ONDC, a new player in the food delivery space, is shaking up the industry with its exceptionally low prices. What sets it apart from the competition is the fact that it is a government-backed platform.
The Triple D Model
India’s top restaurateurs, Riyaaz Amlani and Zorawar Kalra, support ONDC and shed light on the reasons behind its lower costs. They introduce the “triple D model,” which goes beyond just delivery costs. This model includes:
1. Delivery Cost: The basic cost of getting food delivered to your doorstep.
2. Discovery Cost: This refers to the fees restaurants pay to be featured prominently on the app, making them more visible to customers.
3. Discounting: To attract customers, restaurants often provide discounts, which can significantly impact their margins.
High Commission Fees: A Burden on Restaurants
Amlani and Kalra highlight that food delivery giants like Swiggy and Zomato charge a whopping 55 percent of the order value as commissions and fees. This high commission, in combination with the discovery and discounting costs, puts immense pressure on restaurants.
The Discounting Dilemma
Restaurants are compelled to offer discounts to stay competitive and attract customers. However, this discounting culture can become an addiction and negatively affect the overall ecosystem. It’s a double-edged sword – while discounts lure customers, they eat into restaurant profits, making it challenging for eateries to maintain sustainable margins.
ONDC’s key advantage lies in its significantly lower commissions, making it a more economically viable option for restaurants. With this approach, it allows eateries to offer competitive pricing without compromising their bottom line.
In a nutshell, ONDC’s emergence as a government-backed platform with lower costs and a fairer business model is changing the game in the food delivery industry. It’s not only a win for restaurants but also for customers who can enjoy quality food without breaking the bank.