News Brief

Ola Bets Big On ONDC, Set To Launch Grocery Delivery Through The Government-Backed Network

Kuldeep Negi

Jun 28, 2024, 11:36 AM | Updated 11:36 AM IST

An Ola car.
An Ola car.

Bhavish Aggarwal-led Ola is reportedly set to launch grocery delivery services through the government-backed Open Network for Digital Commerce (ONDC) in the coming days.

Already a major player in the food delivery market, Ola has emerged as the second-largest buyer-side platform on ONDC after Magicpin.

The ride-hailing company reportedly processes 15,000 to 20,000 food orders daily, capturing nearly a third of the demand in key markets such as Delhi-NCR and Bengaluru.

"Ola enables more than 30 percent of ONDC food orders in Bengaluru and Delhi-NCR, in its efforts to capture significant market share of the online food ecosystem in the immediate term. Further, it is also leveraging its core expertise in the logistics domain by offering EV-based logistics services at a highly competitive price to smaller sellers on the ONDC network," said a person close to the developments, Moneycontrol reported.

This is not Ola's first foray into grocery delivery.

In July 2015, Ola launched an online grocery store in Bengaluru, following the introduction of a food delivery app earlier that year.

The initiative, which aimed to use its cabs and drivers for grocery deliveries, was discontinued nine months later without detailed explanation.

In 2021, Ola re-entered the online grocery delivery market with Ola Dash, launching services in Mumbai and Bangalore with nearly 15 dark stores.

However, this venture was also short-lived, with operations ceasing after a year.

Last year, Ola joined ONDC to offer food delivery services.

"Our partnership with ONDC is going strong, and we have been able to achieve an incredible 10X growth in the last few months alone. We will continue to leverage the ONDC platform to explore and unlock opportunities for our next phase of growth," said an Ola spokesperson.

ONDC is projected to surpass 1 crore transactions, encompassing both mobility and retail, for the first time in June, marking a 5x year-on-year growth.

The network reached a new peak of 50 lakh retail orders in May, up from 35.9 lakh in April.

A record 2 lakh retail transactions were completed in a single day during May.

ONDC transactions are broadly categorised into ride-hailing and retail, which includes food, grocery, fashion, and electronics.

In May, both the food delivery and grocery segments in the retail category each achieved 10 lakh orders for the first time.

However, food delivery accounted for only 20 percent of total retail orders, down from 76 percent a year ago.

The composition of ONDC’s retail transactions has shifted over recent months, with a decline in food delivery orders and an increase in categories like grocery, fashion, and home and kitchen.

Over the past year-and-a-half, several new-age companies such as Paytm, Ola, PhonePe, Meesho, Magicpin, and Shiprocket have joined ONDC, aiming to challenge the dominance of established players like Amazon, Flipkart, Zomato, and Swiggy in India's online retail market.

The government aims to increase e-commerce penetration to 25 percent in the next few years through ONDC, targeting a gross merchandise value of $48 billion.

Large corporate houses and philanthropic organizations such as Nasscom Foundation and JSW Foundation are contributing to building the ONDC ecosystem by providing vocational training, developing user-friendly technology stacks, and offering on-ground support.

These organizations are also leveraging their CSR capabilities to make necessary capital investments for the network. Last year, Hindustan Unilever committed to helping onboard 13 lakh kirana stores onto ONDC.

Meanwhile, the Bill and Melinda Gates Foundation has partnered with ONDC to empower 10 lakh women entrepreneurs, aiming to enhance their earning potential by over 25 percent through the network.

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Kuldeep is Senior Editor (Newsroom) at Swarajya. He tweets at @kaydnegi.

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