- ONDC’s money map: BA, SA, LSP, PSP, and gateway roles
- Settlement flows & working-capital traps
- Catalog correctness: why schema beats coupons
- Logistics arbitrage: city density, batching, and SLAs
- Scorecard: who wins as AOV and order density rise
The short
- Discovery is commoditising. Buyer Apps (BAs) win via UX, trust, and payments; price alone is a race to zero.
- Catalog is margin. Clean taxonomy, attributes, and availability accuracy reduce cancellations, refunds, and reattempt costs.
- Logistics is the lever. City-level density, micro-fulfilment, and batching economics decide contribution margins.
- Settlement discipline matters. Late settlements and reconciliation leakage crush small sellers’ working capital.
Who this applies to
Buyer Apps (BA)
Own demand, payments, and post-order CX. Trust & UX Repeat
Seller Apps (SA) & SMEs
Onboard, normalise, and service supply; minimise cancellations. Fill-rate Catalog hygiene
Logistics (LSP)
First–mid–last mile; SLA, NDR, and return costs define profitability. Density Routing
Gateways / PSPs
Network policies, payments, and dispute rails; keep failure loops tight. Reliability
Settlement & working capital
Two things break unit economics: refund loops (cancellations, unavailable inventory) and settlement slippage (late credit, partial reconciliation). For small sellers, a 3–7 day lag can choke reorder capacity.
- Principle: Tie BA/SA incentives to first-attempt delivery and same-day reconciliation windows.
- Operational: Auto-close orders after proof-of-delivery; trigger settlement minus network fees and LSP dues.
- Data: Keep a single source of truth for order state; suppress duplicate callbacks to avoid ghost refunds.
Catalog standards = fewer losses
Attribute completeness (brand, size/pack, MRP, shelf-life, veg/non-veg, HSN) and stock freshness lower NDR/returns by double-digit percentages in dense categories like grocery and pharma-light.
Logistics arbitrage
Three knobs move contribution margin:
- Density: Orders per km per hour. Push slotting and hyperlocal assortments.
- Batching: Two-stop merges with SLA headroom can shave 12–20% cost on short routes.
- Returns containment: Pre-delivery confirmation for high-NDR SKUs; doorstep QC for perishables.
Quick table — where the money sits
| Actor | Profit pool | Pressure points |
|---|---|---|
| Buyer App | Payments, cross-sell, ads, subscriptions | CAC vs LTV, refund handling, chargebacks |
| Seller App | Onboarding fees, SaaS tools, fulfilment add-ons | Catalog QA cost, support load, churn |
| LSP | Dense lanes, batching, reverse-logistics fees | NDR, SLA penalties, idle time |
| Gateway/PSP | TPV take-rate, value-added fraud tools | Disputes TAT, peak reliability |
Scorecard — when do profits show up?
- AOV ↑ + Density ↑: BA ads/subscriptions and LSP batching margins expand.
- Catalog accuracy ↑: SA support costs fall; first-attempt deliveries rise.
- Settlement T+1: Seller churn drops; supply depth improves without subsidies.
Playbook to move from pilot to profit
For Buyer Apps
- Enforce attribute completeness; penalise stale stock.
- Offer slots, not promises—build SLA headroom for batching.
- Subscription for free-returns threshold; cap abuse.
For Seller Apps
- Auto-sync inventory; lock low-availability SKUs.
- Standardised imagery; no “variant ambiguity”.
- Weekly cohort reviews: NDR, cancellations, and repeat.
One-line takeaway
ONDC profits don’t come from discounts—they come from clean catalogs, dense routes, and disciplined settlement.