It’s raining food delivery apps in India: Does this mean cheaper services?

Food delivery apps have become a staple. Swiggy and Zomato have been dominating our lives. But their duopoly is under threat. The government-backed Open Network for Digital Commerce (ONDC) is here and it is likely to be a game-changer. It might be time to say goodbye to the high prices paid for delivery. But how? The biggest criticism faced by Swiggy and Zomato is the “middleman cut”. For delivering food from the restaurant to people’s dining room, the two companies charge a sum. This only adds to food bills. Now ONDC promises that it will cut down the middleman between the business and the consumer. This means patrons will have to shell out less money. How will ONDC work? First things first, ONDC is not an app or a service, it is a platform developed by the government, which can help in connecting businesses with customers. E-commerce companies can integrate into the platform, which allows customers to order food or any other product listed on the platform. Brands and businesses then need to set up their services on ONGC, which will be available to people across the country, reports The Indian Express. You can order food or any other products from the ONDC platform via apps and the order is then passed on to the business. The eatery or business will take care of the order, and the app will also share all user details with the business, which is not the case with Zomato or Swiggy, the report says. The commission taken by ONDC is minimal. It charges less than half of Swiggy and Zomato, where commissions vary from 18 per cent to 25 per cent, allowing eateries and food chains to better price their products. In ONDC, food orders are delivered through third-party providers such as Shadowfax, Dunzo and Loadshare for a fee paid by the restaurants. Does ONDC have any takers? Yes, several e-commerce businesses like Paytm, Magicpin, and Meesho have partnered with ONDC . Also, the latest entrant in the food delivery market Waayu, which promises to deliver to customers at a lower cost, will also be on the government-backed platform. Waayu, which is backed by Bollywood actor, Suniel Shetty, promises to deliver food to customers at a lower cost thanks to its no-commission policy. ONDC integration is planned for the app, according to a report by NDTV. Waayu, which is currently available only in Mumbai, also has the support of the Indian Hotel and Restaurant Association (AHAR). According to the Waayu website, it is an app with zero commission charges designed especially by and for restaurants for better profits, and visibility. It claims to be more affordable than other delivery aggregators in the market and charges “zero commission” so that the savings are passed on to the customer. Also read: Zomato shares tumble 5% as ONDC enters food delivery space; What investors should know What does this mean for Zomato, Swiggy? According to Business Insider, the development of open networks for e-commerce is the primary goal of ONDC. The platform is expected to usher in big changes in the food delivery space. It aims to dramatically increase the e-commerce penetration in the country and is currently operational in 236 cities, including Mumbai, Pune, Bangalore, Noida, Kolkata and Chennai. Also, it is giving big discounts for now. On ONDC, e-commerce businesses like Magicpin, are offering 30 to 80 per cent discounts on items from some of the popular food chains like McDonald’s, Taco Bell, Pizza Hut and Cafe Coffee Day. [caption id=“attachment_12586582” align=“alignnone” width=“640”] Swiggy holds 46 per cent of the market share in India, the rest 54 per cent is commanded by Zomato[/caption] With restaurants moving to ONDC, Karan Taurani of Elara Capital believes raising commission rates could be tough for Zomato over the medium term, which is a key driver for their profitability guidance. “ONDC augurs well for food as a product which has lower average order value versus e-commerce and white goods, where there are trust issues,” Taurani said. This comes at a time when Swiggy and Zomato are looking to make more profits and cut costs. While Zomato in February reached out to several restaurants seeking to increase commission by two to six per cent, Swiggy has started charging a platform fee of two per cent. Both companies have laid off employees recently to bring down expenses. Now a platform like ONDC gives the two market leaders reasons to worry. Deepak Shenoy, founder, Capital Mind told The Economic Times that it was “way too early” to say whether ONDC would affect Zomato’s and Swiggy’s business. “Of course, it is a challenge. It is a threat. I am sure they have seen other threats like this before. And you will see if this competition changes their path to profitability.” But ONDC is expected to affect more than the food delivery business. The Economic Times quotes a recent report by American consulting firm McKinsey, which says that ONDC has the potential to increase India’s digital consumption by five times to around $340 billion by 2030. “ONDC will also help push up the number of digital transacting consumers by three to four times from 165-190 million to 450-500 million users during the same period,” the report says. The network, which consists of numerous small- and large-scale e-commerce firms, aims to compete with established players like Amazon and Flipkart in India. With inputs from agencies Read all the  Latest News ,  Trending News ,  Cricket News ,  Bollywood News , India News  and  Entertainment News  here. Follow us on  Facebook ,  Twitter  and  Instagram .