Why Customer Acquisition Costs Are Rising on Marketplaces — and How ONDC and Direct Website Selling Fixes It

If your paid acquisition numbers have lookedworse every quarter for the past two years, you're not imagining it, and it'snot just your campaigns. The underlying economics of acquiring a customer inIndia have shifted structurally — and brands leaning entirely on marketplacesand paid social are absorbing the full force of that shift. Here's what'sactually driving it, and why combining your own website with ONDC addresses theroot causes rather than just the symptoms.

The Numbers: CAC Is Up 35% YoY, and It's Structural

A few data points that explain the scale of theproblem:

•     The average CACfor Indian D2C brands has increased roughly 35% year-over-year between 2024 and2026, driven by rising ad costs, increased competition, and platform algorithmchanges — this isn't a seasonal blip, it's described across multiple 2026 industryanalyses as a structural shift

•     Meta ad CAC forIndian D2C brands rose from roughly ₹380 in 2025 to ₹502 in 2026 — a 32% jumpin a single year — while blended CPMs across Meta and Google have climbed30-45% over the same period in competitive categories like beauty, fashion, andwellness

•     iOS privacychanges (App Tracking Transparency) alone are estimated to have added 20-25% toacquisition costs, by degrading the targeting precision that made paid socialefficient in the first place

•     India now hasover 800 funded D2C brands competing for the same audience pools — in beautyand personal care alone, acquisition costs that once sat at ₹200-500 percustomer have, for many brands, climbed to ₹800-1,200

Why Marketplace Dependency Makes This Worse, Not Better

•     Commission stackson top of rising ad costs — a typical marketplace takes 15-30% commission perorder, which means rising CAC is eating into a margin that's already beenreduced before the sale even happens, unlike ONDC's roughly 3% commissionstructure which leaves farmore room to absorb acquisition cost pressure

•     The marketplaceowns the customer data, not you — email, phone number, and purchase historytypically stay with the platform, which means you can't build the retention andrepeat-purchase engine that would otherwise lower your blended CAC over time

•     You're rentingvisibility, not owning it — marketplace discovery depends on algorithmicranking and paid placement you don't control, so even strong organic growth onyour own channels doesn't reduce what you pay the marketplace for visibilitythere

•     Acquiring a newcustomer costs roughly 5-7x more than retaining an existing one — and thatretention lever is largely unavailable to brands that sell exclusively throughmarketplaces, since there's no direct line to the customer after the sale

Marketplace-Dependent Growth vs ONDC + Website Hybrid — At a Glance

How the ONDC + Website Combination Actually Lowers CAC

•     Lower commissionfrees up margin for acquisition — on a ₹500 order, a marketplace commission of₹125-175 versus ONDC's roughly ₹30-60 is real budget that can either go backinto marketing or simply improve unit economics without raising ad spend at all

•     Organic,protocol-level discovery reduces paid dependency — because asingle ONDC listing appears across 30+ connected buyer apps, you gain reach that doesn't require winning aMeta or Google ad auction for every new customer, which is exactly themechanism behind the 15-20% lower CAC early adopters report

•     Your websitecaptures and owns the data that drives retention — asingle integration connects your existing catalog to ONDC without sacrificing the direct customerrelationship your website already gives you, so every sale — whichever channelit comes through — can feed into email, WhatsApp, and loyalty programs thatlower acquisition cost over the customer's lifetime

•     Blended CACimproves even if paid CAC doesn't — since ONDC adds a lower-cost acquisitionchannel alongside your existing paid spend, your overall blended CAC can falleven while Meta and Google costs keep climbing, simply by shifting more of yournew-customer mix toward the cheaper channel

A Practical Starting Point

•     Audit whatpercentage of your current CAC is commission versus ad spend — if commission iseating 15%+ before ads even enter the picture, that's the first lever to pull

•     Connect yourexisting website catalog to ONDC through a single integration rather than building a second, disconnectedstorefront — this keeps operational overhead low while adding thelower-commission channel

•     Redirect aportion of what you were spending to win marketplace ad auctions towardretention infrastructure (email flows, WhatsApp, loyalty) now that your websiterelationship with the customer is intact

•     Track blended CACacross all channels monthly, not just paid-channel CAC in isolation — this isthe number that actually reflects whether the hybrid model is working

Frequently Asked Questions

Is the 35% CAC increase specific to a certainindustry, or across all D2C categories?

It's reported as a blended, cross-categoryyear-over-year figure for Indian D2C brands overall, though some categories —beauty and personal care in particular — have seen even steeper increases, withper-customer costs climbing to ₹800-1,200 in some cases.

Does selling on ONDC replace the need for paidadvertising entirely?

No — most brands still use paid acquisition, butONDC adds a lower-commission, organically discoverable channel that reduces howmuch of your total customer acquisition needs to come from expensive adauctions.

How much lower is CAC through ONDC compared tomarketplaces?

Early adopters have reported roughly 15-20%lower customer acquisition costs through the ONDC network, largely due to itslower commission structure and organic, protocol-level discovery acrossmultiple buyer apps.

Why does owning customer data matter for CACspecifically?

Because retaining an existing customer costssignificantly less than acquiring a new one — commonly cited at 5-7x less — sobrands that own their customer data (email, phone, purchase history) can lowerblended CAC over time through repeat purchases, while marketplace-only sellersgenerally can't.

Is it complicated to add ONDC to an existing D2Cwebsite?

No — it typically connects through a singleplugin or seller-app integration that syncs your existing catalog, rather thanrequiring you to build or maintain a second, separate storefront.

Fixing the Root Cause, Not the Symptom

Rising ad costs aren't going away, and no amountof campaign optimization fully offsets a structural 35% YoY increase. The moredurable fix is reducing how much of your growth depends on expensive, rentedacquisition in the first place — which is exactly what pairing a direct websitewith ONDC's lower-commission network is built to do. Platforms like COSTBO makethe integration itself simple, so the strategic shift doesn't come with a heavyoperational cost.

About Costbo

Founded by Mr. Eswar and Mr. Ananth, with nearly 20 years of technology experience, Costbo is a leading ONDC seller platform powering India’s open digital commerce ecosystem. Costbo is among the first ONDC 1.2.0 certified seller platforms, enabling brands and sellers to sell on ONDC with fast onboarding, lower costs, and full operational control.

Ready to grow on ONDC? Start your journey with Costbo today.

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References

• 10Ways to Reduce Customer Acquisition Cost for D2C Brands — Balistro

• WhyYour D2C Brand's Customer Acquisition Cost Keeps Rising (and What to Do AboutIt) — Adtitude Media

• CustomerAcquisition Strategies for D2C Brands in India — The D2C Pulse

• Whatis D2C E-commerce? Direct-to-Consumer Guide for India — Cognito IT Consultancy

• 2026India retail: quick commerce, ONDC and D2C — ecorpIT

Read More

1. Building Blocks of ONDC: A Detailed Guide to India’s Open Digital Commerce Infrastructure
2. ONDC A Revolutionary Open eCommerce Network – in Action
3. Roles of Seller App & Buyer App on ONDC Network
4. Why Sell Online Through the ONDC Network?
5. Getting Started as a Seller on ONDC: Registration Options
6. Which Is the Best ONDC Seller App? Features, Pros & Cons (2026)
7. Best ONDC Buyer Apps in 2026: Features, Pros & Cons
8. What is ONDC Buyer App

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