Ola Eyes Grocery and Fashion Expansion on ONDC Platform

Ride-hailing giant Ola is gearing up to expand its e-commerce offerings beyond food and beverages. The company plans to leverage the Open Network for Digital Commerce (ONDC) platform to offer its 75 million monthly active users the ability to shop for groceries and fashion apparel directly through the Ola app.

Currently, Ola users can only order food and beverages through the ONDC integration. This move signifies a strategic shift towards "horizontal scaling" for Ola's e-commerce ambitions. By integrating with ONDC, Ola gains access to a vast network of sellers, including thousands of grocers and fashion brands already established on the platform across various cities.

Benefits of ONDC Integration for Ola

This integration with ONDC offers several advantages for Ola:

• Cost-Effective Expansion: Utilizing ONDC eliminates the need for Ola to invest in building a separate delivery fleet or convincing sellers to join its platform. This translates to significant cost savings for the company's grocery and apparel business segment.

• Strengthened Logistics Network: Since Ola is also a logistics service provider on ONDC, this move strengthens its overall logistics operations within the network.

• Diversification Strategy: An analyst quoted in the article highlights the strategic benefit of diversification for Ola. By offering groceries and fashion apparel through ONDC, Ola expands its product portfolio and caters to a wider range of user needs.

Focus on Non-Mobility Segments

While Ola's core mobility business is not currently integrated with ONDC, its competitor Uber has signed a memorandum of understanding (MoU) with the platform to explore potential integration and expand its service offerings beyond just mobility.

The analyst explains the rationale behind this distinction:

"Ola is already a full-fledged platform for mobility. They have a buyer side, a seller side, and a platform...  For mobility, they don't necessarily need a network like ONDC."

ONDC - A Growing E-commerce Network

Launched in 2022, ONDC is a government-backed initiative aimed at creating an open and neutral e-commerce network in India. This network empowers small and medium businesses to connect with buyers directly, fostering a more level playing field compared to established e-commerce giants.

As of April 2023, ONDC boasts over 380,000 sellers, with a significant portion (around 105,000) representing non-mobility categories like groceries and fashion. The network has witnessed promising growth, with over 17.42 lakh grocery orders and 26.38 lakh fashion orders placed between April 2023 and March 2024. In March alone, fashion comprised 6.74% and grocery comprised 4.47% of the total monthly orders on ONDC.

Ola's Competitive Edge in Logistics

Sources claim that Ola has a competitive edge in terms of logistics pricing. The company plans to expand its logistics services aggressively, offering them to other seller applications on the ONDC network.

Future Outlook

Formal announcements regarding the grocery and fashion expansion on ONDC are expected soon.  This move positions Ola to capitalize on the growing ONDC network and potentially become a major player in the non-mobility e-commerce space in India.

Conclusion:

As Ola embarks on its journey to expand its e-commerce reach with ONDC integration, the company is poised to redefine the online shopping experience for millions of users. By tapping into the vast potential of ONDC, Ola aims to offer a diverse array of products while bolstering its logistics capabilities, thereby solidifying its position in the e-commerce landscape.