Smaller Indian Cities Lead Digital Commerce Surge on ONDC

The ONDC's scope is also expanding, with a pilot project underway to onboard street food vendors in Delhi and Lucknow

In a remarkable shift, smaller Indian cities have emerged as the driving force behind the surge in digital commerce on the Open Network for Digital Commerce (ONDC), outpacing major metros in retail transactions. According to recent data, tier 2 and beyond cities accounted for a significant 65 percent of all retail purchases in April, signaling a notable trend in consumer behavior.

Despite a flat total number of orders at 3.6 million, the distribution of transactions reflects a substantial transition. "Non-mobility segment continues to grow and now has reached 50 percent of total network transactions with 3.6 million transactions in April 2024," stated a source familiar with the developments. This contrasts sharply with previous figures, where retail purchases were a mere fraction of the total transactions. However, within the mobility segment, there has been a noticeable decline in ride-hailing transactions via the Namma Yatri platform, dropping 12 percent from March to April. This has been attributed to established ride-hailing apps shifting towards subscription-based models.

The ONDC's scope is also expanding, with a pilot project underway to onboard street food vendors in Delhi and Lucknow. Currently, 246 vendors are part of the network, with plans to scale up to 500 by the end of May. This initiative aims to democratize e-commerce, challenging the dominance of major players like Amazon and Flipkart. With the government's ambitious target of achieving 25 percent e-commerce penetration and a gross merchandise value of $48 billion, ONDC's role in reshaping India's digital commerce landscape is becoming increasingly prominent.