The Open Network for Digital Commerce (ONDC) has garnered significant attention from netizens in the past few days, potentially posing a threat to the current duopoly enjoyed by food delivery giants Zomato and Swiggy. The internet is abuzz with news articles and screenshots highlighting the price discrepancies of the same food items on Zomato, Swiggy, and ONDC.
Read More: ONDC sparks price war, threatens Zomato and Swiggy dominance in food delivery space
Despite the buzz surrounding ONDC, brokerage firm Motilal Oswal Securities has stated that it does not present an immediate threat to Zomato.
It said, “We do not perceive direct ordering as a major concern for the industry. However, we see ONDC as a potential threat to Zomato, only if it meaningfully scales up across categories, allowing it to achieve greater efficiency compared to the walled gardens.”
Read More: The rise of ONDC: A threat to Swiggy and Zomato’s dominance?
According to Motilal Oswal Securities, ONDC will only pose a threat to Zomato once the platform expands to multiple categories beyond food and enters the ecommerce sector. Currently, Zomato processes 1.8 million orders per day on a standalone basis, while ONDC delivers only 10,000 orders. Additionally, the brokerage firm has disputed the notion that free delivery is available on the ONDC platform, clarifying that it is only applicable to the first order on the platform, and the cost is borne by the restaurants.
“After the first free delivery, in some cases delivery charges are higher than Zomato/Swiggy,” it said.
According to the brokerage firm, the discrepancy in food prices on ONDC is not significant enough to outweigh the broader range of food choices offered by either Swiggy or Zomato.
Motilal Oswal Securities indicated that if Zomato’s attempts to rationalize its take rate are impeded, the company’s objective of achieving profitability could face further delays.
During Tuesday’s (May 9th) intraday trading, Zomato’s stock price on the BSE fell by 7% to INR 60.35. This decline was linked to Zomato’s experimentation with B2B delivery services and concerns about potential disruptions to the food tech sector caused by ONDC. Moreover, Invesco, a significant investor in Swiggy, Zomato’s competitor, has slashed its valuation by 50% to around $5.5 billion.
Read More: Zomato’s share prices drop as ONDC threatens with cheaper food options
As of the time of publication, Zomato’s stock price on the BSE was recorded at INR 61.82.
