1. Nav Arjan - New Revenues
2. Nav Manak – New norms
3. Nav Sanrachna – New structures
It is good to see that the railway ministry is looking at new sources of revenue for the railways. The IRCTC site happens to be one of the front runners in the ecommerce space in India (generating additional revenue for the railways) but there happens to be another child of the railways in the same space, which has not been tapped till now – ecommerce Logistics.
THE ECOMMERCE JUGGERNAUT
Ecommerce retail has been the talking point in the last few years and the growth has just begun. On any normal day, there would be around 1 million shipments moving around in India (on special days this figure can jump exponentially) and in revenue terms, this would be around Rs 20 billion. No wonder then, that this has seen the mushrooming of ecommerce specific logistics players.
Two fundamental things will rule the future size of the ecommerce logistics industry:
1. Expansion to Tier 2 towns onwards - The penetration of ecommerce retail is still limited to few cities (mostly metros or larger cities easily accessible by flights) and gradually when it expands to the smaller towns, there will be substantial organic growth.
2. Nature of shipments - Currently most of the ecommerce market is captured by small products like mobiles and apparels, which in general would be less than 1 kg in weight. As the trust and confidence increases, the share of bigger and bulkier products will increase, resulting in higher logistics revenue.
RAILWAYS – CURRENT STATUS
The expected revenue from Freight for 2017-18 is pegged at around Rs 1.2 lakh crores.
Currently coal comprises close to 40% of freight revenue and given the focus on clean energy sources, we might see slower growth coming from coal based revenue. It is time that the Indian railway started seriously thinking about one of it’s main pillars of strategy – “Nav Arjan (New source of revenue)” derived from the ecommerce logistics business.
NAV ARJAN – ECOMMERCE LOGISTICS
The current market size of ecommerce logistics is Rs 200 crores and given the growth rate of this industry at close to 50%, it should increase to Rs 1000 by 2020. The majority of the logistics happens through Air and Road.
Air route is fast and given that most cities within India can be covered within 2.5 hrs, it makes an ideal option for delivering shipments. The issues with air shipments are cost and given the ever increasing volume of shipments, there is limited space in each flight which can carry the shipments.
The article has been penned down by Ashish Neogy, he is currently working as a freelance retail consultant. He has 14 years of retail industry experience and worked with some of the big names like Flipkart in India , Tesco in UK & Central Europe and i2 technologies (US & Europe). He has expertise in SCM and Category Management in e-commerce and Merchandise planning and Store operations in brick and mortar retailers. He did his MBA from IIM- Lucknow and engineering from BIT Ranchi.