Amazon plans it big with India Post network to ramp up its delivery mechanism

NEW DELHI: E-commerce giant Amazon  wants to do in India what Alibaba did in China. Amazon's India head Amit Agarwal  on Tuesday met telecom and IT  minister Ravi  Shankar Prasad and urged him to allow the use of new technologies such as  real-time tracking and monitoring devices on the India Post network to develop a  delivery mechanism based on smart logistics.

The government has sought a detailed proposal from Amazon, to which it will  respond, a person familiar with the details of the meeting told ET. Amazon wants  to leverage an improved India Post network to ramp up its delivery mechanism to  within 24 hours anywhere within the country.

Agarwal was accompanied for the meeting by Monique Meche, Amazon's vice president  for international public policy. In an emailed response to ET's query, Amazon  said that it is "looking for ways to deepen" its relationship with the Indian  postal service which started last year. It currently uses the Indian postal  services as a delivery channel, but it is looking to deepen this further, in  line with what Alibaba did in China

Alibaba was the first e-commerce company to tie-up with a government postal  agency in China. Right before it hit the capital markets with a multi-billion  dollar issue, Alibaba tied up with China Post to share warehouses, processing  centres and delivery resources, all part of a smart logistics network providing  easier and faster delivery services to online sellers. Prasad also discussed  prospects for pushing trade and commerce in rural parts of the country in a big  way and how e-commerce websites such as Amazon could play a big part in giving a platform to  small-time retailers and entrepreneurs in the hinterland through its market  place models.

With over 1.6 lakh post offices throughout the country with the lion's share  of 1.4 lakh in rural areas, India Post claims to have the largest postal network   in the world, according to its website. On an average, a post office serves an  area of 21.2 sq km and a population of 7,175 people.

 "Speed of the  last mile delivery to a customer will be the most decisive factor in an already  price competitive e-commerce"Speed of the last mile delivery to a customer will be the most decisive factor  in an already price competitive e-commerce landscape and Amazon wants to leverage on the  well-penetrated postal network," a second executive who did not want to be  identified told ET.

Interestingly, Amazon's proposal comes in the wake of the special task force  constituted by Prime Minister Narendra Modi in October to enhance the role of  India Posts in financial inclusion and trade. The committee headed by former  cabinet secretary TSR Subramanian will submit its report by the year end. India  Post had also tried to get a banking licence but had failed, and is now looking  to become a 'payment bank', one which can accept deposits and remittances but  cannot lend

"The government would obviously review any proposals made by Amazon under the  light of the recommendations made," the second official said. On a lighter note  at the meeting, Prasad referred to Amazon's arch-rival, homegrown e-commerce  major Flipkart, and asked Agarwal who would win the e-commerce war between the  two majors in India. "The consumer," Agarwal responded.

Surging growth of the e-commerce sector in India has led to a fund-raising spree  by companies in the sector. Most recent being Japan's Softbank Corporation's $627-million  investment in Snapdeal, which was preceded by $1-billion fund raising by  Flipkart. A day after Flipkart concluded its fund raising, Amazon committed  investment of $2 billion in India. In the meeting, Agarwal further discussed  setting up of a data centre in India for which the company readily agreed to put  up a server. Microsoft was the first technology giant this year to  announce the setting up of three data centres in the country

These data centres will enable access to customers in banking and financial  services as well as the central and state governments. Many such services are  currently legally restrained as they require data to be hosted within the  country. Owing to which Amazon put forth the proposal to set up a server within  India.