India Post may have taken a bigger bite out of the ecommerce industry than it is equipped to handle. On Thursday, the secretary of the India Post department, S.K. Sinha said online orders accumulating. As a result they have decided to hire additional services.
Keeping up with the rhythm of ecommerce
The post department issued orders recently, allowing the appointment of third party persons for the pick-up and delivery of post office articles. They will be appointing students and the unemployed to deliver ecommerce goods. This should provide them sufficient manpower to tackle the ecommerce order pile up.
To motivate third parties to sign up each delivery completed will entail a 12% commission. Sinha stated this new program will generate employment and picking up 10 orders of 1 kg can fetch Rs. 100 – 200 per day.
To register the third party must submit identification proof and references from 2 prominent persons (that the post office recognizes). Upon completion of this the third party will obtain a license to pick up and deliver articles.
Expanding postal reach and revenue
Logistics is a major pain point for Indian ecommerce. And India Post has a wide reach all across the country with the largest postal network in the world. The postal system could be the key to better ecommerce delivery. Online retail will have easier access to rural and remote regions through this form of parcel delivery. Amazon, eBay, Flipkart and Snapdeal all use India Postal services for their online retail business.
This program of outsourcing parcel services to a third party will improve postal reach and bring it up to par with private delivery services.
The revenue earned from ecommerce COD deliveries keeps increasing each financial year.
2013-14 – Rs. 100 crore
2014-15 – Rs. 500 crore
2015-16 – Rs. 1,300 crore
India Post secretly looking for a bail out?
In 2015, India Post recorded a deficit of Rs. 6,000 crore. This is a 14.4% increase compared to the year before. The department expects ecommerce and financial services to take off very soon. This in turn will launch them into the breakeven zone in about 6 to 7 years.
E-post office, which provides philately products, is also anticipated to take off and bring in revenue.
Gnagajal (water from river Ganga) is a newly launched product by the post department. It has a strong demand according to Sinha. However, the Gangajal program doesn’t generate profit. It does acquire goodwill for the post department. This Sinha said this should help attract users to its speed post and banking services.