Why ONDC Can’t Take Down Zomato and Swiggy?
In 2022, when the Open Network for Digital Commerce (ONDC) was launched, it was touted as a revolutionary initiative that would democratize e-commerce in India. Backed by the Indian government and a consortium of public sector entities and banks, ONDC aimed to do for e-commerce what UPI did for digital payments, make it open, interoperable, and inclusive. But three years later, the optimism surrounding ONDC has faded. ONDC is not a standalone app or marketplace. It’s a digital infrastructure – a protocol layer that connects buyers and sellers, regardless of which app or platform they use. Think of it like UPI, just as UPI allows different banks to interact seamlessly for payments, ONDC enables seller-side platforms and buyer-side apps to communicate and transact with one another. This eliminates the need for exclusive partnerships and theoretically gives every business a fair shot at visibility. This model had the potential to disrupt India’s e-commerce and food delivery segments. With lower commissions and more seller freedom, ONDC promised better margins for businesses and more options for consumers. But fast-forward to 2025, and ONDC’s food and retail segment seems to be losing steam.
In October 2024, ONDC was clocking about 6.5 million retail orders a month. By February 2025, that number had dropped to 4.6 million, a 29% decline. Retail transactions, once nearly half of all ONDC activity, now make up just 29%. Meanwhile, ONDC’s mobility vertical has surged, with its share of transactions rising from 40% to 56%, thanks to platforms like Namma Yatri and Ola plugging into the network. Logistics, too, has seen a modest increase. This shift suggests that ONDC’s promise in food delivery and general retail hasn’t materialized as expected. And the reasons are manifold. Unlike payments or mobility, retail, especially food delivery, is complex. It involves real-time inventory, smooth user interfaces, customer support, returns, refunds, and quality control. Zomato, Swiggy, Amazon, and Flipkart have spent years perfecting these elements, backed by massive funding and tech infrastructure. ONDC’s decentralized model makes it harder to ensure consistency. Surveys have shown that over half of ONDC users find the interface clunky, while nearly a third report issues with customer service. In a market where consumers are used to the slick, fast, and dependable experience offered by private players, ONDC’s shortcomings become all the more glaring.
One of the primary tools used by ONDC to attract users and sellers was subsidies. Buyer and seller platforms were initially offered incentives up to INR 2.5 crore. These subsidies made it possible to offer steep discounts to consumers while maintaining low commissions for sellers, essentially ONDC’s core value proposition. But that model wasn’t sustainable. By early 2025, incentives were slashed to just INR 30 lakh per participant. As a result, the discounts dried up, and with them, consumer interest waned. Unlike Zomato and Swiggy, which built user bases on the back of years of VC funding and a willingness to burn cash for market share, ONDC has to justify every rupee it spends, being backed by public institutions means there’s greater scrutiny and a strong emphasis on financial prudence. The equation just didn’t add up. Without deep pockets or a compelling UX, ONDC struggled to keep users engaged. The troubles aren’t limited to user-side dissatisfaction.
There have been murmurs of discontent among ONDC’s partners as well. The National Restaurant Association of India (NRAI), representing over 50,000 eateries, was rumoured to be stepping back from ONDC and exploring partnerships with Rapido, a ride-hailing company with food delivery ambitions. While both ONDC and NRAI dismissed these claims, the fact that such rumours gained traction indicates a lack of confidence in ONDC’s direction. Since December 2024, ONDC has seen the exit of three top executives, including its CEO, CBO, and non-executive chairperson. Leadership instability at a time when the platform desperately needs strategic clarity has only raised more questions about its long-term prospects.
Despite its struggles, it’s too early to write off ONDC entirely. The platform still enjoys strong institutional backing, and its vision of an open, interoperable digital commerce ecosystem remains relevant. If ONDC can simplify its user experience, invest in better customer support, and refocus on high-potential verticals like mobility and logistics, it could still carve out a sustainable niche.
