What Is Driving ONDC's Rise In The Mobility Sector?

The Open Network for Digital Commerce (ONDC) was introduced in 2022 with an aim to go beyond the platform-centric digital commerce model and provide a user-friendly platform that eliminates the need to use multiple apps for buyers and sellers. In March, in order to level the playing field for mobility players of all sizes, ONDC forayed into the mobility segment by integrating the Bengaluru-based auto booking app 'Namma Yatri' on the network. According to T Koshy, managing director and CEO of ONDC, a large section of the merchants on ONDC, in places like Kochi in Kerala and Bengaluru in Karnataka are auto and taxi drivers, where the adoption is primarily driven by unions. 

Since ONDC offers rides at zero commission, it also has the potential to become the primary choice for customers, considering the dissatisfaction that customers often experience from ride-hailing companies such as Ola, Uber or Rapido over timeliness, payment and other issues. Given that mobility at present is driving the highest number of transactions on ONDC, this is not a very far-fetched assumption. What is it about the mobility sector, particularly the auto and taxi segment, that is leading to its widespread adoption?

Why Is There A Swift Rise Of Mobility Services On The ONDC Platform?

Present in around 240 cities, ONDC, according to an equity research report by ICICI Securities, carries out around 15,000-20,000 daily transactions through retail merchants. The mobility sector is responsible for an additional 60,000 transactions per day. Speaking to The Core  Koshy said, “Today almost 950,000 merchants are doing more than 100,000 transactions a day on ONDC. It is really a tiny bit, compared to the potential but the good thing is there is a humongous amount of merchants under various areas of integration to make their products visible from across the various segments of products and services.” 

In addition to this, the presence of different buyer applications like Paytm, Phone Pe and Mystore along with some other big players involved in various stages of integration of network participants, merchants and buyer applications are encouraging buyers. 

What is the significance of ONDC in Bengaluru and Kochi?

Among the 150,000 merchants on the government-backed platform, nearly 90,000 are taxis and autos operating in Bangalore and Kochi, as per Koshy. Bengaluru-based auto booking app, ‘Namma Yatri’ which has been onboarded by ONDC to fast track in the mobility sphere, was built and launched by Juspay Technologies last year on November 1. Now, this ONDC service basically offers rides without making drivers or riders pay any commission.

Speaking on what made this integration catch on quickly, Koshi said, “When the whole idea of this open network was being attempted, the first thing that was attempted was in the mobility area as a pilot in Kochi. After that, we had a partner, Juspay who decided to just jump in with blind faith on this idea. Because of the significant amount of work that they've done in this area, they fine-tuned the whole idea into an implementation that gave them the confidence to chart in Bangalore for the auto. More importantly, the drivers' union, both in Kochi as well as in Bangalore, also found that this is something that is more attractive to them and with a lot more control in their hands with respect to terms and conditions of the whole arrangement.” 

The unions themselves are actively promoting the idea among their members to come out to the supply side and are also telling their customers that this is a better way to hail a ride, Koshy added. The platform further plans to grow into new areas, offering a diverse range of transportation options, including cabs, buses, and metro rail services.

Namma Yatri To Charge Subscription Fee from September, What Does It Mean?

As Namma Yatri is set to charge subscription fees for drivers on its platform, from September 1, ONDC, in a statement said that auto rickshaw drivers in Bengaluru will have the option to either pay Rs 25 per day for unlimited trips or Rs 3.5 per trip for up to 10 trips per day, after which the trips will be free. Koshy said that since the platform is carrying more transactions, the money is required to enable the unit and maintain the network as it is only a regular taxi service that does not offer any discounts to buyers or sellers. “The network makes it convenient for the travellers, the consumers and the taxi drivers.”

On ONDC’s earning prospects, Koshy clarified, “Our position is that as a utility in the early stages. We will charge nothing, till it reaches a certain level,  but eventually it has to be self-sustaining from there. For us, it is a very marginal cost. There'll be some kind of subscription charges, to earn sufficient money to maintain the organization and to do the developmental work, because we have no central system. So the operation costs are practically small compared to national-level operations of food, grocery, financial products, B2B and B2C etc.

Following the success of the Namma Yatri app, auto drivers in Bengaluru are now planning to introduce 'MetroMitra,' an initiative aimed at offering last-mile connectivity from the metro stations. According to a report by Moneycontrol, this app will also be launched on ONDC. "We have commenced the development of MetroMitra as a mobility seller app to operate within the ONDC network," D Rudramurthy, general secretary of ARDU had told Moneycontrol in July this year.