Ola, the well-known ride-hailing service, is set to broaden its reach by going live across India on the Open Network for Digital Commerce (ONDC) in the Food and Beverage (F&B) category, as confirmed by ONDC’s Chief Executive T. Koshy. This expansion emphasizes Ola’s commitment to leveraging the ONDC platform, which is designed to enhance digital commerce and empower local businesses.
As of now, Ola operates in only a few cities on the ONDC platform. However, Koshy stated that the company has plans to expand its footprint across the entire country. This move aligns with Ola’s strategic interest in the F&B segment, which has already shown promise. In addition to F&B, Ola has also ventured into the groceries segment on ONDC, and Koshy indicated that additional sectors would be explored soon.
The ONDC initiative, backed by the Indian government, aims to create an inclusive online marketplace, where various stakeholders benefit from an open network. It encourages the participation of local businesses, thus enhancing local economies, particularly by boosting driver incomes. According to the white paper recently released by ONDC, the platform has positively impacted approximately 550,000 drivers across 18 cities in eight states.
Uber, a competitor to Ola, is also monitoring the developments within ONDC, with interest in entering transit and intercity bus services. However, unlike Ola, Uber currently does not have a presence in the F&B sector on the ONDC platform.
The white paper titled “Driving Digital Inclusion — Open Network and New Business Models in Mobility Apps” outlines the economic impact of the ONDC initiative. It projects that the model could potentially increase drivers’ incomes by up to 30%, resulting in an estimated income boost of ₹1.36 lakh annually for each driver, aggregating to ₹20,475 crores for 1.5 million drivers. This economic uplift could translate to a broader impact ranging between ₹51,000 crores to ₹67,000 crores annually through increased local consumption.
A notable strategic shift in the ONDC model is the implementation of network fees, which will be introduced at ₹1.5 for transactions exceeding ₹250 beginning January 1 of the coming year. This move challenges conventional aggregator-driven platforms that often impose high commissions, which can erode drivers’ earnings. The ONDC aims to provide a zero-commission alternative, allowing drivers to retain the entirety of their earnings.
Koshy highlighted this vision in his comments, stating, “Eventual sustainability for ONDC hinges on a small margin maintained on transactions.” The organization is in the process of developing models that align with this self-sustaining goal, actively engaging with participants in the network.
In addition to its F&B venture, Ola is expanding its logistics capabilities on ONDC. The introduction of warehouse-as-a-service is expected to support this growth. Koshy informed that this initiative is part of a broader strategy aimed at modernizing logistics solutions.
While the ONDC initiative strives for inclusivity and growth, it also faces challenges relating to financial incentives. To manage cash burn, ONDC plans to utilize financial incentives strategically to encourage consumer trials, having already reduced the financial support per participant to ₹40 lakhs.
As ONDC continues to scale, it represents a shift towards a more inclusive digital economy. With over 200 apps under its umbrella, ONDC facilitates interactions between various buyer and seller apps, enabling customers to purchase products across diverse platforms. The ONDC model’s adaptability potentially positions it as a significant player in India’s evolving digital commerce landscape.
As this initiative unfolds, the involvement of major players like Ola and Uber in ONDC may well transform India’s approach to online commerce, encouraging local participation and driving growth across multiple sectors in the economy.
Ola’s forthcoming move to establish itself pan-India on the ONDC platform not only showcases its strategic agility but also highlights a significant evolution in the Indian digital marketplace landscape.