Paytm Mall Pivots To ONDC As Primary Focus; Early Investors Alibaba, Ant Group Exit

Paytm E-commerce, the parent company of Paytm Mall has shared plans to pivot to Open Network for Digital Commerce (ONDC) platform to explore export business opportunities.

Through this, Paytm Mall is reportedly creating a long-term sustainable business in association with ONDC that aims to democratise the purchase and sale of goods in the Indian market, driving transparency and digital independence for small businesses in the country.

The development comes at a time when 24 ecommerce startups including Flipkart’s logistics arm Ekart Logistics, hyperlocal delivery startup Dunzo, and payment service provider PhonePe have been selected for ONDC’s pilot phase. 

By pivoting the business, Paytm E-commerce’s early investors–Alibaba and Ant Group have exited the company. 

Paytm’s parent company One 97 Communications Limited (OCL) has no direct or indirect shareholding in Paytm E-commerce. The company is also not a part of the OCL group although it uses the Paytm brand and receives services from OCL.

On April 29 this year, ONDC started its pilot project by launching its platform in five cities of India including Delhi NCR, Bengaluru, Bhopal, Shillong and Coimbatore. It has also started real-time transactions in retail and food delivery segments in some Indian cities. For example, it started delivery from restaurants in Shillong as well as delivery from retail stores in Delhi. The pilot project is primarily focusing on retailers and restaurants as of now.

Before officially launching the ONDC, the Indian government is aiming to fortify the process which will take about six months. At present, five seller platforms, one buyer platform and one logistics company are participating in this pilot project.

“With this pilot phase, we want to learn as to how this rolls out in the real life environment where you actually make payments, do the deliveries, cancel orders and how refunds work. Once these lessons are known, we would create a playbook, which will be a set of standards,” Anil Agrawal, additional secretary in the Department For Promotion of Industry and Internal Trade (DPIIT), said at the time of the soft launch.

Formed on December 31 2021,  ONDC is an initiative by Piyush Goyal, Department for Promotion of Industry and Internal Trade (DPIIT). It is backed by some of the major banks such as State Bank of India (SBI), Axis Bank, HDFC and Kotak Mahindra.

In March this year, State Bank of India (SBI) bought a 7.84% stake in ONDC for INR 10 Cr. Previously, Kotak Mahindra, HDFC and Axis Bank held shares in the ONDC for INR 10 Cr respectively. 

With the ONDC, the Indian government aims to democratise digital commerce, moving it from a platform-centric model to an open network. This project will empower merchants and consumers by breaking silos to form a single network to drive innovation and scale, transforming all businesses from retail to food to mobility.

ONDC is being introduced to the market when India has emerged as one of the largest retail markets in the world, pegged at about $810 Bn, according to a report by Bain & Company. 

On the other hand, the addressable ecommerce market of India is estimated to touch the $200 Bn mark by 2026, as per an Inc42 report.