PhonePe To Launch Grocery Delivery App For ONDC, Earmarks $15 Mn For Entry

Walmart-owned fintech PhonePe is looking to mark its entry into the government’s Open Network for Digital Commerce (ONDC) with a consumer-facing app to further its ecommerce ambitions. To that respect, PhonePe is working on a yet unnamed hyperlocal grocery delivery app.

The app is currently being piloted in Bengaluru and PhonePe will look to take on the likes of Zepto, Dunzo, Blinkit, Swiggy Instamart and more importantly, Flipkart Quick.

The Walmart-owned fintech startup had made its ambitions to facilitate ecommerce at an ONDC meeting back in February 2022.

Vivek Lohcheb, VP, offline business at PhonePe, had said, “PhonePe will play the role of buyer and seller application on ONDC. In the first phase of the launch, we will enable Grocery and F&B in Bengaluru. Lakhs of merchants are set to benefit from ONDC effortlessly.”

PhonePe was acquired in 2016 by Flipkart.

To be sure, PhonePe has tried its hand at online commerce twice. First with Switch, which was loosely based on the concept of a super app and Stores, which was to facilitate the hyperlocal discovery of merchants.

However, a separate buyer app will be launched later this month, Sameer Nigam, founder and CEO of PhonePe, told ET in an interview. Nigam added that the fintech has earmarked up to $15 Mn for its entry into the ONDC. It will be deploying the said capital over the next 18 months.

Incidentally, the hyperlocal commerce app will be a standalone one and not be a part of PhonePe’s main app. Nigam was cited in the aforementioned interview as saying that launching a separate app will allow the startup to differentiate between the payments and the commerce customers.

PhonePe’s parent Walmart brought up the fintech’s growth over the past few quarters at its Q2 earnings call yesterday (August 16). 

Walmart chief financial officer John David Rainey said, “…if you look at the largest digital payment companies outside China in the world, PhonePe, after a very brief history, is already roughly two-thirds the size of that (China) and what is going to be the largest market (India) in the world. It is a very exciting opportunity.”

The Bengaluru-based fintech is far from the first fintech startup that is gunning for ONDC. Paytm might as well prove to be its biggest competitor as Vijay Shekhar Sharma’s platform is looking to act as a buyer app itself via its subsidiary Paytm Mall.