Amazon, Flipkart in
talks with IRCTC to tap
its database of 21 million consumers
its database of 21 million consumers
MUMBAI | NEW DELHI: Before Flipkart, there was IRCTC, which for most Indians was their introduction to e-commerce more than a decade ago. And even now, revenue from online ticketing on Indian Railway Catering and Tourism Corp rules the roost, having exceeded the combined sales of Flipkart and Amazon India in the year ended March.
While both Flipkart
and Amazon each said earlier this year that they had hit a billion dollars in
annual gross merchandise value or total value of goods sold IRCTC
generated Rs15,410 crore or nearly $2.5 billion through online ticket sales in
the last financial year, up 24% from a year ago when it sold tickets worth
Rs12,419 crore. The figures are sourced from RoC filings.
Since IRCTC doesn't
compete with any of the online marketplaces in India, both Amazon and Flipkart
are in talks with the government-owned portal as they look to tap the rail
portal's existing database of more th an 21 million consumers. "Tie-ups
with portals like Flipkart, Amazon etc are in the
process under which these portals would like to sell their merchandise through
IRCTC's portal, it being one of the largest e-commerce sites in the entire
Asia-Pacific region," said Sandip Dutta, public relations manager at
IRCTC, which set a record in March when it booked 5.80 lakh e-tickets on a
single day. That compares with 27 tickets a day when it began in 2002.
The government-owned
portal posted a 33% increase in income at Rs954.7 crore, which mainly includes service charges on tickets, sales of Railneer water, onboard
catering services and licence fees from outsourced catering vendors. This is
similar to online marketplaces where sales don't include actual goods sold but
instead count commission from sellers and revenue from advertisements on their
e-commerce sites. Amazon Seller Services posted revenue (commissions) ofRs169
crore while Flipkart Internet, which manages the portal, had total income of
Rs179 crore.
But unlike these
privately owned marketplaces, IRCTC posted profit after
tax of Rs72 crore, up from Rs59 crore in the previous year. Amazon, which
entered India a year ago, posted a net loss of Rs321 crore while its biggest
rival Flipkart more than doubled losses to Rs400 crore.
Despite having a
monopolistic position, higher web traffic and sales, IRCTC can't command a
valuation similar to Flipkart or Snapdeal, feel experts.
"Being a
government company, its slow decision making, red tapism, less innovation leads
to non interest by investors, which in turn leads to a lower valuation. Margins
of travel are much lower than margins commanded by selling goods online too,"
said Rakesh Nangia, founder and managing partner of Nangia & Co, a tax and
transaction advisory firm.
Also, e-commerce companies sell a wide variety of goods unlike IRCTC, which is mainly a ticketing website with no product mix, making it a less scalable business. According to a report by consulting firm Technopak, the $2.3 billion etailing market is expected to swell to $32 billion by 2020 and account for 3% of the total Indian retail sector by then.
Also, e-commerce companies sell a wide variety of goods unlike IRCTC, which is mainly a ticketing website with no product mix, making it a less scalable business. According to a report by consulting firm Technopak, the $2.3 billion etailing market is expected to swell to $32 billion by 2020 and account for 3% of the total Indian retail sector by then.
IRCTC, on its part, tried
widening its business by partnering Yebhi.com in a revenue-sharing model last
year. Electronics, clothes and home furnishings were sold on the IRCTC site,
which also promoted online shopping with a link to Yebhi's portal. However, the
year-long contracted
wasn't extended
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