In a 2023 Substack breakdown, product manager Asad Abrar explains that ONDC is not a delivery app but a government-backed set of protocols linking buyer apps, seller apps and delivery partners. It aims to cut the costs behind Zomato and Swiggy's roughly 20% commission, but faces open questions on delivery quality, customer support and monetisation.
ONDC is a network, not an app
Restaurant owners often hear ONDC (Open Network for Digital Commerce) described as an open channel that lets any app carry their menu without Zomato or Swiggy commission. Asad Abrar, a product manager, wrote a detailed breakdown on Substack in 2023 that looks at it as infrastructure instead: a system with specific parts, each of which can fail.
The first correction he makes is that ONDC is not a food-delivery app lining up against Zomato and Swiggy. It is a government-backed collection of protocols and rules that allows separate e-commerce platforms to work with one another. According to Abrar, it has three layers:
- Buyer-side apps such as PhonePe and Paytm, where customers browse and place orders.
- Seller-side platforms such as PetPooja and Ingenio, which sign restaurants up and put their menus onto the network. Delivery firms including Expressbees, Dunzo and Shadowfax also connect on this side.
- Technology providers that run the payment infrastructure beneath both sides.
Why earlier challengers to Zomato and Swiggy failed
Before ONDC, several players tried to take food-delivery share from Zomato and Swiggy, including Amazon Food, Ola Food and a number of individual restaurant apps. None of them managed it. Abrar identifies three reasons that keep coming up:
- Choice: one restaurant's app cannot match the range of a marketplace carrying many restaurants, so it struggles to create demand by itself.
- Delivery: without an established fleet of riders, getting orders out reliably from a standalone app is hard.
- Trust: when the product is food arriving at the door, customers stuck with the support teams of platforms they already knew rather than risk an untested one.
What a roughly 20% commission pays for
Abrar lists what a commission of about 20% on Zomato and Swiggy actually covers:
- Subsidised delivery fees
- Customer support
- Promotions and marketing
- The technology running the platform
- Salaries for sales, operations and tech staff
ONDC's plan is to go after each of these costs. Connecting to buyer apps with big existing user bases, such as PhonePe and Paytm, is supposed to push customer acquisition cost close to zero. The seller-side network is meant to make signing up restaurants quicker and cheaper. Technology costs are shared, with government support, instead of every platform paying to build its own stack. If commissions fall, the thinking goes, restaurants can hand part of the saving to customers as a lower price that gives them a reason to switch.
Three risks the model still carries
Abrar is candid that ONDC's design brings new risks as well as removing old ones:
- Delivery quality. Zomato and Swiggy run their own rider fleets from start to finish. ONDC depends on third-party delivery partners it does not directly manage, so it is harder to promise the same standard of service everywhere on the network.
- Customer support. ONDC is counting on AI and its technology partners to keep support costs low, an approach not yet proven at the volumes Zomato and Swiggy handle.
- Monetisation. Buyer apps plan to earn from restaurant and brand advertising, while seller platforms intend to bill restaurants for services such as order acceptance and catalogue upkeep. Neither side is used to paying for things this way today.
What this means for your restaurant
- Know which layer you are dealing with. On ONDC you join through a seller-side platform such as PetPooja or Ingenio, and customers find you through buyer apps such as PhonePe or Paytm.
- Look past the headline commission. Abrar's three risks, namely delivery consistency with third-party riders, customer support, and how the network will earn money, are what to check before moving orders across.
- Budget for new kinds of charges. Seller platforms intend to charge for accepting orders and keeping your catalogue up to date, and buyer apps plan to sell advertising to restaurants and brands.
- Abrar's analysis dates from 2023, so confirm how each of these points works today before you commit.
Sources
- #10 How ONDC can compete with Swiggy/Zomato? — Substack (Asad Abrar)
This article summarises the reporting and guides listed above; the figures belong to those sources and are attributed in the text. Check anything that affects your business against your own platform agreements, payout statements and advisers.