IRCTC, the catering and online booking arm of the Indian Railways, is now shopping around for a new partner for its e-commerce initiative. Flipkart and Amazon are among companies vying for a partnership with the railway behemoth, according to media reports.
IRCTC had tied up with Yehbhi.com for its e-commerce venture for a year, which it has now scrapped and is on the lookout for a new partner. The e-tail initiative of IRCTC had gone live in July last year with apparel, electronics, accessories, furnishings and kids merchandise.Earlier in March this year, YourStory had an exclusive report about IRCTC exploring new partners for its online retail platform.
"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, which is one of the largest e-commerce sites in the entire Asia-Pacific region," said Sandip Dutta, public relations manager at IRCTC (via).
Under its contract with Yebhi, partnership was based on a revenue sharing model where Yebhi held inventory for IRCTC and shared about 2-10 percent of the revenue. IRCTC was to promote online shopping through banners on the main landing page with a separate tab with links to the shopping portal.
Moreover, last year, Yebhi said it expected to snap up over Rs. 200 crore worth of business from IRCTC’s online retail platform. However, the projection later proved to be too high as the conversion rate from IRCTC’s platform wasn’t encouraging.
According to our sources, Yebhi used to pay over Rs 3 crore monthly rental to the state-owned platform and also shared profits in single digit. The partnership between the two didn’t work out as Yebhi ran out of funds and later shut down its online store.
Front runners: Flipkart and Amazon
Data is the biggest driver for Flipkart and Amazon’s interest in IRCTC’s online retail platform. At present, IRCTC has over two crore registered users and gets close to 1.2 million daily visits, generating 180 million transactions every year, thus making it the largest e-commerce site in the country.
IRCTC also has a good presence in smaller cities, which is another attraction for e-commerce majors. However, there are also some challenges. For instance, the consumers who typically come to IRCTC’s portal come to plan a trip and it may not be easy to convert them into shoppers.
IRCTC’s other offerings on its website – hotel bookings and trip planning – are extensions of the rail booking service, but electronics and clothes may be a long shot. It will also be interesting to see how the partnership works out. With Yehbhi, the partner held inventory which was to be sold on IRCTC platform.
In case of Flipkart and Amazon, which are marketplaces rather than inventory-led businesses, one wonders how they will manage the inventory.
Whatever the outcome, the fact remains that the state-owned IRCTC has ambitious plans and the ability to play on a far bigger scale. The e-commerce business seems headed for even more interesting times.