Amazon plans it big
with India Post network
to ramp up its delivery mechanism
to ramp up its delivery mechanism
NEW DELHI: E-commerce
giant Amazon wants to do in India what Alibaba did in China. Amazon's India
head Amit Agarwal on Tuesday met telecom and IT minister Ravi Shankar Prasad
and urged him to allow the use of new technologies such as real-time tracking
and monitoring devices on the India Post network to develop a delivery
mechanism based on smart logistics.
The government has
sought a detailed proposal from Amazon, to which it will respond, a person
familiar with the details of the meeting told ET. Amazon wants to leverage an
improved India Post network to ramp up its delivery mechanism to within 24
hours anywhere within the country.
Agarwal was
accompanied for the meeting by Monique Meche, Amazon's vice president for
international public policy. In an emailed response to ET's query, Amazon said
that it is "looking for ways to deepen" its relationship with the
Indian postal service which started last year. It currently uses the Indian
postal services as a delivery channel, but it is looking to deepen this
further, in line with what Alibaba did in China
Alibaba was the first
e-commerce company to tie-up with a government postal agency in China. Right
before it hit the capital markets with a multi-billion dollar issue, Alibaba
tied up with China Post to share warehouses, processing centres and delivery
resources, all part of a smart logistics network providing easier and faster
delivery services to online sellers. Prasad also discussed prospects for
pushing trade and commerce in rural parts of the country in a big way and how
e-commerce websites such as Amazon could play a big part in giving a platform
to small-time retailers and entrepreneurs in the hinterland through its market
place models.
With over 1.6 lakh
post offices throughout the country with the lion's share of 1.4 lakh in rural
areas, India Post claims to have the largest postal network in the world,
according to its website. On an average, a post office serves an area of 21.2
sq km and a population of 7,175 people.
"Speed of the
last mile delivery to a customer will be the most decisive factor in an already
price competitive e-commerce" Speed of the last mile delivery to a
customer will be the most decisive factor in an already price competitive
e-commerce landscape and Amazon wants to leverage on the well-penetrated postal
network," a second executive who did not want to be identified told
ET.
Interestingly,
Amazon's proposal comes in the wake of the special task force constituted by
Prime Minister Narendra Modi in October to enhance the role of India Posts in
financial inclusion and trade. The committee headed by former cabinet secretary
TSR Subramanian will submit its report by the year end. India Post had also
tried to get a banking licence but had failed, and is now looking to become a
'payment bank', one which can accept deposits and remittances but cannot lend
"The government
would obviously review any proposals made by Amazon under the light of the
recommendations made," the second official said. On a lighter note at the
meeting, Prasad referred to Amazon's arch-rival, homegrown e-commerce major
Flipkart, and asked Agarwal who would win the e-commerce war between the two
majors in India. "The consumer," Agarwal responded.
Surging growth of the
e-commerce sector in India has led to a fund-raising spree by companies in the
sector. Most recent being Japan's Softbank Corporation's $627-million
investment in Snapdeal, which was preceded by $1-billion fund raising by
Flipkart. A day after Flipkart concluded its fund raising, Amazon committed
investment of $2 billion in India. In the meeting, Agarwal further discussed
setting up of a data centre in India for which the company readily agreed to
put up a server. Microsoft was the first technology giant this year to announce
the setting up of three data centres in the country
These data centres
will enable access to customers in banking and financial services as well as
the central and state governments. Many such services are currently legally
restrained as they require data to be hosted within the country. Owing to which
Amazon put forth the proposal to set up a server within India.
Source : http://economictimes.indiatimes.com/