Tata Neu embraces ONDC to start food ordering service
What's the story
Tata Neu, the Tata Group's super app, is gearing up to join the online food ordering sector by utilizing the Open Network for Digital Commerce (ONDC). This marks the first time a traditional Indian conglomerate has ventured into the billion dollar worth food delivery sector. Per Moneycontrol, Tata Neu's food ordering service will launch soon for closed-user group trials. However, a public launch of the service may take a month or more.
Tata Neu's strategy
Food ordering to bring consumers back to the app
The goal of Tata Neu's foray into food ordering is to establish a "high-frequency use case" that will bring users to the app frequently. This approach will allow Tata Neu to cross-sell its other products in categories such as clothing, jewelry, groceries, electronics, and travel. The app may eventually integrate with ONDC for additional categories, depending on user response.
Tata Neu's prospects
ONDC will help expand access to restaurants for Tata Neu
Currently, the Tata Neu app's food category tab only showcases menus from various restaurants at Taj hotels, the conglomerate's hotel brand. By integrating with ONDC, Tata Neu will gain access to tens of thousands of restaurants already on the network. And going by Tata's brand recognition, restaurants will sign up on Neu super app. Swiggy and Zomato currently dominate the food delivery market, holding over 95% of the market share.
Logistics support
ONDC provides third party food delivery support
Tata Neu has registered as buyer-side app on ONDC, making its entry into food ordering cost-effective since it won't need to deploy its delivery riders. ONDC provides third party food delivery support to its clients. Tata Neu is collaborating with Zomato-backed Magicpin on its ONDC integration. Magicpin, acting as a technology service provider, is helping Tata Neu with the frontend, similar to its partnerships with Paytm and Ola for their ONDC integration.
What is ONDC?
Why ONDC is a lucrative option for upcoming businesses
ONDC was launched in 2021 as a government initiative supported by private entities. It is an open, e-commerce interface that faciliates direct interaction of buyers and sellers. ONDC charges lower commissions as compared to platforms like Swiggy and Zomato. This results in better profit margins for sellers and cheaper prices for consumers. Recently, Domino's decided to deliver orders in Delhi-NCR through ONDC platform in a bid to raise profits and lower its dependence on Swiggy and Zomato.
ONDC's offerings
ONDC's offerings that attracted Tata Neu to enter market
The range of purchases on ONDC has expanded, with food orders now accounting for about 35% of orders, down from 90% just 4-5 months ago. This change occurred as ONDC added sellers in new categories such as fashion, electronics, beauty, and homecare. In January, ONDC recorded a new high of 6.5 million transactions, with 3.5 million being ride bookings on the Namma Yatri app and remainder through apps like Paytm, Snapdeal, Magicpin, and Ola.