Why India Post could become e-commerce’s most potent delivery partner

Sharadamani Amma, an 87-year-old great grandmother, remembers a time when the sight of mail runners would cause a great deal of excitement in the small Kerala village she grew up in. The appearance of these postal employees, who carried mail between post offices on foot, meant a letter or money order or, god forbid, a telegram—a sure sign of ill news.

But those days are long gone. The postmen are no longer held in high regard in most of the country, and few in the current generation would have even stepped into a post office, at least in urban India.

New age e-commerce companies want to change this. The likes of Amazon and Snapdeal already have pilot projects running with India Post, while newspaper reports suggest that Flipkart is set to follow suit.

But what makes India Post, seen by many as a relic of a bygone era, so attractive to these online portals?

UNBEATABLE NETWORK

India Post’s network of post offices in India is incomparable. None of the private courier or logistics firms can even come close say experts and e-commerce firms. “India Post has an unmatched network that is critical for the growth of e-commerce in India,” says Ashish Chitravanshi, Vice President of operations at Snapdeal. A view echoed by Amazon.in. “Through India Post’s extensive network, Amazon India is able to service over 19,000 pin-codes through 140,000 post-offices across all 35 states and union territories in India,” says Samuel Thomas, Director of transportation at Amazon India.

This network covers about 25,000 pin codes, while even large private courier companies like DTDC reach only about 10,000.

RURAL DEPTH

While the pan India network is impressive, it is India Post’s rural depth that gives it an edge. “No one can reach rural areas like India Post,” says Manish Saigal, Managing Director of advisory services firm Alvarez & Marsal India. Manish says India Post’s importance will only increase when non-metro India’s contribution to e-commerce sales surpasses that of metro India. “The top 20 cities contribute 60% in value terms right now. The pendulum will shift the other way pretty soon,” adds Manish.

The pendulum has already swung the other way for some e-tailers. Over 70% of orders for Snapdeal are from smaller cities and towns, according to Snapdeal’s VP-Operations Ashish. “The growing popularity of online shopping in these non-metro centers presents a unique set of logistical challenges like spread out population, high km/delivery factor and high cost of setting up delivery infrastructure,” explains Ashish.

ADVANTAGE INDIA POST

It is not just the e-commerce companies that stand to gain from a partnership with India Post. The revenue potential for India Post is quite high.

The central government agency is already handling over 1.5 lakh e-commerce deliveries a day, according to industry estimates, making India Post one of the largest delivery partners for the industry. The Business Development and Marketing Directorate of India Post, which handles delivery of parcels like those of e-commerce companies, earned revenue of Rs 1961.76 crore between April and December last year.

“A lot of people dismiss India Post but they are doing mind-boggling work on the ground for e-commerce already,” says Manish.

An advertisement put out by India Post showed the department has handled Rs 500 crore of cash-on-delivery (CoD) in the financial year 2014-15.

However, Alvarez & Marsal’s Manish says India Post needs to do more in terms of technology adoption. This is especially important for CoD. India Post does have years of experience handling and delivering cash, in the form of money orders. However, CoD unlike money order requires postmen and women to collect cash and not hand over cash. E-commerce companies also expect this cash to be remitted into their accounts daily and further expect transparent and instant system updates.

This technology integration between India Post and e-commerce companies is beginning to happen. “We have integrated Amazon and Postal systems to electronically enable information sharing,” says Amazon India’s Samuel.

There are examples globally of national postal departments taking advantage of the growth of online retail. Ankur Bisen, senior Vice President at retail advisory firm Technopak, cites the examples of Deutsche Post (Germany) and Royal Mail (UK). “Both these companies were state sponsored mail carriers and realised the diminishing importance of postage. Both of them have successfully re-modelled themselves to suit the emerging e-commerce needs,” says Ankur. An AFP report in March stated that Deutsche Post’s e-commerce parcel division saw its revenues rise by 2.6% to reach 15.7 billion euros (Rs 1.11 lakh crore) in FY 2014.

“If they can marry India Post’s local knowledge and network with technology, they can become unbeatable. But they need to do this fast,” says Manish.

If this succeeds, then Sharadamani Amma’s great granddaughter Mythili will also soon wait with bated breath for the postman to call at her Bengaluru flat.

(Sources of data and information shown in graphics: India Post annual report, India Post advertisement, Amazon India, DTDC website, news reports)

 EVERY POSTAL EMPLOYEE SHOULD KNOW

 

          The Department of Posts, which forms a part of the Ministry of Communications and Information Technology, is responsible for the planning, development, expansion of operation and maintenance of Postal Services in the country.  It also discharges certain agency functions in respect of Savings Bank and other Small Savings Schemes, collection of customs duty on Postal articles and disbursement of pension to Military and Railway pensioners, Family pension to Industrial Employees of Coal Mines etc. 

