Walmart-backed fintech giant PhonePe makes e-commerce push
In a move reminiscent of the successful early forays into the state-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, on Tuesday launched a hyperlocal commerce app, called Pincode, powered by the Open Network for Digital Commerce (ONDC), an Indian government initiative that strives to democratize the e-commerce landscape by offering a zero-commission platform .
Pincode will work with local stores and will initially go live in Bengaluru, PhonePe executives said at a press conference on Tuesday. The startup, which also counts General Atlantic and Tiger Global among its backers, plans to slowly expand to more cities and collect 100,000 orders a day by the end of the year. Pincode currently focuses on categories such as grocery, medicine and food.
ONDC, a non-profit company established by India’s Ministry of Commerce in 2021, is an “interoperable” network, where buyers and sellers can do business regardless of the service they use, disrupting consumers’ reliance on using proprietary services powered by Amazon and flip chart.
“This is the UPI moment for e-commerce,” said Sameer Nigam, co-founder and CEO of PhonePe. “I think there is legitimate friction in the e-commerce industry. Would we have gone into the e-commerce industry had ONDC not happened? Absolutely not.”
Scores of industry players, including 48-year-old retailer Sangeetha Mobiles, and restaurants are hoping that the ONDC makes inroads into the market and forces incumbents to lower their charges, their executives said.
Image credit: PhonePe
“Pincode is a brand new shopping app and offers a revolutionary new approach to e-commerce, putting 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 sellers digitized by various seller platforms in an inclusive way, while creating new opportunities for growth and driving innovation at scale,” he added.
PhonePe, valued at $12 billion, registering with the ONDC is notable in several ways.
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In the Walmart-backed app, ONDC is courting a major player. The network has so far been largely ignored by the big giants such as Amazon, Google and Facebook
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Although PhonePe captures over 50% of all transaction 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
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PhonePe, which was acquired by Flipkart in 2016, was separated from the e-commerce giant last year. Although Flipkart does not plan to enter mobile payments, TechCrunch previously reported, it is interesting that PhonePe wants a piece of the e-commerce market
PhonePe said it will “invest significant efforts” in Pincode and in “enabling every Indian store owner spread across every nook and cranny, over the next few years.”
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 to iron 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.
