Amazon planning to leverage India Post network to ramp up its delivery mechanism
Amazon proposed a plan to Union Government to allow it to use new technologies such as real-time tracking and monitoring devices on the India Post network.
E-commerce giant Amazon on 11 November 2014 proposed a plan to Union Government to allow it to use new technologies such as real-time tracking and monitoring devices on the India Post network to develop a delivery mechanism based on smart logistics.
For this, Amazon India head Amit Agarwal met Union Telecom and IT Minister Ravi Shankar Prasad on 11 November 2014.
Amazon, which tied up with India Post in 2013 to use Indian postal services as a delivery channel, is aiming at leveraging an improved India Post network to ramp up its delivery mechanism to within 24 hours anywhere within the country.
The proposal made by Amazon is in line with what Chinese e-commerce giant Alibaba did in China. Alibaba was the first e-commerce company to tie-up with a government postal agency in China. It tied up with China Post to develop a delivery mechanism based on smart logistics.
Union government response
The Union Telecom Minister Ravi Shankar Prasad sought a detailed proposal from Amazon to look into the issue. 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.
How Amazon will benefit?
Amazon will benefit because of the large network of India Post. There are more than 1.6 lakh post offices throughout the country out of which 1.4 lakh post offices lies in rural areas.
With such a large network, India Post claims to have the largest postal network in the world. On an average, a post office serves an area of 21.2 sq km and a population of 7175 people.
If the Amazon proposal is accepted then it will change the landscape of the already price competitive e-commerce.
Interestingly, Amazon's proposal comes in the wake of the special task force constituted by Prime Minister Narendra Modi in October 2014 to enhance the role of India Posts in financial inclusion and trade.
The task force is headed by former cabinet secretary TSR Subramanian. It will submit its report by the end of year 2014.