Bengaluru/Mumbai: India Post’s plan to increase rural penetration by revamping 150,000 rural post offices is expected to boost the e-commerce sector by strengthening logistics and widening opportunities for collaboration with private players like Delhivery and Ecom Express, industry specialists told Mint.
The government’s postal service—considered among the widest postal networks in the world—could help e-commerce reach the remotest corners of the country, adding untouched zip codes to the purview of private and public logistics players.
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“By leveraging India Post’s vast network, we can create a more inclusive and efficient logistics ecosystem, driving growth for businesses and empowering rural communities,” said Ajay Rao, founder and chief executive of Mumbai-based logistics and supply chain provider Emiza. “This is a bold step towards building a more connected India.”
Ajay Chitkara, chief executive of Ecom Express, told Mint that a government-backed entity entering logistics signals growth opportunities as it helps expand reach and complement private players.
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Union finance minister Nirmala Sitharaman announced in her budget speech on Saturday said that India Post’s 150,000 rural post offices, complemented by the India Post Payment Bank and a vast network of 240,000 dak sevaks, will be repositioned to boost the rural economy.
“India Post will also be transformed as a large public logistics organization. This will meet the rising needs of Viswakarmas, new entrepreneurs, women, self-help groups, MSMEs, and large business organizations,” she said.
Tier II, III and beyond regions drive a significant chunk of e-commerce and online retail volumes. Unicommerce’s Republic Day Trends released recently showed that a large part of demand was from cities including Lucknow, Jaipur Patna, Coimbatore, Surat and Alwar, among a few others, according to the firm’s managing director and CEO Kapil Makhija.
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To be sure, several players have tied up with India Post in the past. In October, e-commerce giant Amazon India signed a memorandum of understanding with India Post to tap the latter’s last-mile delivery network. In December, Unicommerce’s logistics arm Shipway partnered with India Post to enable wider reach for direct-to-consumer brands and online sellers.
However, mastering the economics of e-commerce is far from easy.
The economic viability of touching far-fetched locations is tough to achieve especially because e-commerce is largely under penetrated in remote pincodes, Amitava Saha, managing director and chief executive officer of Xpressbees told Mint. “Most large logistics players are already present in most pin codes so the value India Post will bring is incremental at best. It’s not just the ability to serve, it also depends on the level of consumption in remote pin codes.”
According to Archana Jahagirdar, founder and managing partner at early-stage venture capital firm Rukam Capital, India Post’s pricing strategy could make a difference. “If they can price themselves better than private players have so far, it will make a significant difference. For small startups, logistics costs are a major factor. If they can secure better margins due to more competitive logistics, we’ll see startups grow faster, which is the most desired outcome.”
India Post also lags in terms of agility and technology-driven efficiency that logistics startups can bring to the table, Ecom Express’s Chitkara said.
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