ONDC, which stands for Open Network for Digital Commerce, was launched as a transformative initiative by DPIIT, Government of India, with one bold mission: to democratize digital commerce. When it went live in April 2022, the hype was massive. There were fears of intense competition, discussions about the end of platform monopolies, and a lot of excitement among new-age players eager to ride this wave.
But a few years later, there is a clear mismatch between expectations and reality.
So, the big question is: Has ONDC failed, is it just struggling, or is this the beginning of something much bigger?
In this article, let’s do a deep dive and break down every important detail to get a clear picture.
Let’s go back to the early days.
When ONDC was launched, it was positioned as a revolutionary public digital infrastructure often compared to UPI.
Many believed it would break the Amazon–Flipkart duopoly, crush Swiggy–Zomato commissions, and give millions of kirana stores a powerful digital backbone.
Three years later, the picture looks very different.
Food and grocery orders on ONDC have slowed down, big consumer-facing apps like PhonePe’s Pincode have shut their operations, and many other players have either scaled down or completely exited the consumer side of the network.
Now, to get a better perspective, let’s understand where ONDC stands today. The early signs were encouraging, and what started as a small project in five cities has quickly expanded to more than 600 cities and over six lakh sellers onboarded.
Orders started picking up, and Tier-2&3 contributed more than 70% of ONDC’s overall traffic.
But by early 2025, there is a shift in the narrative. First, there is a decline seen in retail categories, especially food delivery, groceries, and fashion. To give you better clarity,
Monthly retail orders dropped sharply from around 6.5 million in October 2024 to nearly 4.6 million by February 2025.
When we look at the mix of total transaction contribution of retail orders, it fell from 47% to 29% in just months.
But the other segment, which is mobility, started taking off.
With players like Namma Yatri and Ola leveraging ONDC rails, ride bookings surged. Unlike retail, mobility required no complex supply chain, no inventory mapping, and no messy refunds.
The simplicity worked. As of 2025, mobility now accounts for nearly 56% of ONDC’s total transactions, and even logistics is growing steadily.
Now, we need to understand why some of the biggest consumer apps are stepping back or shutting down their ONDC-based experiments.
To understand this, we need to look beyond the headlines and into the economics, operational challenges, and strategic realities behind the exits.
The first major exit signal came when PhonePe shut down its ONDC-powered consumer app, Pincode, despite months of investment and aggressive onboarding in multiple cities.
Soon after, Paytm scaled down its ONDC food delivery push, and several other buyer apps reduced visibility, paused promotions, or quietly shifted their strategy away from consumer- facing commerce on the network.
In the early growth phase, ONDC saw a spike in orders, but a large part of that was subsidy- driven. Consumers were attracted by significantly lower prices compared to Swiggy, Zomato, or Blinkit.
But once the discounts faded, order volumes dipped, and for apps operating on already thin margins, the unit economics stopped making sense.
ONDC had lower commissions (great for sellers), but that also meant buyer apps had fewer revenue streams to cover such things as tech and product costs, customer support, delivery coordination, refunds, and compliance.
In the early phase, incentives played a crucial role. They made food delivery and groceries on ONDC cheaper than Swiggy, Zomato, Blinkit, or Amazon, sometimes by a wide margin.
This attracted users quickly, and buyer apps leaned heavily on these subsidies to offer steep discounts. But by late 2024, things changed.
ONDC reduced incentive payouts dramatically from nearly ₹2.5 crore per buyer app to just ₹30 lakh. With that, the aggressive discounts vanished almost overnight.
And that’s where cracks began to show. With that, players like Pincode, Paytm, and even other players like Magicpin, Ola Consumer, and several smaller buyer apps also reduced their ONDC focus once subsidies dried up.
Then there are many moving parts to run these models; unlike Swiggy, Zomato, or Amazon, this works as a network model.
So, this means one app handles product discovery, another fulfills the order, a third party delivers it, and a fourth manages payments.
When everything works smoothly, it feels seamless. But when something goes wrong, no single player owns the resolution.
In a market where fast, clean execution wins, this fragmentation became a major friction point.
Then there is another reason: platforms like Blinkit or Zepto run tightly controlled fulfillment networks. ONDC relies on multiple logistics partners, and quality varies drastically.
Now when we compare it with UPI, it took years to get adoption, product feedback, and ecosystem alignment to reach where it is today.
ONDC Is in a similar phase. The recent slowdown and exits may give the impression that ONDC is failing, but that conclusion is premature.
But is it still one of the most ambitious digital infrastructure experiments India has attempted after UPI?
The real impact of ONDC may not be visible immediately. But if executed well, it has the potential to quietly become a foundational layer of India’s digital commerce ecosystem, not by competing with existing platforms, but by enabling a fairer, more open, and more distributed marketplace for the future.
Only time will tell whether ONDC becomes a defining success story of India’s digital economy or just an ambitious experiment.
