ONDC’s Secret Sauce: Why Zomato-Backed magicpin Is The Silent Winner

At a time when the country is debating whether the government-backed Open Network for Digital Commerce (ONDC) will eliminate the Zomato-Swiggy duopoly, magicpin, which is backed by Zomato, has emerged as the net gainer. 

As of now, the Gurugram-based discounts and discovery platform is seen enjoying the first-mover advantage of joining the ONDC and assisting sellers and restaurants in adopting the open protocol. 

In March, magicpin announced that it integrated its tech platform with the ONDC and successfully onboarded 22,000 restaurants from Delhi NCR and Bengaluru onto the open network. 

Inc42 was the first publication to report on the brewing discount war between the ONDC and other food tech players, such as Swiggy and Zomato, in the food delivery space.

Read: Swiggy-Zomato Killer In The Making? Can ONDC End The Foodtech Duopoly?

The momentum gained pace in April when the transactions suddenly spiked in the grocery and food delivery categories. Sources privy to the development have said that magicpin has outshined payments giant PhonePe’s ONDC-specific buyer app, Pincode, with nearly 90% share in the network’s order volumes.

This has been made possible due to magicpin working on three critical aspects within the ONDC — seller side apps, buyer side apps and third-party logistics players, which has made it a darling of big tech players joining the ONDC bandwagon. 

In an exclusive interaction, the cofounder and CEO of magicpin, Anshoo Sharma, told Inc42 that the startup is in talks with the leading tech platforms who will use the existing tech infrastructure of magicpin and its hyperlocal retail reach to gain scale on the ONDC.

Despite Walmart’s PhonePe launching the first ONDC-specific buyer app, Sharma believes that magicpin’s offerings in an open protocol like ONDC are unmatchable. 

Sources told Inc42 that even PhonePe will be leveraging magicpin’s last-mile connectivity features to fulfil orders on the ONDC.

magicpin has also been roped in by Paytm to develop a more user-friendly interface for ONDC deliveries, opening another revenue stream for the startup.

“We are in talks with various big tech companies who will be joining the ONDC soon,” magicpin CEO said. He, however, refrained from revealing much.

“Within the first four weeks of joining the ONDC, magicpin scaled from 100 to 10,000 orders a day. In the fifth week, we saw a massive leap to 20,000 daily orders. This represents a 200-fold growth in ONDC’s daily orders through magicpin. We are thrilled to take the network to another level by enabling customers to shop at their favourite local businesses or other retailers on the ONDC,” Sharma said in a statement. 

An interesting facet, however, remains that Zomato has a 16.6% stake in magicpin and the food aggregator was a lead investor in its Series D round last year. Even Zomato’s CEO Deepinder Goyal is part of the board at magicpin as an independent director.

To our question of whether Zomato’s stake in magicpin will create a conflict of interest now that the savings platform has charged up the food delivery orders on the ONDC, Sharma said that magicpin’s access is to sellers/merchants beyond the food delivery category. 

He added that segments like fashion, quick-service restaurants, night-life, pharmaceuticals, and electronics also have commanded a fair share of revenue for the platform over the past few years. 

magicpin is also building a Software-as-a-Service (SaaS) platform for the ONDC initiative. With this SaaS platform, magicpin aims to offer its proprietary technology stack, including tools for digital payments, customer engagement and loyalty programmes to SMEs, thus enabling them to compete with larger players in the market. 

This initiative is expected to drive greater adoption of digital commerce among small businesses, contributing to the growth and development of the Indian economy, according to magicpin. 

Upping The Hyperlocal Game

Hyperlocal commerce adoption has been quick since the onset of the Covid-19 pandemic, but it is only ecommerce that has garnered much traction, with corporate giants like Tatas and Reliance foraying into the space. 

However, the magicpin CEO believes that the real growth lies in harnessing the potential of the $1 Tn offline retail market, which is highly fragmented. It is this hyperlocal physical retail market that the Gurugram-based startup is trying to gain an increased access to with its unique propositions of discounts and discovery. 

Sharma added that unlike pay-per-click models, magicpin offers a pay-per-conversion model, which basically refers to drawing commissions from sellers/merchants only after an order is placed by the end user.

Founded in 2015 by Sharma and Brij Bhushan, magicpin claims to have 10 Mn active users and 9,00,000 merchant partners across 50-plus cities in India. Having raised close to $100 Mn, magicpin counts Lightspeed, WaterBridge, among its investors.

In FY22, the startup reported a 1.6X surge in revenue. Overall, its revenue from operations stood at INR 232.78 Cr with INR 144.96 Cr in losses.

The company claims to have witnessed a 4X rise in the number of users, whereas 2.5X growth in GMV since last year.

Sharma said that his startup banks on referrals, which has proven to be a key customer acquisition strategy in addition to the platform-specific discounts that consumers can avail from various brands and outlets. In addition, the payment feature available on magicpin also enables users to avail more discounts. 

In terms of average commissions, the magicpin CEO said that the platform makes 20% commission on any order placed on its platform. The asset-light business model, under which the company spends only on marketing campaigns, customer acquisitions, human capital and building its tech stack is an added advantage, according to Sharma, who sees the company becoming profitable by next year.

“We aren’t in a hurry to raise the next round of capital or public listing but we are surely heading in the right direction,” the magicpin CEO added.

With that said, by the time the ONDC scales to topple some market giants Anshoo Sharma believes that magicpin would have already spun its magic.