In December, ONDC Reached 5 Million Transactions for the First Time in a Month

According to persons familiar with the events, the government-backed Open Network for Digital Commerce (ONDC) surpassed 5 million transactions in a month spanning ride-hailing and retail sales for the first time in December.

In December, 2.1 million ONDC transactions were in the retail category, while 3.4 million were in the mobility category. Food delivery and fashion purchases each accounted for one-third of the 2.1 million orders placed in the retail area, with the remaining transactions divided over emerging categories such as cosmetics and electronics.

The present percentage of retail purchases contrasts sharply with the early 2023 transaction breakdown, in which retail accounted for barely 5-10% of all ONDC transactions, whereas mobility dominated with 90-95 percent.

Within 11 months, retail sales on ONDC increased more than 1,700 times, from 1,281 in January to 2.2 million in December.

ONDC refused to comment on the transaction figures.

While 2023 was focused on setting the framework for ONDC by bringing on a large first wave of buyers, sellers, and platforms, 2024 will be critical in evaluating its scalability. According to insiders, the government-backed network intends to dramatically increase its efforts in the following months, to reach a monthly run rate of up to 8 million transactions by the end of FY24.

To be fair, ONDC has yet to meet its previously stated objective of 100,000 retail purchases per day — or 3 million orders per month — by 2023. Although reports claim that it has already experienced a high of over 95,000 retail purchases in a single day, reaching the 100,000-order threshold continuously seems to be a long shot.

According to sources close to the developments, ONDC’s growth trajectory is based on feedback from network participants — both new-age unicorns and traditional fast-moving consumer goods (FMCG) businesses — who have grown persuaded of the scalability of sales on the platform.

Several new-age businesses, including Paytm, Ola, PhonePe, Meesho, Magicpin, and Shiprocket, have placed bets on the government-backed ONDC, which aims to break the dominance of a few giants like Amazon, Flipkart, Zomato, and Swiggy on online shopping in the nation.

Traditional FMCG heavyweights such as Unilever and ITC, on the other hand, have thrown their hats in the ring since ONDC allows them to sell directly to customers while saving huge distribution expenses.

Paytm founder and CEO Vijay Shekhar Sharma said last month that ONDC would open up the e-commerce market for many businesses since it separates distinct components of a transaction such as seller, logistics, and payment. In consequence, a single player does not need vast sums of capital to develop all of the components required to enter the ecosystem.

Sharma said that 11.8 million customers have already bought on ONDC via Paytm and predicted that the network will have 10 million merchants by the end of 2025.

The government expects ONDC to boost e-commerce penetration in the nation to 25% in the next two years, with a gross merchandise value of $48 billion.