The Indian Railway Catering & Tourism Corporation (IRCTC) is preparing a big-bang entry into the Indian e-commerce market in collaboration with a multinational or domestic e-tailer. It is in the process of inviting bids from private e-commerce players to sell merchandise on its website in return for a 7-8% commission.
“Our goal is to invite the best players, including Flipkart and Amazon. The tender committee is considering the option of floating the tenders again as some difficulties have emerged with the original tender floated late last month,” a senior IRCTC source said.
“We are in talks with all the major e-commerce players, not just Flipkart and Amazon,” the IRCTC spokesperson told HT. “Some are interested. But things are at a very preliminary stage.”
IRCTC, which sells an average of 300,000 rail tickets every day, is India’s largest e-commerce portal and has a 20 million-plus user base. Its turnover of Rs 15,410 crore in 2013-14 is 25% more than the combined turnover of about `12,400 crore posted by Flipkart and Amazon India, the country’s two largest private e-commerce companies, each of which recently clocked annual sales of $1 billion (Rs 6,200 crore).
Sources said Flipkart, Amazon and Snapdeal, India’s third largest private e-commerce company, are all very keen on tying up with IRCTC in order to tap its massive user base. These companies did not respond to HT’s request for comments.
The Indian e-commerce market, currently at $11 billion (Rs 68,000 crore) per year, is expected to almost double to $20 billion (Rs 1.24 lakh crore) over the next two years, according to a recent report by Motilal Oswal, a leading broking and research house.
The jury is out on whether the IRCTC initiative will succeed. “Users of the IRCTC website are necessity-driven and are not typical want-driven shoppers. Therefore, the conversion rate will be very low as the size of IRCTC orders are sometimes as low as Rs 300,” said Ashish Jhalani, CEO, eTailing India, an industry research company.
“However, e-commerce players are interested to partner with IRCTC because even a mere 1% conversion would mean a lot given the huge traffic on IRCTC website,” he added.
This will be IRCTC’s second attempt at cracking the e-commerce market. It had earlier tied up with yebhi.com, an e-commerce company but the pact wasn’t renewed.
“There was traffic but the conversion into sales was weak,” said Manmohan Agarwal, founder & CEO, Yebhi.com.