Uber is debuting its Business-to-Business (B2B) logistics service in India. They are using the Open Network for Digital Commerce (ONDC) to do it. This initiative is intended to promote the growth of digital commerce. Most importantly, it will help small retailers access a much larger customer base. ONDC launched in 2021 with a specific aspiration. It sought to build on the success of the Indian government’s Unified Payments Interface and spur the widespread adoption of digital commerce by Indians across the country.
The new permanent logistics service will further enable enterprises connected to the ONDC network. In return, they’ll tap into a new world of on-demand logistics fueled by Uber’s massive network of 1.4 million drivers. This expansion is part of Uber’s larger strategy to transition beyond its core competency of ride-sharing.
Uber’s logistics play will be run on a white-label basis. This allows businesses to use it in a seamless way, to where their end-users don’t see any Uber branding at all. This strategy offers mobility, logistics, and freight companies on the ONDC network a digital bridge to plug into Uber’s logistics capabilities, streamlining their operations and improving services. The service will operate similar to Uber Direct, which launched in the U.S. back in 2020. What it will achieve is much more immediate, flexible, and efficient logistics solutions to businesses.
In terms of new business opportunities, Uber’s logistics service Uber Connect has the potential to be very powerful. It is being introduced at a time when retail orders on the ONDC network have significantly decreased. After reaching an all-time high of 6.5 million in October, retail orders fell almost 34% in April, down to 4.3 million. ONDC’s rides collections jumped 21.45% YoY, contributing an additional $94.27 million to our operating revenue earned last calendar year. This year’s growth is an encouraging indicator of a long-term positive trend in many facets of its operations.
In 2023, ONDC expanded the scope of its work to include mobility solutions. This is a welcomed step toward achieving its aim of creating a strong digital commerce environment. Uber’s increasing influence into the logistics space through ONDC, if it goes through, will ensure that Uber remains the dominating player in the changing market. India remains a huge priority for the company.
Vibhor Jain, acting CEO and COO at ONDC, stated that “Uber’s initial enablement of metro ticketing and logistics unlocks new possibilities — from seamless multimodal journeys to unifying a fragmented logistics ecosystem.” This one remark gets at the game-changing power of being able to bring together all these different transportation and logistics services onto one platform.
The industrial logic behind Uber’s decision to enter B2B logistics through ONDC is quite clear. This push supports small e-tailers across India by providing them access to more technologically savvy logistics capabilities. Retail/ecommerce Digital commerce is the fastest growing channel. Collaboration among entities such as this may prove to be the lifeblood for companies seeking to grow in an increasingly competitive environment.