The A to Z of ONDC’s commission structure

The Open Network for Digital Commerce (ONDC), the government’s marquee e-commerce network project, has already created a lot of buzz among merchants as it promises to create an inclusive marketplace.

While on the buyer side, only

is active, on the seller side, Digiit, eSamudaay, Gofrugal Technologies, Growth Falcons, and Seller App have gone live.

Dunzo and LoadShare are currently the only two logistics service providers ONDC has onboarded.

ET spoke to network participants to understand how the commission structure works.

There are three levels of commission: at the buyer level, seller level, and logistics level, Dilip Vamanan, the co-founder of Seller App, told ET.

Seller App is one of the five seller-side apps on ONDC.

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Currently, Paytm is the only app that is live on the buyer side, and it charges a 3% commission.

Since buyer apps will be customer-facing platforms on the network, they will also charge a buyer finder fee.

Paytm declined to comment.

However, ET reviewed one of the orders on Seller App’s dashboard and found the commission to be 3%.

Apart from this, a seller fee will also be charged as merchants will be linked to the network via seller apps, and they will be managing the inventory and orders.

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Sellers can also decide to have zero delivery fees or levy it depending on the distance.

“We will be charging a 0.5% to 1.5% transaction cut but for the next six months we will not charge any seller fee,” Vamanan said about Seller App’s charges.

Seller App won’t charge any retailer who earns less than Rs 1 lakh in revenue per month for a lifetime.

Seller App is currently waiting for retailers to understand how to accept orders, digitise their catalogue and manage their inventory.

On how these rates compare with that of established marketplaces, he said the rates are “on par” or even “slightly better than Amazon or Flipkart”.

However, there are no onboarding charges on Amazon or Flipkart currently.

Onboarding on ONDC is free for now but may have tier-based charges in future, he said.

Amazon charges sellers $39.99 per month in countries like the United States.

Depending on factors like warehouse storage, category, size of the product, short term or long-term storage, and several other factors, the commission is 15% to 26% on every order at Amazon.

Amazon did not respond to ET’s queries.

Girish Pai, CEO, GrowthFalcons, said, “We focus on the food and beverages sector, and charge 10% plus GST which is the lowest in the industry.”

Explaining how the charges work, he said, currently when restaurants get discovered on Paytm, for a food order worth Rs 100, logistics charges will be Rs 30.

In all, the total bill will be Rs 130.

Out of the Rs 100, GrowthFalcons charges 10% to the merchant, so the merchant will be paid Rs 90. Out of this 10%, 3% plus GST is given to Paytm.

When compared to Swiggy or

, which charge 25% to 35% commission, this is reasonable, Pai said.

“The commissions charged by the two (Swiggy and Zomato) are steep,” he said.

While Zomato did not respond to ET’s queries, Swiggy denied charging 35% commission.

In a statement over email, a Swiggy spokesperson told ET, “We would like to clarify that the 35% transaction cut is untrue. Swiggy’s commission fees are structured in a way that gives restaurant partners options to find what works best for their business.”

Commissions for restaurant partners are arrived at an individual restaurant level and are in line with factors like average order value, delivery costs, delivery toolkits and other costs that are incurred, the spokesperson said.

“The commission we charge is a function of the value we generate for the restaurant and is mutually agreed with the restaurant partner prior to being executed in the form of an agreement,” he said. “We confirm that we do not and have never historically charged 35% commission for any restaurant.”

However, grocery margins are laser thin, Pai said.

“It is a challenge if commissions ranging from 5% to 6% are charged. That is why seller apps may not be charging anything in this segment,” he added.

In the groceries segment, four seller apps barring GrowthFalcons – Digiit, GoFrugal, eSamudaay, and Seller App – are live.

“3% plus GST comes to around 3.54%. Anything you charge must be less than 7% in the grocery segment,” Pai said.

“Our target is to help small businesses get incremental business at lower cost. For example, cloud kitchens don’t have dine-in facilities and are majorly dependent on Swiggy or Zomato, which is why they’re charged up to 35% commissions for online orders. So, they’re looking for a network like ONDC and GrowthFalcons to come in and get incremental business with lower commissions. 10% is a no brainer for the merchants. My conversion rate to any cloud kitchen is 99% at 10% commission,” he said.

At least 60 merchants were onboarded online with no onboarding fee, but only a transaction commission, Pai explained.

“There is no markup on food which the customer or merchants bear the brunt for. End consumers are charged less, and merchants are happy with lower commissions,” he said. is a network on the seller’s side. Any seller can onboard on the app.

“eSamudaay charges Rs 200 per month for sellers and Rs 100 a month for delivery partners,” said founder-CEO Anup Pai.

There also needs to be someone to manage the marketplace: the customer experience, the delivery orchestration, the transaction management, the dispute resolution, the marketing of the marketplace, and the education of the customer, irrespective of the number of buyer apps and seller apps. This has been localised at the scale of a district in the case of eSamudaay, he said.

“There are private companies that are getting incorporated at the district level, creating a super app framework — a marketplace. Multiple sellers of multiple categories can onboard themselves, and there is a marketplace manager for all of it,” he added.

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