Walmart-backed fintech giant PhonePe makes e-commerce push


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, launched an e-commerce app on Pincode, 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.

Pincode will work with local shops and is going live initially in Bengaluru. The startup plans to slowly expand across India, city by city.

ONDC, a non-profit firm that was set up by India’s commerce ministry in 2021, is an “interoperable” network, where buyers and sellers can do business regardless of the app or service they use, disrupting the consumers’ reliance on using proprietary services run by Amazon and Flipkart.

“This is the UPI moment for e-commerce,” said Sameer Nigam, co-founder and chief executive of PhonePe. “I think there is legitimate friction in the e-commerce industry. The consumers don’t care where their food comes from, where they next phone comes from. They care about convenience.”

Scores of industry players including the 48-year-old retailer Sangeetha Mobiles, and restaurants are hoping that ONDC makes a dent in the market and forces incumbents to lower their fees, their executives said at a conference Tuesday.

PhonePe, valued at $12 billion, signing up to ONDC is remarkable in a number of ways.

  1. In the Walmart-backed app, ONDC is courting a major player. The network so far largely been ignored by the major giants such as Amazon, Google and Facebook
  2. Even as PhonePe assumes over 50% of all transactions 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
  3. PhonePe, which was acquired by Flipkart in 2016, separated from the e-commerce giant last year. Even as Flipkart doesn’t plan to get into mobile payments, TechCrunch previously reported, it’s interesting that PhonePe wants a slice of the e-commerce market

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.

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