Reaching Out!

We, Group 3, have been following the growth story of e-commerce firms in India since December 2014. We have spoken about almost each topic linked to e-commerce. It is no secret that the mobile & Internet revolutions have seeped into even the remotest parts of India. Even places that don’t have concrete buildings have access to the Internet. One of the topics not covered so far is reaching out to towns and villages by e-commerce firms. This includes distribution as well as payments. Surfing on the Internet is not as difficult as delivery of goods is. This is because logistics companies employed by e-commerce firms don’t have the resources and means to reach the further geographical locations of India as there are few or no effective last-mile delivery options. Also, usage of bank accounts is limited, therefore Cash-On-Delivery is the most preferred payment option. This raises the issue of collecting payments as well.

Hailed as the knight in shining armor, the Indian Postal services came swooping in to save the day. India Post is world’s most widely distributed postal system, meaning that they can reach the most inaccessible places in India with relatively less difficulty. They cater to areas encompassing 25,000 pin codes whereas the largest private courier service providers cover only 10,000 pin codes. As of March 2011, with 154,866 post offices all over the country and 466,903 employees, 90% of all post offices are in rural areas. On an average, a typical post office covers 21.23 square kms, and serves 7114 citizens. The whole nation-wide network of post offices is divided into 22 circles, thereby covering each and every nook and corner of the nation. Also, the Indian Post had witnessed a rapid decline in demand for services due to more technologically advanced modes of communication such as e-mail and mobile phones, resulting in lesser revenue. Therefore, a partnership between both entities would have substantial benefits for the two.

MoUs were signed and the partnership began. Snapdeal and Shopclues were the first ones to have partnered with India Post. Amazon and Alibaba have also partnered with the American and Chinese postal services respectively. Hence, there is no reason to believe that we cannot have a similar system in India. Soon, Flipkart & Amazon also joined the wagon and tied up with the Indian Post. As per government officials, the Indian post collected Rs. 280 crores cash in 12 months. Even though this is only a small chunk of what e-commerce firms make, it is significant because demand from non-metro areas is expected to rise. Eyeing the recent e-changes, Raghuram Rajan, RBI Governor has given the India Post a green signal for a banking license which means that doing COD transactions with the E-commerce portals will be further easy. The long severed public image of the India Post will get its big break by tying up with the e-commerce giants. This shows the effectiveness of the partnership. We hope this partnership fosters the e-commerce revolution and India’s development as well.

– Arushi Kotecha