ONDC Introduces new Incentive Scheme: Empowering Buyer Apps and Expanding into Small Cities

In a bid to boost digital commerce and create a level playing field for all participants, the Open Network for Digital Commerce (ONDC) has introduced significant changes to its incentive scheme. The fifth version of this scheme, effective from September 4th, 2023, aims to provide more flexibility to buyer-side apps, lower subsidies in the food category, and expand merchant density in non-metro districts.

Flexibility for Buyer-Side Apps

One of the key changes in ONDC's incentive structure is the increased flexibility granted to buyer-side apps regarding how they distribute discounts to consumers. This change acknowledges that different categories may require distinct discounting strategies and allows apps to tailor their approaches accordingly.

Reduction in Subsidies in the Food Category

To address concerns about excessive discounting, ONDC has taken measures to lower average subsidies in the food category by half. This move is likely aimed at striking a balance between encouraging adoption and ensuring long-term sustainability.

Boosting Merchant Density in Non-Metro Districts

Expanding the network's reach is crucial for ONDC's success. The revised scheme includes provisions to enhance the density of merchants on the platform, with a focus on 45 non-metro districts. This move aligns with the government's broader vision of promoting digital commerce in Tier 2 and Tier 3 cities and beyond.

Changes in Average Incentives

ONDC's new incentive structure introduces category-based differentiation for the average incentives offered to users. For instance, in the food and beverage category, the average incentive for orders greater than Rs 200 has been set at Rs 50 per order. Similar distinctions exist for grocery, beauty and personal care, electronics, and other categories. This approach acknowledges the varying dynamics within different sectors of digital commerce.

Caps on Transactions per Week

In an effort to strike a balance between incentivizing users and avoiding market distortions, ONDC has imposed a cap on the number of transactions for which a buyer can avail incentives per week. This cap has been reduced from five to two transactions per week. This change reflects ONDC's commitment to responsible growth.

These revisions to ONDC's incentive scheme showcase its commitment to fostering a thriving digital commerce ecosystem in India. By striking a balance between incentivizing stakeholders and ensuring the sustainability of the platform, ONDC aims to create an inclusive and competitive marketplace that benefits both consumers and businesses.

As digital commerce continues to reshape India's retail landscape, ondc app evolving strategies and incentive structures play a crucial role in facilitating this transformation. The government-backed initiative remains a key driver in the country's journey towards a digitally empowered economy, promoting innovation, competition, and equitable access to opportunities.



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