India Post says that it will be rolling out its e-commerce portal in the next six months and is looking to take on the likes of Amazon and ebay, reports the Economic Times. The step is part of its massive modernization initiative worth Rs 5,000 crore.

India Post says that it will not be a marketplace model but it shall maintain a moderated and curated list of items. In addition to the physical products, services of different public sector are also being planned to be included into the tradable items of the portal. The report adds that India Post will be tying up with other government entities such as Spices Board, Tea Board and Cashew Board to offer local specialties.

It’s worth noting that India Post (Karnataka Circle) had generated revenues worth Rs 50 crore in the current financial year on the back of e-commerce deliveries for Amazon, Snapdeal, Flipkart, Myntra, Homeshop18, and Global Shiksha among others. Earlier last year, India Post had signed a MoU with Snapdeal & Shopclues.com to work as a delivery agent, after piloting the service with Snapdeal & Amazon last year.

Our take

India Post’s delivery service probably has the widest reach in India, with over 1.5 lakh post offices across 25,000 pin codes. Improving efficiency & reliability and reducing time of delivery was India Post’s primary challenge, which has allowed for a large and competitive courier service market in the country. That being said, when it comes to tier III & tier IV towns no courier company can match India Post’s reach. It will be great to see how they can perform as an e-commerce portal. More importantly, it also indicates that it wants to offer services of various public sectors which we think would be helpful for the common citizen.

Banking foray

The Department of Posts has also applied for a payments bank licence and still keeps its banking hopes after failing to get a universal bank licence from the RBI last year. The Indian government had set up a task force last year to explore ways of using the post office network in the country to provide last mile services. The task force report (pdf) has suggested that three separate subsidiaries be formed as part of a holding company under the Postal Department, that would focus on services in e-commerce, banking and insurance segments. Each of these subsidiaries would be operated as Strategic Business Units (SBUs).