e-commerce company Snapdeal said on Tuesday that it has started receiving orders on the government’s ambitious, open source, not-for-profit, e-commerce platform, Open Network for Digital Commerce (ONDC).
With Snapdeal’s onboarding, ONDC aims to deepen its reach in Tier 2 and beyond cities, where the platform hopes to increase e-commerce penetration. On a country-level, the total e-commerce penetration was lesser than 10%, it was even lower in non-metro regions. The initial orders from Snapdeal, through ONDC, were from cities like Ajmer (Rajasthan), Gurdaspur (Punjab), Aligarh (Uttar Pradesh), Indore (Madhya Pradesh), Kakinada (Andhra Pradesh), Amravati (Maharashtra), who ordered home and kitchen products including bedsheets and utensils, among several others.
While Snapdeal now caters to the Tier 2 and beyond areas, Amazon’s logistics network (from pickup to delivery) and SmartCommerce services also integrated with ONDC, to serve the metro and Tier 1 cities where Amazon has a relatively stronger footing. Other units of Amazon were likely to go live on the platform, too. Even units of Flipkart are in the process of integrating with ONDC.
ONDC is currently live in over 180 cities, with more than 24,000 sellers on its platform. There are eight buyer apps, like Paytm, and 21 seller apps like GoFrugal, on the ONDC currently. T Koshy, CEO, ONDC, in an interaction with FE, had earlier said the average order value (AOV) on the platform was around `200-300 but expected that to grow as more products from fashion, beauty and personal care (BPC) and electronics are added over the coming months. ONDC’s AOV currently was just a shade under Meesho’s AOV of `400, analysts estimated. Meesho is also heavily focused on Tier 2 and beyond regions, with fashion being a popular pick among its growing customer base.
“With over a decade of experience serving Bharat through lakhs of small and medium enterprises, Snapdeal
More than 86% of Snapdeal’s orders come from outside the metro cities. Further, with increased focus on the ‘value’ segment, over 95% of the products sold on Snapdeal are priced below `1,000.
That was especially helpful when the mid-income buyers from India’s Tier 2 and beyond cities, covering more than 80% of India’s population, will likely triple in size in five years, from around 78 million in 2021 to nearly 256 million by 2026, Redseer analysts said. During the festive sales last year, around September, about 65% of the total sales during the first week came from Tier 2 and beyond cities only.
Analysts have pointed out that share of shoppers from non-metro cities was growing every year but a lower AOV, in comparison with metro and Tier 1 cities, was likely to affect slow the pace of growth of the e-commerce industry.