            The Department administers Postal Life Insurance for the benefit of Postal, Telecom and other Central Govt. Employees and Employees of State Governments, Public Sector Undertakings, Nationalized Banks and Local bodies etc. Planning and Policy-making at Headquarters. The Postal Services Board is the apex management body of the Department, comprising the Chairman (who is also the Secretary, Department of Posts and Director General) and six Members.  The six members of the Board hold functional portfolios of Operations, Personnel,   PLI, HRD, Technology and Planning.  The Joint Secretary and Financial Advisor to the Department is a permanent invitee to the Board.  The Secretary, Postal Services Board, assists the Board.  Deputy Directors General, Directors and Assistant Directors General provide necessary support to the Board at the Headquarters. 

            Postal Circles For providing postal services, the whole country has been divided  in to 22 Postal circles extending postal services to 30 States and 6 UTs. Each circle is co-terminus with a State except (i) the North Eastern Circle, which comprises six North Eastern States, (ii) Maharashtra circle which includes Goa, (iii) West Bengal Circle includes Sikkim and the Union Territory of Andaman and Nicobar Islands, (iv) Kerala circle includes the Union Territory of Lakshadweep and Mahe District of Puducherry (UT), (v) Punjab Circle includes the Union Territory of Chandigarh, (vi) Gujarat circle includes Daman, Diu, Dadra and Nagar Haveli (UT), (vii) Andhra Pradesh Circle includes  Telangana State and (viii) Tamil Nadu Circle includes Union Territory of Puducherry ( Except Mahe District).

             The Chief Postmaster General heads each Circle.  Each Circle is divided into Regions comprising groups of field units, called Divisions (Postal / RMS Divisions).  Each Region is headed by a Postmaster General.  In the Circles , DAP and Regions, there are other functional supporting logistics units like Circle Stamp Depots,  Postal Store Depots and Mail Motor Service.  

            Army Postal Services Over and above these 22 Circles, the communication needs of the armed forces are catered to by the Base Circle.  Base Circle is headed by the Additional Director General, Army Postal Service.  The officer cadre of Army Postal Services is drawn on deputation from the Indian Postal Service.  75 % of the other ranks of the Army Postal Service are drawn from the Department of Posts and the remaining personnel are recruited by the Army. 

            Operational Units:-There are 21 GPOs presently functioning in the country. They are:  Hyderabad (Andhra Pradesh Circle), Guwahati (Assam Circle), Patna(Bihar), Delhi (Delhi), Ahmedabad (Gujarat), Ambala (Haryana), Shimla (Himachal Pradesh),Sri Nagar (Jammu& Kashmir), Ranchi (Jharkhand),Bangalore (Karnataka),Thiruvanantapuram (Kerala), Bhopal (Madhya Pradesh),Mumbai (Maharashtra),Shillong(North East),Bhubaneswar Orissa), Chandigarh(Punjab), Jaipur (Rajasthan),Chennai(Tamil Nadu), Dehradun (Uttrakhand), Lucknow Uttar Pradesh) and Kolkata (West Bengal Circle).

             Kausik chennai: Rafi Ahmed Kidwai National Postal Academy (RAKNPA), Ghaziabad is the Apex Training Institution and caters to the training needs of the managerial cadres of India Post. It conducts induction training of Indian Postal Service officers and mid-carrier training programmes for Indian Postal Service officers. It also conducts Induction Training for Gr.`B‟ officers besides some specialized need based training's on technology, Marketing and other fields of importance.  

            There are six Postal Training Centers at Darbhanga, Guwahati, Madurai, Mysore, Saharanpur and Vadodra. These Training Centres cater to the training needs of Inspectorial cadre (Inspector Posts/Assistant Superintendents of Posts) and all Gr. `C‟ employees (Postal Assistants/Sorting Assistants. They also conduct induction training for the Inspector Posts and for Postal Assistants/Sorting Assistants. 

            383 Workplace Training Centres (WTCs) in circles are operational.  These WTCs cater to the training needs of various categories of staff near their work place.

            There are also 5 Zonal Training Centres (ZTCs) which cater to training needs of the Postal Accounts Personnel. Engineering wing comprising of Architectural, Civil and Electrical Engineering disciplines is entrusted with design and construction of all Major  & Minor building projects and maintenance of buildings in the Department.