregators in the market.
But as I have also said earlier in my blogs, every coin has two sides. So here are some challenges that ONDC has to face in this early period to survive in the market.
1. As the company is providing additional discounts, it will not help in the long run. As business is about making profits. So the company has also said that discounts are limited for some time period.
2. As ONDC is making the process to lower the commission and ease the overall experience of the customers but still there are variations in the prices of some products as they were more expensive than Zomato & Swiggy.
3. ONDC has not started operating in the whole country and it is going to be a big challenge for them to gain the trust of customers all over the country and fulfill their expectations with their services.
5. The biggest challenge for ONDC is the duration for delivering the food on time because the company has already received some complaints that customers received the package after 1 and a half hours of order as a result, the food was cold. In response to that, the company is vigorously working to resolve this issue.
So, what are your thoughts about this app and Suniel Shetty's Waayu? Will these two are going to replace Zomato and Swiggy or they will fail like others to gain the trust of customers. Do let us know in the comment section.
If you are reading this site for the first time, allow me to introduce myself. My name is Akash, and I'm the founder of Financial Talks with Sky. I discuss a variety of topics, including personal finance, the stock market, and much more. Follow Financial Talks with Sky to learn more about finances and stock markets.
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