Indian Institute of Management Rohtak

India Post | B2B Marketing Project Report

 INDIA POST | B2B MARKETING

Executive summary

The project includes analysis of the business operations of government run India Post and the
industry it operates in. It gives an introduction to its ambition of becoming a major player in the
e-commerce logistics market. The project identifies the problems being faced by India post that
hinders the company from achieving its ambition. The report suggests and evaluates various
alternatives in order to solve the problems. It also highlights the managerial learnings that we
learnt by exploring the B2B expansion problem of India Post.

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Table of content

Executive summary 1
Introduction 4
Background Information 4
About the organization 4
Postal & Mail Operations 4
Financial Services 5
Market Overview 5
Target Industry Overview 6
Customer and their profile 7
Factors affecting Organizational Buying Behavior 8
Target Customers’ Buying Centers 9
Observed Problems faced by the organization 11
Underutilization of resources 11
Inability to accept and handle large volumes 11
Lack of technological upgradation 11
Further Research on the problem 11
Pros 12
Cons 13
References 14

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1. Introduction
India Post is one of the most extensive Postal services catering to the Indian public since 1727,
with currently touching through a network of more than 1.55 Lakh + Post Offices across India.
With their Last Mile Reach, almost 90% of the Post Office are catering to Rural Population and
the rest 10% to Urban. As per the Business Today article dated April 22, 2019, it was reported as
one of the most considerable Loss Making PSU followed by BSNL and Air India. With the
increase of e-Commerce & International Courier players India Post seems to have been miscued
majorly because of High-Pay and allowance costs, Mismatch between product-service and price
and price charged, Mismanagement of human resources and Lack of diversification of business.
Hence, there is still a massive opportunity for India Post which can be captured through B2B
model in order to survive and subsidize the cost for the needy.

2. Background Information
2.1. About the organization
With the Vision and Mission of being the Customer’s First Choice through touching the lives of
every citizen in the country in the mode of various value for money services viz ranging from
mail, parcel, money transfer, banking insurance and retail services.
India Post function area can be broadly divided into
● Postal & Mail Operations
● Financial Services
○ India Post Payment Bank
○ Philately
Postal & Mail Operations
Almost 30% of the revenue for India Post Comes from its Postal Services which equals to almost
Rs. 5,000 Cr in cash. A Post Office serves 21.14 sq. Km. of area and a population of 8770 people
on an average. Post Offices are usually opened on the basis of distance, population, and income
norms. These services can further be classified into Premium Services which include Speed Post,

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Business Post, and other modern ancillary services like e-Commerce Portal, e-Post, e-Payment
etc.
Financial Services
The financial services function area contributes to about 70% of the total revenues for India Post
with the vision of building the most accessible, affordable and trusted bank for common man and
spearheading Financial Inclusion by reducing cost and removing barriers for accessing banking
services. During the Budget Speech of 2015-16 a major initiative was taken up by the
government in order to promote financial and increase access of the people to the formal
financial system. The services provided under Financial services are further categorized as
deposits (Savings account, current account), money transfer, direct benefit transfers
(MGNREGA, scholarships, Government subsidies), third party products (Loans, insurance,
investments, schemes), bill & utility payments (mobile & DTH recharge and electricity, water,
gas bills), enterprise and merchant payments (postal products, digital payment of E-commerce
delivery, offline payments).

2.2. Market Overview

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According to the Annual report FY19-20 presently, India Post has a market share of 4% by
volume and 5% by revenue of Domestic parcel market, while the company is targeting to capture
10% market share in the domestic CEP market in revenue terms by 2024 and 15% of the
domestic parcel market by 2026 by focusing on marketing and sales activities, robust operational
capacity and providing quality parcel services. They are aiming to increase the parcel handling

capacity from 6 crores per annum to 24 crores per annum simultaneously, as shown in Figure-1
below. 
After enjoying monopoly in the Indian market since 1999 India Post started facing losses and
deficit problems since the launch and widespread use of mobile network and internet services
leading to easy-to-use services and cheap communication methods. Other than that local,
national and international scale courier services are taking over Indian market and Indian Post’s
share. The major competitors of Indian Post are DHL, FedEx, First Flight, DTDC, Blue Dart,
Internet, Telecom Networks. Despite having various benefits of an enormous network, huge
capital base, huge human resources, government support and subsidies, far enough as compared
to local and national competitors, they are continuously performing low.

