PhonePe’s Pincode exits non-food categories in ecommerce business rejig

Walmart-backed PhonePe is restructuring its ecommerce strategy on the Open Network for Digital Commerce (ONDC). It is exiting several categories like fashion, grocery, electronics except for food delivery on the network, according to people briefed on the matter. The company has briefed the government-backed ONDC network already and the same is in effect as of Tuesday.

On the main PhonePe app, it will provide only unreserved ticket booking through ONDC.

“PhonePe Payment Technology Services Private Limited (Pincode) has requested ONDC to remain subscribed only to Food and Unreserved ticket booking domains on the ONDC registry, taking a view to join the other domains after re-aligning their internal approach,” according to an internal ONDC note, seen by ET. “Accordingly, with effect from 23rd April 2024, Pincode will be unsubscribed from the other domains, except Food and Unreserved ticket booking.”

People cited above said PhonePe has decided to narrow down on segments working on ONDC and is realigning its focus accordingly. Several sources said the end consumer experience is still not at par with other consumer delivery apps which was also a factor in PhonePe’s decision making.

PhonePe launched its ecommerce venture Pincode on ONDC last year offering grocery, food delivery, medicines, fashion and electronics among other categories on the network. It launched the services in 10 cities after launching it first in Bengaluru.

A spokesperson for PhonePe’s Pincode declined to comment.

ET reported on Wednesday that PhonePe has ploughed in Rs 90 crore in Pincode in the last one year in two tranches – one in July 2023 and second, earlier this month.

A senior government official told ET that ONDC has been witnessing issues with grocery deliveries on account of lack of standardisation of general trade and smaller modern trade kirana stores.

“In food delivery, platforms such as Zomato and Swiggy have managed to standardise and train restaurants to a large extent to handle online ordering…on how to package and manage inventory, which ensures optimal customer experience. That kind of an effort hasn’t been put with grocery stores that has generally led to a lack of improvement in quality of experience,” the official said.

“Broadly, complaints are around wrong items being shipped or poor packaging leading to damaged items prior to being delivered. The ecosystem needs to work together here to resolve this before ONDC can take grocery deliveries to a large scale,” the official added.

As of March-end, almost 6 lakh food orders had been delivered through ONDC on a cumulative basis, while nearly 2 lakh grocery orders were serviced.