E-commerce in India to take to the rails

E-commerce players in India have welcomed a pledge by the country’s railway minister, Sadananda Gowda, to boost logistics support for e-commerce.


E-commerce in India to take to the rails


E-commerce players in India have welcomed a pledge by the country’s railway minister, Sadananda Gowda, to boost logistics support for e-commerce.

In his first rail budget in mid-July, the minister said the railways would extend “logistic support to various e-commerce companies by providing designated pickup centres at identified stations.” Rail cargo could be up to 45 per cent cheaper than air-cargo, according to distance and volume, according to industry estimates.

“The initiative is certainly a positive move forward for the ecommerce industry,” said Rohit Bansal, cofounder of online marketplace Snapdeal. The company’s third-party logistics partners at present use airlines to transport 95 per cent of Snapdeal’s orders. The industry is waiting for clarity on what “pick up centres” mean.

Industry insiders said the initiative will help propel the US$2.3 billion industry forward. “This is a strong recognition of the importance of the e-commerce industry’s ability to provide value to consumers in India,” said Samuel Thomas, Amazon India’s director of transportation. The global e-commerce major launched India operations a little over a year ago.

So far, e-commerce companies have not made use of railways due to issues like delays and pilferage. “They could use a judicial mix of road-rail and air to improve fulfillment while reducing the cost of delivery,” said Manish Saigal, managing director at advisory firm Alvarez and Marsal.