2.3. Target Industry Overview

The logistics and distribution industry while growing at a CAGR of 15% is scrutinized as a
crucial sector to uplift international trade as a consequence of digitalization and globalization.
The market of e-commerce retail logistics alone is estimated around $1.35 billion in 2018 and is
estimated to clock a nearly 36% growth in the coming five years, according to a KPMG report.

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This freight and logistics industry is growing rapidly and contemplated as the backbone of
India’s economy as it ensures efficient, quick and economical transport of goods across India and
many commercial sectors rely on it. 
On one side, with the implementation of refined processes and advanced technology, the
planning, implementation, and control of the movement of goods have become faster and
efficient. On the other hand, inefficient logistics infrastructure and traditional practices created
bottlenecks in the Indian economy's growth. But the latest procedures for logistics management
has the ability to overcome the difficulties at the same time offering cutting-edge
competitiveness in the long run.
The e-commerce retail logistics sector is serviced by traditional logistics service providers
(LSPs), e-commerce retail focused logistics service providers and captive logistics arms. It is
largely a captive market (49% share), however, a sizable share is still dominated by new age
players catering especially to e-commerce retail. Major E-commerce logistic companies in India
are Delhivery, Gati, Ecom Express, FedEx, Blue Dart, Final Thoughts.
With 1.5 lakh post offices in India and 5 lakh hired postmen across India, India post aims to
become a key e-commerce logistic player in India. It would like to take advantage of its reach
even in the remotest villages of India and become the top player in the logistic market by
collaborating with top e-commerce players like Amazon, Myntra, Flipkart, Jabong.com,
Snapdeal, Ebay, Shopclues.com, Nykaa. 
There has been a remarkable rise in investment in E-commerce business with the increase in
awareness about the benefits of online trading. Hand in hand with offline trading, numerous
established businesses, e.g. Lifestyle or Shoppers Stop, have set up online transaction channels.
Logistics has been a major driver of the e-commerce retail industry and an important point of
differentiation between market players which are aiming at better customer satisfaction and
service.

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2.4. Customer and their profile

Target customer, Indian e-commerce is

growing exponentially and is expected to
beat US to become second largest e-
commerce market in the world.

India’s e-commerce market has potential to

grow four folds, Why? With the increase in
internet penetration it is expected to reach
835 million active users by 2023, and 220
million online shoppers by 2025.

Online retail is growing beyond metros and stretched out to tier-II and tier-III cities too. They
now deliver to 15%-20% pin codes out of 100,000 pin codes in India. With this increased reach
of online retailers in remote locations, there seem tremendous opportunities in logistics. Few of
our key customer profile would be 
● Beginning as an online bookstore, and now it has become India's one the leading e-com
shop, Amazon is selling almost everything electronics, furniture, jewelry, apparels etc
● 2GUD is an online retailer of refurbished goods, which offers a range of electronics and
cell phones, used and restored.
● Nykaa - a beauty retailer selling cosmetics, clothes, and wellness products to Indian
customers. 
● 1mg, an online pharmacy and healthcare information website.
● Myntra, online retailer of lifestyle and fashion in India. which is owned by another e-
commerce giant Flipkart.
● Founded in 1999, IndiaMart is an online B2B marketplace for Indian companies.
● Offline big retail brands like Shoppers Stop, BigBazar, Max etc are going online and
offering home delivery of their products and mostly cater local customers, hence are very
important potential customers.

