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ONDC is the perfect platform for establishing and expanding your F&B business online. With ONDC, you can reduce your commission costs, increase your online presence, and maximize your profits. The first step towards onboarding on ONDC is choosing the right seller network who has the capability to on-board seamlessly and serve you long term. Gofrugal is an omni-channel ERP solution, one of the first ERP to participate in the network. Gofrugal helps you manage your business efficiently with minimal resources, including inventory, billing, CRM, purchase, accounting and much more. Onboarding your business to ONDC with Gofrugal is as easy as ABC. All it takes is a GST number and a good catalog. Share your interest today! For more details, speak to V Nandakumar +91 81440 77433 or visit www.gofrugal.com
-Monisha Timple Prakash (firstname.lastname@example.org)
Are you a restaurant onwner suffering from the online phobia? Are you the one who is always fed up with voicing against the unethical practices followed by the online players across India? The Government of India comes up with an initiative to provide solutions for your uncertainties. ONDC, with its primary objective is to significantly increase the adoption of e-commerce has already gained popularity, with daily transactions reaching 10,000 orders.
What is ONDC?
The Open Network for Digital Commerce (ONDC) is an initiative that seeks to revolutionize the way goods and services are exchanged over digital networks. It is built on the principles of open-sourced methodology, utilizing open specifications and network protocols that are not tied to any particular platform. By establishing open protocols for every step of the exchange process, similar to how the internet relies on protocols like UPI for money transactions.
ONDC’s protocols will standardize crucial operations such as cataloguing, inventory management, order management, and order fulfillment. This standardization empowers small businesses to leverage any ONDC-compatible application instead of being confined by platform-specific policies. Consequently, it grants small enterprises multiple avenues for discovery and business transactions on the network.
Need for ONDC in the online food delivery landscape :
The large difference in food prices between ONDC and food delivery apps can be attributed to their varying business models and the commissions they charge. ONDC charges significantly lower commissions (2-4%) compared to the higher commissions (25-30%) charged by Zomato and Swiggy. This lower commission rate incentivizes restaurants to join ONDC and eliminates the need for restaurants to pass on the extra costs to customers.
K.S. Krishnan, the founder of Uttar Bhojan – Taste the North and Dakshin Bhojan – Taste the South, Chennai. He says, “The big shift in consumer behaviour on buying online is affecting cloud players.” He adds that there is an increase in online sales rather than offline. This allows the online aggregators to gradually increase their commission between 25% – 30%, which is actually killing the restaurants. He lists the challenges such as lack of transparency of customer details, increases in input cost, and higher commission margin. He stresses, “The restaurants get sandwiched between the input cost pressure and the higher commission from the online aggregators. Eventually leads to no profit.” He also brings in a different dimension where he states that Chinese cuisine gets more margin than South and North Indian cuisines, which require high cost. Furthermore, he shares that they can neither increase the selling price nor the profit, which questions their survival.
Industry experts suggest that it may be too soon to underestimate the private food delivery app as ONDC is still in its early stages. Established players have an advantage with their well-established network and customer base.
Current challenges with private delivery apps:
Another leading restaurant owner from Alwarpet in Chennai, on the condition of anonymity, explicates three major challenges in using online delivery platforms: higher commission margin, deep discounting, and the CPC model on the delivery platforms. “The higher commission margin of the online delivery platforms affects the profit of the restaurants. He also adds that as the market is driven by discounts, the sales depend on the discount percentage that the restaurant provides.”
The restauranter says, “We have to bear the seeding as well as the deep discounts. If discounts provided by the restaurant reduce, the sales also get reduced.” The CPC (Cost-per-click) bidding is also high which also affects the profit. He furthermore adds that the climate plays a central role in deciding the sales of the restaurant. They are currently facings a reduced number of delivery partners as a result of the scorching summer which also affects the business.
Visuvesvaran of Hotel Aryaas, Kochi, sheds light on the challenges they face because of online aggregators. He started with the high margin standards of the leading online platforms and the online aggregators’ ability to optimize the level of orders that a restaurant can sell. One of the important factors noted by him is that the system of the leading monopoly finds fault with the restaurants and not with the delivery pilots. This is because when the restaurant delays the order, the online delivery platforms penalize the restaurant whereas when the delivery partner delays the restaurant has no medium to file this. Thus the delay in delivery affects solely the restaurants. He said, “We have no medium to know our customers”, adding to the lack of customer details. He also added, “Any layman can’t understand their( online aggregators) commission process”. These online platforms start with noting 28 % as margin but it comes to approximately around 38% including GST and others. He also mentioned that though these platforms helped them in delivery and business, their growth remains the same because of the discounts and commissions. Thus he points out that there is no system to regulate and keep track of these online delivery platforms.
Vishnu Priya, a media professional-cum-restauranteur handling one of the leading cloud kitchen and dine-in restaurant in Chennai, Kaimanam at Gopalapuram, accentuates both the pros and cons of the online delivery platform. “In the initial three years, we had a good time with the online platforms. Within a short period of time, my brand got recognized and I got an identity and made money out of it”, says Vishnu Priya. Eventually, she finds less margin coming out as a result of discounting in online delivery platforms and it wasn’t generating enough customer loyalty. She points out that positives and negatives are everywhere but the choice is with us, until ‘what time we are going to take it’. She is gradually reducing the discounts on the online platforms and focusing on the customers who come for their face value and taste.
On the other hand, there have been complaints about ONDC, including issues with orders and delivery delays. Additionally, the lack of a centralized customer service representative puts Zomato and Swiggy ahead in providing an end-to-end experience. Only time will reveal if ONDC can truly disrupt the online food delivery ecosystem in India. Nonetheless, ONDC is making waves in the e-commerce industry, similar to the impact of UPI.