India’s postal department gets a happy mail from online shoppers

Getting stronger.
Getting stronger.
Image: Reuters/Anindito Mukherjee
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India’s unrelenting e-commerce boom has thrown a lifeline for a struggling government unit: the post office.

India Post, the world’s largest snail-mail network, has seen revenue from cash-on-delivery (CoD) consignments double in the first nine months of the current fiscal compared to a year ago, the Indian Express newspaper reported on Jan. 11.

The main reason for this jump is the growth in consignments from e-commerce websites such as Amazon, Flipkart and Snapdeal. And the future for e-commerce in India looks bright—the industry is estimated to grow at 50% annually till 2020.

In 2014, India Post operated around 154,882 post offices—90% of them in rural areas. This gives it a leg up over other logistics players who lack reach in the countryside.

Here’s how much the department, founded in 1774, has earned from CoD consignments in the last few financial years. The data for the 2016 fiscal is for the first nine months.

The boost in revenue will help revive India Post as it prepares to launch a payments bank. The Reserve Bank of India granted the postal department a payments bank licence last August. The bank is expected to begin operations in March 2017.

The department, however, has had a few rough years. In fiscal 2014, it recorded a loss of Rs5,475 crore. This was mainly because its expenses exceeded revenues of Rs10,730 crore (pdf). And now, e-commerce could help the mammoth shore up its finances.

Online sellers

India Post has currently partnered with over 400 online firms, with Amazon as its largest business partner in the e-commerce division.

“The new facet is CoD. India Post has become the premium courier service for e-commerce, so that is a definite improvement,” union minister for communication and information technology Ravishankar Prasad told The Indian Express newspaper. He said revenue from CoD would reach Rs1,500 crore by March 2016.

For online sellers, whose rural customer base is growing, it is a win-win deal. With India Post’s presence in the hinterlands, they get to widen their customer base without spending on additional logistics.

“With rising internet penetration and the ongoing smartphone revolution, customers in smaller towns and villages now have great access to quality products at low prices. Currently, about 50% of the orders on come from outside the top eight cities,” an Amazon spokesperson told the Mint newspaper in October 2014.