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2.5. Factors affecting Organizational Buying Behavior

Buying behavior is the reflection of organizational objectives and goals. Hence is strongly
affected by the factors that drive their performance.
Online retailers are customer centric, they strive to provide the best experience to their customers
efficiently, accurately and fast. These are the primary characteristics they look for while
selecting their logistics partner. Most of the e-commerce retailers attract customers to shop
online by making offers like free delivery, buy1get1 free, attractive exchange offers and
discounts. An online retailer is as good as it’s delivery service, they often differentiate
themselves as fastest service providers. The preference would always be a partner who is fast and
accurate.
With the exponential growth in active internet users in every corner of the country, there is a
need to cater to most remote areas and they need to do it fast. A partner with a large network and
a huge workforce is an asset to the online retailers in these changing times. Specially during the
COVID-19 crisis India saw a huge jump in numbers of first time users from most remote corners
of the country. A large network with experienced workforce would come in handy in these times.
On 25th March, 2020, BigBasket - a key online grocery player in India had the following
message “We'll be back soon! We are currently experiencing unprecedented demand. In light of
this, we are restricting access to our website to existing customers only. Please try again in a
few hours.” So overwhelming was the response that it faced a breakdown due to a steep increase
in demand amid COVID-19.
Pricing, the cost obviously affects any buying behavior. The businesses would tend to accept the
most profitable deals which fulfill their expectations in every other aspect.
Being customer centric, as stated earlier, is the most important mission statement for any online
retailer. They do not compromise on providing an unquestionable customer experience, which is
one of the major deciding factors in logistics partners, which is why some e-commerce giants
like Amazon and Flipkart have their own distribution channel e-kart (Flipkart) and amazon
delivery. So they can exercise full control over the supply chain and do not compromise on the
customer experience. Hence, the extent of control in partnership is a major deciding factor in
selecting a logistics partner.

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2.6. Target Customers’ Buying Centers

India post has been traditionally only inviting customers to approach itself, but can initiate a new
sales model wherein they can initiate business with their prospective customers (e-Commerce,
SME, local businesses, etc.) and fight to gain market share in the industry. For the same, they
would be required to identify the decision makers who have the formal authority of making peak
influence in these businesses (target customer segment). The process involves identifying the
buying center that involves a large group of individuals who affect the purchase decision, then
there’s a need to identify the forces that will be shaping these individual’s choices. India Post
currently has CPMs (Chief Post Master) doing this work for them; but since they are more
concerned with daily operations management for the organization, we suggest they come up with
zonal BDMs who can track down prospective business customers either from the existing
customer list, from their respective geographies, or try to poach them from competing CEP
players, by means of a contractual obligation that suits both parties.
The buying centers of India Post’s prospective customers would consist of the below entities
Initiators
India Post ZBDMs (Zonal Business Development Managers) can approach the buying
department personnel of its prospective customers, Supply chain and distributions operations
managers/department heads with e-Commerce businesses, proprietors of local businesses, or
personnel in respective positions.
Gatekeepers
Managerial secretaries/assistants or assisting staff of the initiators’ department are generally the
gatekeepers and they need to be reprised with the market pricing, availability & conduct of all
logistic service providers. These ZBDMs must have a broad reach with the gatekeepers and
initiators of their prospective customers, by approaching them through direct communication,
social media, or a cold calling basis. This can boost business for India Post.
Influencers
The important personnel in the corresponding buying centers of the target customers of India
Post, could be supply chain & distribution experts, marketing experts, financial & costing
analysts, or business proprietors themselves, who could influence the decision of these business
to leverage India Post’s distribution channels either on the basis of cost, convenience, reliability
or whichever combination of the same.

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Deciders
The approval holders of the buying decision processes at the target customers, i.e. the finance
manager of the supply chain & distribution wings of eCommerce business, or financial heads of
business’ in general, or business proprietors themselves, could be possible deciders in the buying
process.
Purchasers
There is a high likelihood of initiators being the purchases in the buying process for most of
India Post’s target customers.
Consumers
For most eCommerce companies, the warehouse managers / materials managers / product
managers - distribution, would be possible consumers in this buying decision, as they are at the
end of the hierarchy in the buying process which is in direct contact with the logistic service of
India Post CEP services.

