Ola to Re-enter Grocery Delivery Market via ONDC

Bhavish Aggarwal-led Ola is preparing to re-enter the grocery delivery market through the government-supported Open Network for Digital Commerce (ONDC), according to a source. 

Currently, Ola has established itself as the second-largest buyer-side platform for food delivery on ONDC, following Magicpin.

The company processes between 15,000 to 20,000 food orders daily, accounting for nearly one-third of the demand in significant markets such as Delhi-NCR and Bengaluru, the report said, citing sources.

Ola’s Previous Ventures into Grocery Delivery

This isn’t Ola’s first venture into grocery delivery. The business introduced a meal delivery app in March 2015, and in July of that same year, it opened an online grocery shop in Bengaluru.

The strategy was to use its fleet of cabs and drivers for grocery deliveries between 9 am and 11 pm. However, both services were discontinued within nine months without detailed explanations.

By launching Ola Dash in 2021 and using about 15 dark retailers to distribute its services in Bangalore and Mumbai, Ola returned to the grocery delivery market. However, a year later, Ola closed Ola Dash and stopped running all of its dark businesses.

Ola's Partnership with ONDC

Last year, Ola joined ONDC to provide food delivery services. An Ola spokesperson highlighted the success of this partnership, noting, "Our partnership with ONDC is thriving, and we’ve achieved remarkable 10X growth in recent months. We plan to continue leveraging the ONDC platform to explore new opportunities for our next growth phase.”

Driving E-commerce and Inclusion

Under the next few years, the government's ONDC effort is to increase India's e-commerce penetration to 25% with a target gross merchandise value of $48 billion. Large corporate entities and philanthropic organizations, such as Nasscom Foundation and JSW Foundation, are contributing to the development of the ONDC ecosystem.

They are providing vocational training, building user-friendly technology stacks, and offering on-ground support as part of their strategic priorities. These organizations are also channeling their CSR resources to fund necessary capital investments for the network, noted the Moneycontrol report.

ONDC’s Milestones and Future Growth

The ONDC is approaching a significant milestone, expected to surpass 10 million transactions—including mobility and retail—for the first time in June, marking a 5x year-on-year growth. In May, the network achieved a new peak with five million retail orders, up from 3.59 million the previous month.

The government-supported network also recorded an all-time high of 200,000 retail transactions in a single day during May, according to sources.

Over the past several months, there has been a shift in ONDC’s retail transactions. While food delivery orders have declined, other categories such as grocery, fashion, home, and kitchen have seen increased activity.

Emerging Companies Joining ONDC

In the past year and a half, several emerging companies, including Paytm, Ola, PhonePe, Meesho, Magicpin, and Shiprocket, have joined ONDC, aiming to disrupt the dominance of major players like Amazon, Flipkart, Zomato, and Swiggy in India’s online retail sector.

This influx of companies into the ONDC network is expected to drive further growth and innovation in India’s digital commerce landscape.

Conclusion

Ola’s re-entry into the grocery delivery market via ONDC signifies a strategic move to leverage the expanding digital commerce infrastructure in India. With its previous experiences and ongoing partnerships, Ola aims to capture a significant share of the grocery delivery market, supported by the growing ONDC ecosystem. As ONDC continues to grow, it is poised to transform the e-commerce landscape in India, promoting inclusion and fostering innovation across various sectors.