How will ONDC shake up Zomato and Swiggy? ICICI Sec’s Abhisek Banerjee analyses

Abhisek Banerjee, Vice -President, ICICI Securities, says ONDC at this point might be taking away the cake from the aggregators but it limits the upside on the commission take rates that a lot of these aggregators can probably charge and get away with. That in my view is the impact that ONDC could have on the food aggregator platform.

Have you ordered from the ONDC platform? Did you get the pizza in 30 minutes flat?
I think it will not be really fair to judge the platform on the basis of one or two deliveries but also with regards to the discount that we are seeing. Most likely, it is a transient phenomenon because if you look at the invoices, you will see a Rs 50 discount, which is being funded by ONDC.

Obviously the continuity of that discount is questionable. But over the longer term, a 15% to 20% kind of pricing differential between an ONDC and an aggregator like Swiggy or Zomato is probably sustainable at least 15%. That is probably enough for very price sensitive customers to go and use ONDC but it might not be so for our users who are anyway using the platform maybe twice a week right and giving Rs 1,000 plus orders.

So the point I am trying to make is that ONDC at this point might be taking away the cake from the aggregators but it kind of limits the upside on the commission take rates that a lot of these aggregators can probably charge and get away with. That in my view is the impact that ONDC could have on the food aggregator platform.

What is the sustainability and viability of this? If you order from a restaurant, it may be cheaper. They are not paying as heavy a commission as they are to a Swiggy or a Zomato, but they also have to find their own delivery system to get the food to you and in time?
Absolutely. That is what I am saying. There are takers who will take that decline in service quality, given the discount and those are the price sensitive users but the power users, the more premium users might not be willing to switch right as of now. However, if that differential of pricing goes up to as much as 30% on a sustainable basis, it basically implies Swiggy or Zomato charging 30-35% of take rates, then the question changes. Then even the power users might be more lured into ordering through ONDC.