ONDC Faces Challenges in Maintaining Rapid Growth as Orders Surge, Incentive Limits Imposed

The Open Network for Digital Commerce (ONDC) has seen a 100x rise in orders within a month, with daily order quantities reaching 20,000–25,000, in an impressive demonstration of advancement. However, the network faces numerous difficulties in maintaining its expansion speed.

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For instance, new limits on incentives for seller applications were recently announced. According to a senior executive from an associated app, the network enforced the limits because a sudden increase in orders caused its monthly budget for incentives to be depleted. Since the modification, orders for network participants have significantly decreased. “The decrease was substantial. For this scale, ONDC was not prepared. It is currently resolving its problems in preparation for the upcoming wave,” he said.

Orders have decreased compared to peak order numbers, according to those working with buyer apps, with some reporting a 50% decrease. Despite the fact that ONDC has unveiled a new incentive structure to regain momentum, network members perceive the updated incentive system to be too complicated to put into practice and communicate to customers.

The updated incentive construct is extremely intricate. Previously, everyone offered free delivery, and ONDC would pay for the logistical component with ₹75 for each purchase. Free delivery is still included in the amended plan, but it is limited to a set amount for each selling app, according to a network participant. “Buyer applications are unsure of when it will expire and are unable to run a campaign based on it at this time.”

An easier incentive system is being developed by ONDC and is probably close to being deployed. It is anticipated that Version 2.0 will address a number of problems and enhance return policies, delivery timeframes, conflict resolution, etc. The network’s growing momentum is anticipated to be fueled by increased awareness of the network, aggressive marketing by top buyer applications, and the impending release of Version 2.0 to solve specific difficulties. These factors, combined with the addition of new capabilities and more users, will also likely contribute to the network’s growth.