E-commerce: Online travel Industry in India

Online travel Industry in India : 

—Indian online travel revenues are currently dominated by ticket bookings, with air and train bookings accounting for close to 90% of the segment revenues.—Online travel penetration was estimated at around 28% in 2011, which is significant considering the online travel in China accounted for just 16% of the total travel, and that the APAC average was at 18%.— Even several developed countries such as Italy, Spain, Japan Singapore lag India in online travel penetration. The online travel market is currently estimated at Rs 24,900 Crore ($5.5 billion) in 2011. 

The online travel market is expected to grow at a rate of 22% over the next 4 years and reach Rs 54,800 Crore ($12.2 billion) in size by 2015.

—This assumes a growth rate of13% for the overall travel market and online penetration increasing to 37% (from the current 28%).

Online Travel Agents

—In the US, the OTA market is dominated by Expedia, Orbitz, Priceline and Travelocity. CTrip, Baidu, and eLong lead the show in China.

—India seems to have followed the same pattern. As on March 2010, the top-3 OTAs commanded a 90% market share. MakemyTrip (MMYT) was the undisputed leader with 48% market share, followed by Yatra and Cleartrip.

Traditionally, airline OTAs have struggled in bus travel - a different target segment .

—Top 20 travel sites in India. Ticketvaala and Travelyaari are the closest competitors in the space.

However, there are clear opportunities for them to offer domestic packages and deals with tier 2-3 hotels

Competition From Supplier Websites

—Most supplier websites find a spot in the top 15, with Indian railways at 1, Jet Airways (India’s largest airline) at 8, and Indigo, Spicejet and Air India coming in at 9, 10 and 11 respectively.

—Of the online travel market, supplier websites commanded a 61% market share in India in2010.

Infrasructure Barriers

Payment Cash And Collection

— Vendor Management: 

— Taxation

— Logistics

—Information Security

—Multiple gaps in the current legal and regulatory framework

—  Limited Internet access among customers and SMEs.

— Poor telecom and infrastructure for reliable connectivity.

Future Scope

The online penetration of train travel is around 32% and for air travel is around 50% the online penetration in hotels and packages is less than 5% and that in bus travel is less than 4% of the total market today.

—For MakemyTrip,, net margins on air travel have hovered around 7% for the last few years. And train ticket margins range between 5% and 10%.

— Therefore the OTA market has significant headroom for growth of revenues and profitability going forward.

Existing OTAs will try to strengthen their position by: Getting into unorganized sectors (e.g. bus ticketing)

—Foreign players will try to gain a stronger foothold in the domestic market

—Offline players in the Indian travel market may try to develop a stronger position online

—Expedia and other major global players are set to expand the OTA market.

What are your Opinions on the online travel Industry in India ? Do you forsee major inroads by foreign players or will domestic OTA's be a major chunk of the travel pie ? Give your opinions in the comment section and please like if you found the article helpful.

Last Mile Delivery in India

What is Last Mile Delivery  ? :

• It is  the last stretch of a B2C( Business to Consumer) parcel delivery to the final consignee who has to take reception of the goods at home or a collection point.

Importance of Last Mile Delivery ? :

For any E-commerce firm LMD plays a crucial role in determining profitability. The major cost incurred by sites is during LMD. Therefore it needs to be understood and perfected to ensure smooth sailing.

Two more reasons why LMD is so important :

1) If you mess up a delivery , chances are that you might alienate that customer and the people they would have recommeded it to would also be lost.

2) This results in negative attitude towards your brand.

Last Mile Delivery In India : Let us take the example of FLIPKART.

 

1.3 Cr clicks in 2011 to 11 Cr clicks in 2012. Revenues have grown from 4lacs  to 500cr  within 5 years. Nearly 60 to 70 per cent of deliveries take place through their own network.

 

We can see from the Bar graph , customers prefer Home Delivery as well as other options .

What is the Flipkart Strategy ?

qConventional Home Delivery - Using self and private courier services.

qWarehouses for certain goods like books. In major cities delivery is the direct responsibility of Flipkart – 35 such centers around India.

qContract compliance with dealers across the country for electronic goods.

What are the persisting problems for flipkart ?:

What improvements are suggested ? :

www.chhotu.in is an Indian website specializing in LMD for ebiz.

Packstations: These are localized protected collection boxes where parcels can be deposited by the ebiz and the customer can then go enter a security pin and remove his parcel. This saves cost and time for the ebiz and gives convenience to customers to collect at the time they are free.

Seeking to provide a better access for customers 

to their parcels, Deutsche Post DHL developed the 

Packstation system. Since its inception in 2002, 

it has offered a wide selection of services, from 

delivering shipments to picking up parcels around 

the clock and franking.  

For parcel services, customers have the choice to 

have their shipments delivered to the Packstation, 

so the parcel is no longer brought to the customer’s home address but can be picked up individually. 

Clustering is the concept of delivering the parcels to a local point such as a petrol pump or a supermarket and the customers can collect parcels from there. Benefits are similar to those of Packstations.

 

qMajor Chinese e-commerce giants like Taobao.com are overcoming their last mile delivery issues by :

•Building and expanding their own internal Logistics networks.

•Outsourcing to third party express companies & Forming partnerships / acquiring existing firms.

The graph below shows the economies of LMD :  

The graph shows that if few parcels have to be delivered , then the cost for LMD by company itself is much higher than if it is outsourced to 3rd party companies.

What are your thoughts on Last mile Delivery scenario in India? Post your Ideas by commenting !