Walmart-backed PhonePe is revamping its ecommerce strategy on the Open Network for Digital Commerce (ONDC). It is discontinuing several categories such as fashion, grocery, and electronics, except for food delivery on the network, according to individuals briefed on the matter. The company has already communicated with the government-backed ONDC network, and the changes are now in effect as of Tuesday.
On the PhonePe app, only unreserved ticket booking will be available through ONDC.
“PhonePe Payment Technology Services Private Limited (Pincode) has asked ONDC to limit its subscription solely to the Food and Unreserved ticket booking domains on the ONDC registry. They intend to explore other domains after adjusting their internal strategy,” stated an internal note from ONDC. “Consequently, starting from April 23, 2024, Pincode will no longer be subscribed to other domains except for Food and Unreserved ticket booking.”
As per people cited above, PhonePe has chosen to narrow down its focus on segments operating within ONDC and is realigning its priorities accordingly. Multiple sources have indicated that the end consumer experience still does not match up to other consumer delivery apps, which has also influenced PhonePe’s decision-making process.
Last year, PhonePe introduced its ecommerce venture, Pincode, on ONDC, providing a range of categories such as grocery, food delivery, medicines, fashion, and electronics on the network. After initially launching in Bengaluru, the services were expanded to 10 cities.
Continue Exploring: PhonePe’s Pincode app expands to 10 cities, demonstrating strong growth on ONDC
A representative from PhonePe’s Pincode declined to provide a comment.
According to reports, PhonePe has invested INR 90 crore in Pincode over the past year, divided into two installments – one in July 2023 and the second earlier this month.
According to a senior government official, ONDC has been experiencing challenges with grocery deliveries due to the lack of standardization among general trade and smaller modern trade kirana stores.
“The likes of Zomato and Swiggy in food delivery have succeeded in standardizing and training restaurants extensively to manage online ordering, packaging, and inventory effectively, ensuring an optimal customer experience,” the official stated. “However, similar efforts haven’t been made with grocery stores, resulting in a lack of improvement in the quality of experience.”
Continue Exploring: PhonePe expands e-commerce portfolio with Pincode, a hyperlocal app on Open Network
“In general, complaints revolve around incorrect items being shipped or inadequate packaging resulting in damaged items before delivery,” the official added. “The ecosystem must collaborate to address these issues before ONDC can scale up grocery deliveries significantly.”
By the end of March, nearly 600,000 food orders had been fulfilled through ONDC on a cumulative basis, with almost 200,000 grocery orders being processed.
Continue Exploring: ONDC surpasses 7.1 Million orders milestone in February since inception last year
