Will ONDC and its enablers drive growth of Kirana e-commerce?

When the ONDC (Open Network for Digital Commerce) was established, it was with the stated aim of increasing e-commerce penetration in the country by enabling population-scale inclusion of all types and sizes of sellers. According to the ONDC website, more than 12 million sellers earn their livelihood in India by selling or reselling products and services. However, only 15,000 of these sellers (0.125% of the total) have enabled e-commerce. E‑retail has been out of reach for the majority of sellers, especially from small towns and rural areas. It says ONDC recognises the unique opportunity to increase e‑retail penetration from the existing 4.3% to its maximum potential in India. This has seen the inclusion of many small retailers on the ONDC platform and also the emergence of many tech players enabling it for them. One such is Kiko Live, a SaaS solution for neighbourhood stores and a Seller Network Participant on ONDC Network, which has announced that it has successfully unlocked a major milestone for local kirana stores and retailers on the back of ONDC Network by processing over 100,000 total orders on the ONDC Network. 

“Since its onboarding on the Open Network in December 2023, sellers on Kiko have witnessed significant business growth. From 30-40 orders per day just 3 months ago, Kiko Live is now consistently seeing  2500+ orders per day,” says the company statement. 

Kiko works directly with Kirana stores to digitize their business. 13 million Kirana stores in India generate over $800 billion in annual business, yet most of them do not have a digital footprint. “These sellers continue to depend on orders received over call and Whatsapp for their home delivery business which constitutes over 10% of their business — that's an $80 billion plus Kirana led home delivery business that already exists today, in spite of availability of Quick Commerce,” says Kiko.

“Quick commerce at under $4 billion is a small fraction of the Kirana home delivery business even today. Selling online had been challenging for small retailers in the past. The few who tried, struggled to maintain high inventory fill rates i.e a customer may order 5 items but only receive 3 due to stock-outs. This led to poor buyer experiences. Kiko Live has been able to address this for the retailers, helping them build a thriving business on the ONDC Network. Some retailers are already receiving over 300 orders a day within a couple of weeks of going online,” it adds.

Kiko Live says it is enabling high fulfillment rates by the retailers, with sellers achieving 99% order fill rates to date. The app has also focused on a low-cost model of hyperlocal fulfillment. It adds that these efforts have led to order cancellation rates of less than 1% and repeat buying rates that are now crossing 30% of all orders.

T Koshy, MD & CEO, ONDC, says, “ONDC Network is helping take digital commerce to every corner of the country in an open, inclusive way that empowers all stakeholders. By creating a level playing field, the Open Network allows small, hyperlocal retailers like Kirana stores to leverage technology, drive new sales channels, and grow their business in ways that was not possible before. We are happy to see Kiko Live's growth in a short span of 2 months. Facilitating high fulfillment rates and quick deliveries, it has unlocked the potential for thousands of neighborhood Kirana stores to thrive in the digital economy.” 

Alok Chawla, Co-Founder, Kiko Live, says, “We celebrate Kiko’s meteoric growth journey, starting with 30-40 orders a day in mid-December 2023, and now helping retailers drive 2500+ orders a day through ONDC Network in just over 3 months. We continue to grow aggressively month on month, from 10,000 orders in January to 40,000 orders in February 2024 and we plan to close March 2024 with over 70,000 orders. We have already helped retailers successfully process over 100,000 orders on ONDC Network and  plan to help retailers process over 1.5 million monthly orders before the end of FY25.”

It remains to be seen how retailers can are able to get on the ONDC network, what their challenges are in getting on to the platform, and also how many tech enablers are there who can facilitate it. It also needs to be seen how the Kirana digital performance compares with their offline business.