A panel of key secretaries, set up by Prime Minister
Narendra Modi, has proposed a major “revamp” of India Post to help expand the reach
of e-commerce to every corner of the country, official sources told FE.
India Post boasts of more than 1.5
lakh post offices across the nation, with 90% of them located in rural areas—a
reach, if encashed properly, can be a potent weapon in revolutionalising
e-commerce in the country. (PTI)
A panel of key secretaries, set up
by Prime Minister Narendra Modi, has proposed a major “revamp” of India Post to
help expand the reach of e-commerce to every corner of the country, official
sources told FE. Any such step will not just boost operations of players such
as Amazon, Flipkart and Snapdeal that are struggling to supply to remote areas
due to high logistics costs but also help reverse the sliding fortune of India
Post, which was once the lifeline of communications in India.
At present, areas covered by close
to a half of the PIN (Postal Index Number) codes in the country are beyond the
reach of e-commerce players. While there is no regulatory hurdle for post
offices to handle consignments of e-commerce companies now, India Post has to
liaise with such players more aggressively, rationalise staff in remote areas
and deliver items even faster (at reasonable rates) to be able to grab more
orders from them, a senior government official said. “India Post has to firm up
a long-term strategy fast and make suitable changes internally to tap
e-commerce. It has started taking orders from e-commerce players, but miles to
go,” said the official.
The limited reach of e-commerce
reflects the serious bottlenecks in providing last-mile deliveries to customers
in rural areas, obstructing the growth of the otherwise booming e-commerce
sector, the panel has observed in its report submitted with the Prime Minister.
The panel includes secretaries of
the departments of commerce, industrial policy and promotion, external affairs,
steel, labour, textile, MSME and tourism, and the chairman of the central board
of excise and customs. Commerce secretary Rita Teaotia was the rapporteur of
the panel, a source said.
In fact, the postal department’s
revenues due to cash-on-delivery consignments from e-commerce players jumped to
Rs 1,300 crore in 2015-16 from Rs 500 crore in 2014-15 and just Rs 100 crore in
2013-14, according to official data. It has also tied up with all major e-commerce
players in the country. Still, there is a huge scope for India Post to tap the
e-commerce boom and improve its revenues, the official added.
However, boosting the reach of e-commerce through India Post
will require a massive rationalisation of costs by the state-run communication
behemoth. For instance, while the average cost of a delivery by speed post cost
it almost Rs 67 in 2015-16, the revenue earned was just Rs 39, showed the data
by the postal department. Importantly, while the average cost rose Rs 8 from Rs
59 in 2014-15, the revenue increased by only Rs 2. This means India Post was
unable to pass on the rise in costs to customers, partly due to the fact that
private players in cities and semi-urban areas are giving it a tough
competition. Similarly, while the average cost of a parcel for India Post was
Rs 68 in 2015-16, the revenue earned was just Rs 44.
However, the sources said in rural areas, where the
penetration of other logistics providers is very low, India Post can be the
prime driver of e-commerce.
India Post boasts of more than 1.5
lakh post offices across the nation, with 90% of them located in rural areas—a
reach, if encashed properly, can be a potent weapon in revolutionalising
e-commerce in the country. On an average, a post office serves an area of 21.23
Sq Km and a population of 8,086 people.
The e-commerce market in India is
growing at a brisk pace. Last year, a report by industry body CII and
consultancy firm Deloitte forecast that the Indian e-commerce (B2C) market
could grow to almost $102 billion by 2020 from just $16 billion in 2015, riding
factors such as government initiatives like Digital India, increase in internet
penetration, growth in the adoption of smartphones and evolution of new payment
solutions, among others. The number of online shopper could rise to 220 million
by 2020 from just 39 million in 2015, the report said.
//COPY//- POTOOLS