3. Observed Problems faced by the

organization
Though India Post can use its strength in terms of a big network of post offices and post men in
order to become a major player in the e-commerce logistics market, it has some major challenges
that hinders its ambitions.
3.1. Underutilization of resources
On one side where a vast network of post offices and postman acts as a strength, on the other it
also acts as a challenge as it has not been able to make the use of them to the full potential which
leads to under- utilization of its resources and hence leads to higher costs.
3.2. Inability to accept and handle large volumes
India Post has been able to manage the courier service of documents and small parcels very well
but its inability to accept and handle large volumes and bigger problems due to lack of
warehouses acts as major constraint in order to achieve its ambition of becoming a key player in
the e-commerce logistics market.

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3.3. Lack of technological upgradation

Over the years the logistic companies have highly upgraded technology in terms of shipment
tracking and other technologies. Due to lack of profitability in the core business and traditional
setup, low technology hinders its competitiveness.

4. Further Research on the problem

India Post operates under the government where they have a policy of not firing people. In
addition to this, the India post has stopped its hiring process from past few years due to recurring
losses in their core post & parcel delivery services. This has led to an increasing portion of the
aging workforce, thereby highlighting the below-par human resource and reskilling policies.
Since only 30% of the revenues are contributed to by the post & parcel delivery services, , the
business is limited to the statements being sent by banks and other companies to their customers
or govt. sending some documents to the citizens.

India Post has not been able to accept and handle large volumes due to lack of infrastructure
facilities in the form of warehouses where they would be able to store the shipments of e-
commerce companies. Apart from this they have a policy to carry only dry products and not
something liquid or any bigger items. This acts as a major constraint in expanding their e-
commerce logistic expansions.

5. Proposed Alternatives

India Post can undertake a combination of the further suggested alternatives. It can reduce its
current overstaffing in the CEP aspect of its operations and realign/ dedicate a particular part of
CEP business and dedicate those services to the e-Commerce business’, SMEs, proprietary
businesses which can outsource their business logistics to India Post. Therefore, a complete
restructuring is not necessary, but there is a need to introduce dedicated ZBDMs to initiate CEP
business, zone wise. This restructuring can be internal (post masters/development officers →
ZBDMs by means of reskilling) or external (hire new ZBDMs under a new business line of the
India Post services)

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6. Evaluation of alternatives & possible solutions

The possible aftermath of the suggested alternatives can be shortly bifurcated as pros and cons as
explained below:

Pros
● Effective, efficient, reliable services to new target customers (e-Commerce business’,
etc.)
● Increasing/Optimizing internal resource utilization, thereby cutting (justifying) salary
costs(which had earlier translated into losses).
● New customer segment exploration and revenue realization for organization
● Advantage of extended rural (specifically cities/villages Tier-III, Tier-IV and below)
delivery reach for its customers, i.e. eCommerce companies, can translate into more
business for both.
Cons
● Ageing staff may require huge reskilling (high capital in resource skill development) may
be required.
● New staff hiring (ZBDMs) would most likely increase wage bills/costs of the
organization.
● Governmental organizations are generally not seen to operate business like private
entities (actively searching for customers by making efforts to increase B2B sales). This
can reflect poorly on the government.

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References
1. https://www.indiapost.gov.in/VAS/DOP_PDFFiles/Strategic_Plan.pdf
2. https://www.ukessays.com/essays/business/distribution-process-of-indian-postal-
services-business-essay.php
3. https://postandparcel.info/24543/news/the-challenges-for-india-post/
4. https://www.ukessays.com/essays/business/distribution-process-of-indian-postal-
services-business-essay.php
5. https://www.ibef.org/download/Ecommerce-February-2018.pdf
6. https://casemess.com/ivey/india-post/pestel-analysis.php
7. https://www.businesstoday.in/sectors/psu/is-there-any-plan-to-turnaround-india-
post/story/308736.html

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