Tuesday, 20 September 2016

India Post plans courier play to boost revenues

In an attempt to increase its parcel delivery capacity, India Post plans to partner with courier companies to help them leverage its reach in rural areas and remote locations.

As part of this exercise, India Post has started a pilot project with Blue Dart Express Ltd, a private courier firm, to check the viability of the tie-up for delivery of parcels.

India Post has a network of 154,939 post offices and an employee base of 460,457, out of which 261,162 are gramin dak sewaks who work part-time for the department.

“We are already serving e-commerce firms in small towns and rural areas for delivery of their parcels. We can use our existing infrastructure—logistics and postmen—with which we are servicing e-commerce firms,” a senior official from India Post said requesting anonymity.

The boom in the e-commerce sector has come as a lifeline for the postal department. Till March 2016, India Post collected Rs.1,500 crore in cash for delivering parcels for various e-commerce portals, including Amazon and Flipkart. The cash collected from e-commerce deliveries by the department of posts was Rs.500 crore in 2014-15, and a meagre Rs.100 crore in 2013-14.

“Depending upon the success of the pilot, the tie-up will be announced across India for tapping areas uncovered by courier firms either due to logistics issue or cost concerns,” the official added.

India Post though directly competes with courier companies with its products such as Speed Post, Express Parcel service and Business Parcel service, among others, its monopoly was broken during late 1990s when private courier companies entered the segment. However, most private courier companies ignore outskirts of towns and villages and other far-flung areas.

“India Post with its widest network and reach to every nook and corner is best suited for even delivering couriers of other companies as well,” said another India Post official who also didn’t want to be identified.

India Post has been exploring options to increase its revenues. The postal department plans to have dedicated road routes for short distances and dedicated trains for longer routes to deliver parcels as reported by InfraCircle on 12 August.

Experts concur with India Post’s strategy.

“India Post has the biggest network and postmen reach to every village. Courier companies may not have the last mile connectivity which India Post has. It is a great win-win for everybody. And this is a different India Post we are talking about which is finding ways to identify potential areas to increase revenues,” said Hemant Joshi, partner at Deloitte Haskins & Sells.

Queries emailed to the spokesperson of ministry of electronics and information technology, under which India Post operates, and Blue Dart on 16 September remained unanswered.

The e-commerce sector in India is expected to grow to $119 billion by 2020 with a total of 320 million shoppers, according to a Morgan Stanley report.

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