Winds of change are blowing hard and fast at India Post, one of the world’s most complicated postal networks. The government run establishment, which will shut down 160 year old telegram services next month, will enter a new and rather exciting market– the booming e-commerce business.
The postal department has entered into strategic partnership with India’s national carrier Air India to transport goods between 15 domestic airports to provide airport to airport, city to city and door to door services. [Source]
The partnership is geared to tap into the growing e-commerce business for which logistics is still a pain point. The fledgeling $10 billion e-commerce market has seen some heavy investment flowing in over the past 3-4 years.
The department of posts, has plans to set up 20 mechanized warehouses and booking centers to cater to growing demand from e-commerce companies.
India Posts Logistics Service is a Big Deal
This is totally a big deal for e-commerce in India. If India Post delivers on its promise. If, and a big if, at that.
India Post will charge 6% of the value of a product to deliver an item. As it stands now: there won’t be any extra charges to handle cash or return.
Currently, logistics companies usually charge between Rs 65- Rs 75 for outstation delivery and an additional Rs 35- Rs 45 for cash on delivery. Returns could cost another Rs 40- Rs 55. In comparison with private players, India Post will be undoubtedly cheaper as it will not charge for cash handling.
The service will go a long way in solving the logistics problem. The department of posts has more than 150,000 post offices, a majority of which is in rural areas. If this services takes off, last mile delivery to tier 2 & tier 3 cities, a holy grail Indian e commerce companies have been chasing for long, will become simpler.
The department also has lots of experience in dealing with cash on delivery.
Now comes the big IF part: All the courier companies would be out of business if India Post was so good at what it does. The reliability of India Post is a big question mark. For instance, thousands of letters remain undelivered every year. Express services take much longer than expected in many cases. E-commerce companies which are already taking a beating on poor customer service, might want to tread with caution.