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In a day of tumultuous trading, food delivery giant Zomato fell sharply by 7%, reacting to fears that the Open Network for Digital Commerce (ONDC) might undermine the company's profitability. Despite reassurances from brokerages like Motilal Oswal that ONDC poses a threat only if it scales up significantly, the market expressed its nerves with the sudden slide in Zomato's stocks.
ONDC Website - https://ondc.org/
The ONDC, an initiative under the Ministry of Commerce and Industry, seeks to democratize e-commerce by creating an open and interoperable network that can reduce dependence on specific platforms. This move could potentially disrupt the business models of dominant players in the industry, including Zomato and Swiggy.
Brokerage firm Motilal Oswal, in its recent report, noted that while ONDC is not an immediate threat to Zomato and Swiggy, it could become one if it achieves considerable scale. The report further highlighted the price differentials in different cities, indicating that Zomato and Swiggy still hold a competitive edge due to their extensive network and customer base.
However, the market seemed to react to the uncertainty surrounding the situation, causing a slide in Zomato's shares. The drop is a reminder of the volatility that can arise from regulatory changes and potential competition in the dynamic tech and e-commerce industries.
As the situation unfolds, all eyes will be on the ONDC's progress and its potential impact on the existing e-commerce and food delivery landscape. For now, the market's reaction underscores the need for dominant players like Zomato to stay agile and adaptive in the face of emerging challenges.
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