The ONDC commission structure from A to Z

The Open Network for Digital Commerce (ONDC), the government’s flagship e-commerce network project, has already created a lot of buzz among traders as it promises to create an inclusive marketplace.

While on the buyer side only Paytm is active, on the seller side Digiit, eSamudaay, Gofrugal Technologies, Growth Falcons and Seller App have gone live.

Dunzo and LoadShare are currently the only two logistics service providers that ONDC has integrated.

ET spoke with network participants to understand how the commission structure works.

There are three levels of commission: buyer-level, seller-level, and logistics-level, Seller App co-founder Dilip Vamanan told ET.

Seller App is one of five seller-side apps on ONDC.

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Currently, Paytm is the only live application on the buyer side and charges a 3% commission.

Since buyer apps will be customer-facing platforms on the network, they will also charge buyer search fees.

Paytm declined to comment.

However, ET looked at one of the orders on the Seller App dashboard and found that the commission was 3%.

Apart from this, seller fees will also be charged, as merchants will be linked to the network through seller apps, and they will manage inventory and orders.

ONDC decodedETtech

Sellers can also choose to have no delivery charges or to charge them based on distance.

“We will charge a 0.5% to 1.5% transaction discount, but for the next six months we will not charge any seller fees,” Vamanan said of Seller App fees.

Seller App will not charge any retailer who earns less than Rs 1 lakh in revenue per month for a lifetime.

Seller App currently expects retailers to understand how to accept orders, digitize their catalog and manage their inventory.

On how these rates compare to established marketplaces, he said the rates are “on par” or even “slightly better than Amazon or Flipkart.”

However, there are currently no embed fees on Amazon or Flipkart.

Onboarding on ONDC is currently free, but may have tier-based fees in the future, he said.

Amazon charges $39.99 per month to sellers in countries like the United States.

Depending on factors such as warehouse storage, category, product size, short or long term storage and several other factors, the commission is 15% to 26% on each order at Amazon.

Amazon did not respond to ET’s questions.

Girish Pai, CEO of GrowthFalcons, said, “We are focused on the food and beverage industry and charge 10% plus GST, which is the lowest in the industry.

Explaining how the fees work, he said, currently, when restaurants are discovered on Paytm, for a food order worth Rs 100, the logistics fee will be Rs 30.

In all, the total bill will be Rs 130.

Of the 100 rupees, GrowthFalcons charges the merchant 10%, so the merchant will be paid 90 rupees. Of that 10%, 3% plus GST goes to Paytm.

Compared to Swiggy or Zomato, which charge a 25% to 35% commission, that’s reasonable, Pai said.

“The commissions charged by both (Swiggy and Zomato) are high,” he said.

Although Zomato did not respond to ET’s questions, Swiggy denied charging 35% commission.

In an emailed statement, a Swiggy spokesperson told ET, “We would like to clarify that the 35% transaction discount is false. Swiggy’s commission fee is structured to give restaurant partners the opportunity to find what works best for their business.

Commissions for restaurant partners arrived at the individual restaurant level and are consistent with factors such as average order value, delivery costs, delivery toolkits and other costs incurred, the gatekeeper said. -word.

“The commission we charge is based on the value we generate for the restaurant and is mutually agreed with the partner restaurant before being executed in the form of an agreement,” he said. “We confirm that we do not charge and have never charged 35% commission for a restaurant.”

However, grocery store margins are very thin, Pai said.

“It is a challenge if commissions ranging from 5% to 6% are charged. This is why vendor apps may charge nothing in this segment,” he added.

In the grocery segment, four seller apps except GrowthFalcons – Digiit, GoFrugal, eSamudaay and Seller App – are live.

“3% plus GST is about 3.54%. Anything you charge has to be less than 7% in the grocery segment,” Pai said.

“Our goal is to help small businesses get additional business at a lower cost. For example, cloud kitchens have no catering facilities and mostly rely on Swiggy or Zomato, which is why they are charged up to 35% commission for online orders. So they are looking for a network like ONDC and GrowthFalcons to get in and get additional business with lower commissions. 10% is a given for traders. My conversion rate to any cloud kitchen is 99% with 10% commission,” he said.

At least 60 merchants have been integrated online with no integration fees, but only a transaction fee, Pai explained.

“There is no markup on foods that the customer or merchants bear the brunt of. End consumers are charged less and merchants are happy with lower commissions,” he said.

eSamudaay.com is a vendor-side network. Any seller can onboard the app.

“eSamudaay charges Rs 200 per month for sellers and Rs 100 per month for delivery partners,” said founder-CEO Anup Pai.

You also need someone to manage the marketplace: customer experience, delivery orchestration, transaction management, dispute resolution, marketplace marketing and customer education, whatever regardless of the number of buyer applications and seller applications. . This was localized to a district level in the case of eSamudaay, he said.

“There are private companies incorporating at the district level, creating a super framework – a marketplace. Multiple vendors from multiple categories can get on board, and there’s a marketplace manager for all of that,” he added.

Aurora J. William