E-commerce and India Post

E-commerce and India Post

E-commerce and India Post

India Post is shining and how! For a department that had been struggling for survival against changing times driven by technology, India Post is now at the centre of the E-commerce revolution sweeping the country and reaping its benefits.

Before we discuss how the sun is shining on India Post, let us first put in perspective its past.

The rise, fall and rise again

After independence, the Indian Posts and Telegraph Department, as it was then known, played a key role in keeping India connected with its large army of personnel that reached and delivered postal communication and telegrams in India’s remotest corners.

It lost a large portfolio of business when telecommunications was hived off as a separate ministry. And right until the mobile revolution took the country by storm in the late 90s, letters, post cards, telegrams and couriers were the only way to communicate with our dear ones.

But then technology changed how we communicate, it was a matter of time before people stopped writing letters, post cards and sending telegrams. Private courier companies were faster and more efficient and they began to eat away a major chunk of the mail business. But the Department of Posts still had an upper hand that remains unmatched in the country till date.

India Post, as it is now named, still maintains a vast network of post offices in the remotest places in India. There are 156,000 post offices, with 1,30,000 post offices located in rural areas. Through the 90s and until the recent E-commerce boom, the department was struggling with falling revenues and a bloated manpower network that was increasingly becoming redundant.

The E-commerce boom and opportunity

The success of any E-commerce depends upon the logistic infrastructure that includes warehouses, micro and macro distribution vehicle network, road-rail-air connectivity, trained personnel, and most of all technology.

While private players have taken the initiative to develop the E-commerce business in India, none have the requisite scale and distribution reach that India Post already possesses. As a result almost all major players like Amazon, Snapdeal, Flipkart, Myntra, YepMe and Shopclues, are among the 400 E-commerce companies that have tied up with India Post for distributing their products.

The India Post advantage is being strongly felt in Cash-on-Delivery (COD) service, as a large part of India is still comfortable with buying against cash. India Post with its human resource network is in a position to provide the most reliable, efficient product delivery and cash collection infrastructure that remains unmatched by any player in the private sector. And the results are showing.

Till Nov 2015, India Post handled the following articles (average per month) for major E-commerce players:

  • Amazon: 3,00,000 article per month ; peak touching 6,00,000 per month
  • Snapdeal: 80,000 articles per month
  • YepMe: 60,000 articles per month
  • Myntra: 50,000 articles per month
  • Flipkart: 30,000 articles per month

In terms of gross revenue, the COD business has been growing exponentially since 2013. In the year 2013-14, the revenue from COD stood at Rs 100 crore. In 2014-15, it grew to Rs 500 crore and in FY 2015-16 – till Dec 2015, the revenue stood at Rs 1,000 crore and expected to cross Rs 1,500 crore by the financial year closing.

Thanks to the E-commerce boom, ‘Speed Post’ revenue for the current fiscal is exceeding 16% growth. ‘Parcel’ revenue that witnessed a 2% decline in revenue 2013-14, saw revenue increasing by 37% in 2014-15, and till October 2015 the revenue growth registered was above 117%! As more people begin accessing E-commerce, India Post is likely to be a large beneficiary.

Cashing in on the boom

The government has rightly understood the opportunity and has accepted the challenge by rapidly modernizing its infrastructure. India Post has undertaken several initiatives that include opening dedicated hubs to handle distribution for E-commerce. It has opened 57 dedicated distribution hubs across India to handle the increasing business and further expansion is not ruled out.

On 9 January this year, Minister of Communication & Technology Ravi Shankar Prasad, inaugurated a modern 12,000 sq ft E-commerce Parcel Processing Centre at Parel, Mumbai. This hub has a fully mechanized and computerized system with scanners and computers electronically registering and monitoring parcels, conveyor belts to move, store and retrieve parcels. This is supported by dedicated transport infrastructure that will rapidly move the parcels to Mumbai airport or railway station for onward movement. The hub is designed to handle 30,000 parcels per day.

India is witnessing an unprecedented demand for goods, that are traditionally available in metro cities only, and is mostly coming from Tier II, Tier III and rural India. But there has been a reverse opportunity for rural India as well. Several artisans, craftsmen, weavers etc reside in semi-rural and rural areas and have traditionally not had direct access to clients in India and overseas.

With internet now available, especially through mobile penetration, they are now able to directly sell to the end-user. India Post is facilitating this opportunity by extending COD in reverse i.e. the suppliers from rural India now get their payment collected by India Post and the same is instantly credit to their account.

Next big opportunity for India Post

India Post is now poised to enter another big opportunity to further utilize its massive reach. It is among 11 applicants that have been granted in-principle approval by the Reserve Bank of India to enter banking services through a payments bank. India Post could well emerge as the most important institution for delivering subsidies and third party delivery in banking.

Through the payments bank, India Post will be able to offer a host of services to people that include banking products, digital payment services, banking solutions, ATMs, consultancy and physical security products.

Realizing the potential that India Post offers, 62 well established private firms in India and overseas have approached India Post to tie-up for offering a range of financial products and services. The year 2016-17 will see India Post further strengthen its position as a major player in E-commerce and banking services.

Also Explore :