Sharadamani
Amma, an 87-year-old great grandmother, remembers a time when the sight
of mail runners would cause a great deal of excitement in the small
Kerala village she grew up in. The appearance of these postal employees,
who carried mail between post offices on foot, meant a letter or money
order or, god forbid, a telegram—a sure sign of ill news.
But
those days are long gone. The postmen are no longer held in high regard
in most of the country, and few in the current generation would have
even stepped into a post office, at least in urban India.
New
age e-commerce companies want to change this. The likes
of Amazon and Snapdeal already have pilot projects running with India
Post, while newspaper reports suggest that Flipkart is set to follow
suit.
But what makes India Post, seen by many as a relic of a bygone era, so attractive to these online portals?
UNBEATABLE NETWORK
India
Post’s network of post offices in India is incomparable. None of the
private courier or logistics firms can even come close say experts and
e-commerce firms. “India Post has an unmatched network that is
critical for the growth of e-commerce in India,” says Ashish
Chitravanshi, Vice President of operations at Snapdeal. A view
echoed by Amazon.in. “Through India Post’s extensive network, Amazon
India is able to service over 19,000 pin-codes through 140,000
post-offices across all 35 states and union territories in India,” says
Samuel Thomas, Director of transportation at Amazon India.
This network covers about 25,000 pin codes, while even large private courier companies like DTDC reach only about 10,000.
RURAL DEPTH
While the pan India network is impressive, it is India Post’s rural depth that gives it an edge. “No one can reach rural areas like India Post,” says Manish Saigal, Managing Director of advisory services firm Alvarez & Marsal India. Manish
says India Post’s importance will only increase when non-metro India’s
contribution to e-commerce sales surpasses that of metro India. “The top
20 cities contribute 60% in value terms right now. The pendulum will
shift the other way pretty soon,” adds Manish.
The
pendulum has already swung the other way for some e-tailers. Over 70%
of orders for Snapdeal are from smaller cities and towns, according to
Snapdeal’s VP-Operations Ashish. “The growing popularity of online shopping in
these non-metro centers presents a unique set of logistical challenges
like spread out population, high km/delivery factor and high cost of
setting up delivery infrastructure,” explains Ashish.
ADVANTAGE INDIA POST
It
is not just the e-commerce companies that stand to gain from a
partnership with India Post. The revenue potential for India Post is
quite high.
The
central government agency is already handling over 1.5 lakh e-commerce
deliveries a day, according to industry estimates, making India Post one
of the largest delivery partners for the industry. The Business
Development and Marketing Directorate of India Post, which handles
delivery of parcels like those of e-commerce companies, earned revenue
of Rs 1961.76 crore between April and December last year.
“A lot of people dismiss India Post but they are doing mind-boggling work on the ground for e-commerce already,” says Manish.
An
advertisement put out by India Post showed the department has handled
Rs 500 crore of cash-on-delivery (CoD) in the financial year 2014-15.
However,
Alvarez & Marsal’s Manish says India Post needs to do more in terms
of technology adoption. This is especially important for CoD. India
Post does have years of experience handling and delivering cash, in the
form of money orders. However, CoD unlike money order requires postmen
and women to collect cash and not hand over cash. E-commerce companies
also expect this cash to be remitted into their accounts daily and
further expect transparent and instant system updates.
This technology integration between India Post and e-commerce companies is beginning to happen.“We have integrated Amazon and Postal systems to electronically enable information sharing,” says Amazon India’s Samuel.
There
are examples globally of national postal departments taking advantage
of the growth of online retail. Ankur Bisen, senior Vice President at
retail advisory firm Technopak, cites the examples of Deutsche Post
(Germany) and Royal Mail (UK). “Both these companies were state
sponsored mail carriers and realised the diminishing importance of
postage. Both of them have successfully re-modelled themselves to suit
the emerging e-commerce needs,” says Ankur. An AFP report in March
stated that Deutsche Post’s e-commerce parcel division saw its revenues
rise by 2.6% to reach 15.7 billion euros (Rs 1.11 lakh crore) in FY
2014.
“If
they can marry India Post’s local knowledge and network with
technology, they can become unbeatable. But they need to do this fast,”
says Manish.
If
this succeeds, then Sharadamani Amma’s great granddaughter Mythili will
also soon wait with bated breath for the postman to call at her
Bengaluru flat.
(Sources
of data and information shown in graphics: India Post annual report,
India Post advertisement, Amazon India, DTDC website, news reports)
Courtesy : http://yourstory.com/2015/06/india-post-ecommerce/
