A declining state-owned firm has received a new lease of life on account of India’s e-commerce boom. India Post, the world’s largest postal system with 154,882 post officesstaffed by 460,000 employees handling over six billion pieces of mail annually, has begun to flourish after offering deliveries to a host of leading online retailers including Amazon India, Snapdeal, Paytm and Shopclues.
At a time when online retail is
booming, India Post’s wide reach, its well-entrenched network and a huge team
of 150,000 postmen are proving to be reliable delivery partners in a
logistics-starved country. The system is particularly useful to meet growing
demand in rural and semi-rural markets where online shopping has begun to take
off.
“India Post’s zip code coverage of
tier 3 and tier 4 locations is unmatched,” says Vishal Sharma, vice president
of operations at Shopclues, headquartered in Gurgaon outside New Delhi. Within
a year of partnering with the postal system, India Post already handles a tenth
of Shopclues deliveries. “About two-thirds of these deliveries are in areas
where no other logistics providers exist,” says Sharma.
It is true that 90% of India Post’s
post offices, nearly 140,000 of them, are located in rural India which are
barely serviced by private logistics providers who prefer to operate in urban centers.
A lack of reliable logistics infrastructure in rural India is proving a
challenge for many online retailers. Building infrastructure from scratch to
serve vast geographies is economically non-viable.
Enter the torpid postal system which
appears to be galvanized and has introduced such services as same-day and
next-day deliveries in some zip codes. It has set up 48 modern delivery centers
to handle ecommerce, including a massive one in Mumbai, India’s financial
capital. India
Post’s cash-on-delivery(COD, as it is called) offering launched about two
years ago is proving to be a big hit with the sector.
C
ash-on-delivery is a popular mode of
payment in India where buyers – a large segment of India – shell out cash only
after their shopping arrives at the doorstep rather than pay in advance with a
credit or debit card. COD is particularly handy for hundreds of millions of
Indians who do not own credit or debit cards and who would otherwise be left
out of the online retail boom.
The sluggish India Post has long
been symbolized by a cross bag-toting man riding a rickety bicycle delivering
letters at an unhurried pace. But such deliveries have dwindled with the advent
of mobile phones and the internet. Now, e-commerce has sparked a revival of
fortunes and India Post saw a 37% rise in revenues in package deliveries last
year, compared with a 2% fall the year before. This is still a sedate pace
considering online retail is expected
to see three-fold growth this year.
So, India Post has scope for massive
expansion but challenges remain. Online retailers demand real-time visibility
into deliveries and cash collection which the government-owned company does not
have the technology to provide. “Communication is key in all stages of the
delivery cycle to the customer and India Post is investing in technology to
bridge the many gaps in its system,” says Ankur Bisen, a senior vice president
for retail and consumer products at retail consultancy firm, Technopak.
Then there are the practical
challenges. “How does a postman on a bicycle deliver a television set to a
remote village?” asks Bisen. The government-run firm needs to enhance its
last-mile delivery capabilities as well as its payment systems. “If they do,
India Post could transform to become market leaders in e-commerce deliveries in
the way state-owned postal companies in Germany and the United Kingdom have,”
he said.
Source : forbes.com
