Walmart-backed payments giant PhonePe makes significant foray into e-commerce.

In a move reminiscent of its successful early bet on the government-backed UPI network seven years ago, PhonePe, India’s leading mobile payments app, is now setting its sights on the e-commerce sector. The Bengaluru-based startup, backed by retail giant Walmart, has launched a hyperlocal commerce app called Pincode that is powered by the Open Network for Digital Commerce (ONDC), an Indian government initiative striving to democratize the e-commerce landscape by offering a zero-commission platform.

What is ONDC?

The Open Network for Digital Commerce (ONDC) is a nonprofit firm set up by India’s commerce ministry in 2021. It is an ‘interoperable’ network, where buyers and sellers can do business regardless of the service they use, disrupting the consumers’ reliance on using proprietary services run by Amazon and Flipkart.

How does Pincode work?

Pincode currently focuses on categories such as grocery, medicines, food, electronics, and home décor. The app will work with local shops and is going live initially in Bengaluru. PhonePe executives said at a press conference on Tuesday that the startup plans to slowly expand to more cities and amass 100,000 orders a day by the end of the year.

Why is Pincode important?

PhonePe’s Pincode app offers a revolutionary new approach to e-commerce, which puts all the local stores and sellers at the heart of the digital shopping growth story. Pincode is built on the ONDC network, which allows us to generate demand for merchants digitized by various seller platforms in an inclusive manner, while creating new opportunities for growth and driving innovation at scale.

What are the benefits of Pincode?

PhonePe’s move into e-commerce with Pincode is remarkable in a number of ways. In the Walmart-backed app, ONDC is courting a major player. The network has so far largely been ignored by the major giants such as Amazon, Google, and Facebook.

Even as PhonePe commands over 50% of all value on the UPI network, the company has been hunting for other avenues to generate revenue. PhonePe has recently said in recent quarters that it will use its large platform to cross-sell insurance and other services.

What are the challenges facing ONDC?

India’s e-commerce market, currently dominated by Flipkart and Amazon, is estimated to be worth $133 billion by 2025, according to wealth manager Sanford C. Bernstein. ONDC poses a major disruption to the e-commerce sector, according to Morgan Stanley, but it still has a few things that need to be ironed out.

"We see execution challenges… such as in the ability to bridge the trust deficit between sellers and buyers, and provide real-time availability data for inventory management," they wrote in a recent report.

What does this mean for PhonePe?

PhonePe’s move into e-commerce with Pincode is a significant step forward for the company. With its existing user base and brand recognition, PhonePe is well-positioned to take on the likes of Amazon and Flipkart in the Indian e-commerce market.

Conclusion

PhonePe’s entry into the e-commerce sector with Pincode app marks an exciting new chapter for the company. With its focus on hyperlocal commerce and use of ONDC network, PhonePe is poised to disrupt the e-commerce landscape in India. As the Indian e-commerce market continues to grow, it will be interesting to see how PhonePe’s move into e-commerce plays out.

What’s next?

PhonePe’s entry into e-commerce with Pincode app is a significant development in the Indian digital payments space. With its focus on hyperlocal commerce and use of ONDC network, PhonePe is well-positioned to take on the likes of Amazon and Flipkart in the Indian e-commerce market.

Key Takeaways

• PhonePe has launched a hyperlocal commerce app called Pincode that is powered by the Open Network for Digital Commerce (ONDC).
• The ONDC network is an ‘interoperable’ network, where buyers and sellers can do business regardless of the service they use.
• PhonePe plans to slowly expand to more cities and amass 100,000 orders a day by the end of the year.
• PhonePe’s move into e-commerce with Pincode is significant in that it marks an exciting new chapter for the company.