Uber Enters India’s B2B Logistics Market: A Game Changer for Digital Commerce

Uber is making a significant move by entering India’s burgeoning B2B logistics market through its partnership with the government-backed nonprofit, the Open Network for Digital Commerce (ONDC). This initiative aims to challenge the dominance of major e-commerce players like Amazon and Walmart-backed Flipkart, ultimately widening the scope of digital commerce across the South Asian nation.

The Launch of Uber’s B2B Logistics Service

On a recent Monday, Uber announced its forthcoming B2B logistics service leveraging its extensive network of 1.4 million drivers. While the exact launch date hasn’t been disclosed, this service will initially focus on facilitating food deliveries for ONDC-affiliated businesses. However, it is intended to expand into various other sectors, including e-commerce, groceries, pharmaceuticals, and even healthcare logistics.

As part of this evolution, Uber will become a logistics service provider on the ONDC platform, positioning itself against competitors such as Shiprocket and Shadowfax. This white-label service will function similarly to Uber Direct, which was launched in the U.S. in 2020 but will cater exclusively to businesses operating within the ONDC framework.

Expanding Beyond Ride-Hailing: A Strategic Move

Uber’s latest strategy aligns with its recent push into the consumer logistics sector. Earlier this month, the company rolled out Courier XL in Delhi NCR and Mumbai, allowing users to send large goods weighing up to 1,653 pounds. This service alone indicates Uber’s commitment to dominating the logistics landscape, as it also continues to provide its regular courier services through two-wheelers.

Given the optimistic projections for India’s logistics market, expected to grow 49% to reach 13.4 trillion Indian rupees ($157 billion) by the financial year 2028, Uber’s new service could yield substantial returns. The company reported a 41.1% year-over-year increase in its operating revenue in India last year, which stood at $439 million.

Understanding the Competition

Despite Uber’s promising growth, the ride-hailing giant faces stiff competition from local players such as Rapido and Namma Yatri. These emerging competitors, backed by various investment firms, have established a strong foothold in the market. By diversifying into logistics, Uber aims to bolster its position in India, which is a crucial market for the company.

Furthermore, Uber recently implemented metro ticketing on its rider app, a feature powered by ONDC. This initiative follows a memorandum of understanding with the nonprofit during CEO Dara Khosrowshahi’s visit to India in February 2024. With this rollout, Delhi Metro tickets are now available via the Uber app, with plans to expand to three more cities later this year.

The Road Ahead for ONDC and Uber

Launched in 2021, ONDC aims to boost digital commerce by empowering small retailers. However, its initial struggle to gain traction has raised questions about its long-term viability. Although ONDC intends to emulate the success seen with the Unified Payments Interface, it has yet to attract major industry players fully.

Recent challenges, including declining retail orders and changes in leadership, add complexity to ONDC’s journey. In April 2024, retail orders on the network dropped nearly 34%, highlighting the urgent need for innovative solutions.

“Uber’s initial enablement of metro ticketing and logistics unlocks new possibilities — from seamless multimodal journeys to unifying a fragmented logistics ecosystem,” said Vibhor Jain, acting CEO and COO of ONDC. This collaboration may well mark the turning point needed for ONDC to enhance user value and compete more effectively in the marketplace.

Conclusion: A Step Toward Enhanced Digital Commerce

In conclusion, Uber’s entry into India’s B2B logistics landscape represents a significant step in enhancing digital commerce. By leveraging its robust driver network and collaborating with ONDC, Uber is set to unlock new levels of convenience and efficiency for businesses across the country. As this partnership unfolds, its success may fundamentally reshape India’s logistics ecosystem and fortify Uber’s standing in a fiercely competitive market.

For further insights on Uber’s evolving strategies and innovations, consider exploring our articles on Uber Delivery Services, Logistics Trends in India, and the Future of Digital Commerce.