ONDC to launch new incentive scheme on June 1, caps discounts at Rs 100

ONDC, the government-backed open e-commerce network, has revamped its incentive scheme for buyers and sellers, changing its strategy of using discounts to get customers.

The Open Network for Digital Commerce, in a notification issued to its partners, said a new structure called Incentive Scheme 2.0 will come into effect from June 1 to replace the one introduced on January 30 this year. The new scheme will continue for about a month to end on June 28, said the notification seen by ‘Business Standard’.

The new scheme caps the maximum discount at Rs 100 per order, compared to the earlier limit of Rs 125.

To be eligible for ONDC incentives, food and beverage orders must have a minimum value of Rs 200. For all other categories, the threshold is Rs 300 and includes shipping charges. A buyer is eligible for incentives for a maximum of five transactions per month.

The new structure is expected to slow down discount orders flooding the platform.

ONDC is a non-profit platform set up by the Department for Promotion of Industry and Internal Trade (DPIIT) as an alternative for online shopping. The network is not an app but a facilitative platform designed to “revolutionise” digital commerce.

ONDC offers cheaper food items than online delivery leaders Swiggy and Zomato. ONDC was touted to disrupt the food delivery market.

Several analysts, however, have since emphasized that the discounts and low commissions were not sustainable. Analysts at JM Financial claimed that “ONDC in its current shape and form is nowhere close to shaking up the online food-tech industry.”

Brokerage firms Motilal Oswal and Jefferies echoed a similar analysis, stating that once ONDC withdraws its discounts and commission schemes, order volumes would take a hit.

ONDC’s order value has come down to roughly 9,000 orders a day from an all-time high of over 25,000 in May due to tweaks in the incentive structure, the notification revealed.

The discounts, some of which were funded by the network while others were borne by restaurants, were, however, just a means to create interest. Shireesh Joshi, chief business officer of ONDC, told ‘Business Standard’ earlier that the discounts were “not an ongoing strategy”.

“People will try out the network, as they have, and find that this is also a way to shop that works. Thereafter, sustainable propositions can take over,” Joshi had said.