The news about IRCTC launching an e-commerce site in partnership with Yebhi.com is hard to miss for anyone in India. Everything to do with IRCTC is big. With 2 crore registered users, they book more than 25 crore rail tickets per annum. In fact, they were the harbingers of internet penetration in India. Theirs was the first online transaction for scores of people in India. Naturally, there is a huge expectation about their “diversification” into selling goods online. But, I’ll wait to see how this plays out.
I don’t think the user base can be taken for granted as a headstart. The savvy online shoppers who already have accounts with Flipkart and scores of other e-commerce sites are not captive to IRCTC-Yebhi and will go hunting for better prices. However, the real asset of IRCTC in this regard is the set of users uninitiated to buying anything other than train tickets online. If they had built something with this segment in mind, they might be onto something big. But, in this case they have merely put Yebhi’s inventory in front of IRCTC’s user base.
While Yebhi.com certainly benefits from access to this market, IRCTC is reduced to an affiliate. I do expect IRCTC to retain the right to bring in another player at the end of their current contract though. The typical thinking for them will be that during the next tender cycle, some other e-commerce player might bid higher. But, such a one-time auction might be limiting for either party. So, what’d have been better? We’ll see that in a bit.
In the meantime, like what any smart startup would do, Yebhi is trying to move the shoppers from this microsite to their own site using Google retargeting. Making hay while the sun shines! :) See the conversation below on Twitter:
@nextbigwhat Yebhi is using IRCTC’s analytics to target Yebhi’s ads to user. I searched for shoes on IRCTC, getting ads for shoes on Yebhi!!
— Peeyush Jain (@peeyush2020) August 29, 2013
— Peeyush Jain (@peeyush2020) August 29, 2013
Coming to the title of this post, why this too (yee bhi?), IRCTC? For a lot of us, IRCTC is synonymous with Indian Railways. In reality, it is a (relatively) small subsidiary of Indian Railways set up in 1999 “to upgrade, professionalize and manage the catering and hospitality services at stations, on trains and other locations and to promote domestic and international tourism through development of budget hotels, special tour packages, information & commercial publicity and global reservation systems.”
Essentially, they were the outsourcing hub of any non-core activity of Indian Railways. Gradually they performed well with online ticketing too, and they might have gone in for even a public issue of shares but for some change in thinking at the political level. The internal sibling rivalry between the arms of Indian Railways also added to its woes.
The first casualty was the attractive catering business. The IRCTC Chairman has said:
“During the year 2011-12, the Corporation achieved a total income of 554.11 Crore, as compared to 764.93 Crore in 2010-11. Gross profit of 76.54 crore was achieved during the year 2011-12 as compared to 129.79 crore in the previous year 2010-2011. The total income and profits have declined with transfer of Licensee Catering segment to Railways. Except Catering, all other business segments of the Corporation have shown considerable growth.”
The response from IRCTC was to use its catering capacity to serve corporates. That set them off on the path of reducing reliance on the Railways. I speculate that their online ticketing pie too is threatened from within. One indication was the abortive attempt by the back-end of Railways’ IT infrastructure, CRIS (Central Railway Information Systems), to run a user-facing booking website.
IRCTC’s proposed strategy is “[o]f harnessing its extensive capability in the fields of hospitality, tourism, E-commerce and packaged drinking water and is gearing up to excel in its diversified role. As for future, the Corporation is poised to capture new opportunities in Railway and Non Railway Segment to sustain its high level of performance and at the same time shall continue to lay added emphasis on developing existing business lines.”
I agree with the drift they are taking. However, I would’ve preferred them take a pivotal meta role in the ecosystem. Something like becoming the de facto digital wallet of India. Given that 29% of ticket booking transactions fail at payment stage, bulk of their users would opt for their digital wallet. With their massive reach and the highest frequency of use compared to other e-commerce players, their digital wallet will be viable and can be floated as an option for all e-commerce sites.
Like I said elsewhere they might make digital wallets the new normal just like they made buying online normal in India. Another direction that they could have taken is to become a marketplace for all e-commerce players. That way, they don’t have to rely on one player. They still can take this direction after the current contract with Yebhi ends, but they will need to commit to this strategy and build this marketplace themselves. If they did, they would have moved away from the model of tenders fraught with delays and red tape to a new era of platforms. Will that happen?
[About the author: BalaSundaraRaman (Sundar) is a co-founder of Ideophone, a solution provider for travellers and commuters. Besides being a rail fan, he has worked with various arms of Indian Railways from the divisional level up to the Railway Board in his efforts to launch a novel wakeup call service called Pyka, based on Ideophone’s technology. Write to him on email@example.com or follow him @oligoglot on Twitter.]