Almost after a year of suspense, Amazon has successfully bid for IRCTC’s retailing arm. The ticketing portal has put ‘shop on Amazon’ tab on its homepage which redirects to a separate landing page on Amazon India. Besides Amazon, Flipkart was also lobbying hard for the government-owned platform.
The final amount quoted from Amazon is unknown but according to YourStory sources it’s in the range of six to eight crores for two-year deal. Gurgaon-based Yebhi was the first player to bid for the platform and paid around two crore annual licensing fee through open bidding.
In a press statement, Amazon confirmed its partnership with IRCTC as its preferred Online Shopping Partner for a period of two years. As IRCTC’s preferred shopping partner, Amazon.in will power and manage the entire solution from bringing in selection, enabling ordering, information security, complaint management, fulfilment and returns handling.
Besides Amazon and Flipkart none of the other e-commerce majors like Snapdeal, ShopClues and Jabong had shown much interest in IRCTC’s online retail platform.
The etail initiative of IRCTC had gone live in July 2013 with all the categories available at Yebhi which include apparel, electronics, accessories, furnishings and kids store. In March last year, YourStory exclusively reported about IRCTC exploring new partner for its online retail platform.
IRCTC and Amazon.in’s shopping gateway will be promoted across its websites and will be present on all mediums be it computers or mobiles. IRCTC will also promote online shopping through banners on the main landing page with a separate tab with links to the Amazon.
Besides the annual fee, IRCTC also charges commission on every transaction. Profit margin on electronic, mobile laptop, etc. is comparatively low as compared to unbranded fashion apparels, and footwears among others.
Data and reach were the biggest drivers for Flipkart’s and Amazon’s interest in IRCTC’s online retail platform. With this deal, Amazon will have a chance to showcase its offering to two crores potential buyers who’re registered users of IRCTC.
IRCTC also has a good presence in smaller cities, which is another attraction for Amazon. 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 partnership with Yebhi didn’t work out well as Manmohan Agarwal-headed Yebhi was unable to raise funds and last year pivoted from an online store to a product discovery site. However, with deep pocket and global experience Amazon can leverage IRCTC’s strong reach in the country.