KFC, a fast-food restaurant business, has gained attention for being the most recent food firm to sign up for the Open Network For Digital Commerce (ONDC). This development has the potential to completely change the food service business and represents a fundamental shift in the landscape of digital commerce. KFC’s approach, which will involve partnering with Magicpin for technological integration, catalog assortments, and logistics, is expected to present both many advantages and difficulties. Let’s examine this strategic decision’s possible effects under a few important topics.
Credits: Inc 42
Strengthening Digital Presence
Wider Reach and Accessibility
KFC will greatly increase its digital footprint by joining ONDC. A government-backed network called ONDC seeks to open up digital commerce to a wider audience and democratize it. Within the next month, more than 1,000 KFC locations are anticipated to integrate with ONDC. By using this platform, the QSR chain can cater to customers who have a preference for online ordering. This action is in line with the expanding trend of customers choosing digital solutions for their meal ordering requirements.
Enhanced Customer Experience
Magicpin’s expertise in tech integration and logistics will play a crucial role in ensuring a seamless customer experience. By optimizing catalogue assortments and streamlining logistics, KFC can offer a more efficient and reliable service to its customers. This can lead to increased customer satisfaction and loyalty, as well as higher order volumes.
Competitive Edge Against Rivals
Lower Take Rates
One of the primary motivations for KFC and other large restaurants to join ONDC is the lower take rates compared to existing food ordering giants like Zomato and Swiggy. ONDC’s take rates remain much lower, even with the recent surge in order volumes. This cost advantage can make KFC’s offerings more attractive to price-sensitive customers, giving it a competitive edge in the market.
Reduction in Discounts
ONDC has announced plans to reduce the incentives offered to network participants by about 75%. While this might seem like a setback, it is not expected to have a major impact on the number of food orders. The buyer-side apps on the network are currently charging low take rates to grow their user base, making their offerings cheaper compared to competitors. This pricing strategy can help KFC attract more customers and increase its market share.
Industry-Wide Implications
Increased Adoption of ONDC
KFC’s integration into ONDC is likely to encourage other large food chains and restaurants to consider joining the network. The success of KFC, along with other big brands like Domino’s and McDonald’s, can serve as a testament to the potential benefits of ONDC. As more companies join the platform, ONDC can achieve greater scale and efficiency, further strengthening its position in the digital commerce ecosystem.
Pressure on Existing Players
Existing food ordering behemoths like Zomato and Swiggy are under pressure from the introduction of KFC and other major brands into ONDC. In order to stay competitive, these platforms may need to reevaluate their take rates and pricing policies. In the end, consumers may profit from improved services and prices as a result of this greater competition.
Consumer Benefits
More Choices and Better Deals
With KFC joining ONDC, consumers can expect more choices and better deals when ordering food online. The competition among various platforms can lead to attractive promotional schemes and discounts, enhancing the overall value proposition for customers. Additionally, the lower take rates on ONDC can translate to cost savings for consumers, making their food orders more affordable.
Improved Delivery Experience
Magicpin’s role in optimizing logistics for KFC can result in faster and more reliable deliveries. As efficiency improves, customers can enjoy a better delivery experience, reducing wait times and ensuring their food arrives fresh and hot. This can lead to higher customer satisfaction and repeat orders.
Conclusion
The strategic move made by KFC to join ONDC could have a big effect on the food service sector. KFC may improve its online presence, obtain a competitive advantage, and provide customers with better value by utilizing the benefits of ONDC. This action has wider industry ramifications as well, since it may result in a rise in ONDC adoption and heightened rivalry among current players. With more options, better prices, and enhanced delivery experiences for customers, the digital food commerce market is expected to grow and change in fascinating ways.
