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THE ONLINE REVOLUTION E-Commerce Has Taken Off in an Unexpectedly Big Way in India, Especially in the Travel and Tourism Segment

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THE ONLINE REVOLUTION E-Commerce Has Taken Off in an Unexpectedly Big Way in India, Especially in the Travel and Tourism Segment Cover Story THE ONLINE REVOLUTION E-commerce has taken off in an unexpectedly big way in India, especially in the travel and tourism segment. Millions of Indians prefer booking airline and railway tickets online. The state- owned Indian Railway Catering and Tourism Corporation Ltd (IRCTC) has emerged as one of the largest online sites and dozens of new online travel sites are being set up, write Aarti Gupta and Shivkamal. -COMMERCE transactions, consultancy, recently released a report on particularly in the business-to- India’s e-commerce potential. According consumer (B2C) domain, are to ‘Internet in India (I-Cube)’, the report on an upswing in India, as both focussing on the Indian e-commerce Ebusinesses and consumers realise the market in 2008, there are several verti- benefit of online transactions. Growing cals: Internet (especially broadband) connec- * Travel, comprising travel aggregators, tivity is fuelling growth for online services. tour operators, hotels and railways The roll-out of broadband services by many * E-tailing, comprising online retailers telecommunication service providers in and online auctions hundreds of cities and towns across India * Classifieds, comprising jobs, matri- has given a big boost to e-commerce. mony, property, automobiles and the At the other end of the value chain, general category public and private sector banks in the * Paid content subscription, comprising country today offer online banking facili- research, articles and exclusive ties to their customers, along with a videos clutch of other services including settling * Digital downloads, from Internet to of utility bills, taxes, third-party payments mobile phones and other transactions. “Based on our discussions with The relative ease of online payments various stakeholders, the size of B2C – through credit cards or through Internet e-commerce industry for the year 2006-07 banking facilities – has enabled rapid was computed to be around US$1.5 growth in e-commerce transactions. billion,” says the report. It predicted a The huge investments made by banks in 30 per cent year-on-year growth for the ensuring secure online transactions have following year, with revenues of about added to the comfort level of consumers. US$2 billion. There are about 7.9 million As portals and Internet sites adopt active online buyers in India, of which 80 enhanced security features, e-commerce per cent buy travel products. transactions are on the rise. The online travel industry is the largest The International Market Research contributor to the B2C e-commerce Bureau (IMRB), a leading market research segment, estimated to be around US$1.5 8 9 Cover StorY billion by the end of 2007-08. The entry million tickets online during 2007-08, more of low-cost carriers has given a boost to than doubled the figure the following year. online travel portals. These airlines sell their The estimated gross sales for 2008-09 tickets online to consumers, by-passing With structured were at US$730 million, making IRCTC intermediaries to cut commission costs. funding available, the largest contributor to e-commerce in E-commerce witnessed exponential the country. growth in India in 2008, particularly in we can also foray The entry of travel portals such as online ticket transactions. Today millions Cleartrip, Ezeego1 and Yatra into the of consumers are buying air, train, bus and into hotel, train tickets booking business has given movie tickets over the Internet. customers more options. Although travel The largest player in e-commerce today rail and bus portals together account for a minus- is the Indian Railway Catering and Tourism cule chunk of the overall e-bookings of Corporation (IRCTC), a public sector bookings. the railways, they are popular with the undertaking fully owned by the Ministry relatively affluent travellers. For instance, of Railways. Its online ticket booking Vinay Gupta, both Cleartrip and Yatra have an AC to facility is a mega hit with passengers, ceo, Viaworld.in non-AC bookings ratio of 70:30, while for even with those who do not have Internet IRCTC, the ratio is the opposite. connections at home. For this segment, In the airline sector, travel portals such or those who do not have access to credit as Makemytrip.com (one of the oldest), cards or online bank accounts, IRCTC has online travel portals entering the business, Cleartrip, Yatra, Travelguru, Arzoo (started appointed agents across the country to the share of tickets sold online in the total by Hotmail co-founder Sabeer Bhatia), facilitate online bookings. revenues of Indian Railways doubled to Ezeegoo1 and ixigo, among others, With the IRCTC pushing electronic nearly 30 per cent in 2008-09. are the preferred medium for many to booking of train tickets and scores of The corporation, which sold 18.9 book tickets. 10 Cover StorY The growing business of travel portals search for fare details and ticketing on all continues to attract funding from venture airlines and reservation kiosks. We started funds. Bangalore-based Viaworld.in, a The success of travel sites has full-service travel company, which was spawned a whole new range of portals FlipKart.com founded by a team of engineers in 2006, with e-commerce as their business model: recently raised US$5 million from NEA FlipKart.com (online book purchase), because Indo US Ventures, a venture capital firm. Asklaila.com (information search) and “With structured funding available, we redbus.in (bus ticket booking) have been we felt the need can make investments and also foray into launched by entrepreneurs from India’s for a good online hotel, rail and bus bookings,” says Vinay IT hub – Bangalore, all of whom have Gupta, ceo, Viaworld.in. been successful in securing funding from book store. Its travel network is spread across 290 private equity firms. cities and it issues 5,000 tickets a day. Falling under the category of e-tailing With over 3,000 agents registered with (an online form of retailing) these portals Binny Bansal, it, the company has one of the widest are witnessing robust growth. According co-founder, FlipKart.com networks in India today. The company was to the IMRB report, it grew from US$180 also the first to introduce mobile-based million in 2006-07 to US$230 million a ‘The scope to grow is huge’ Indian Railway Catering and Tourism Corporation (IRCTC), a state-owned enterprise, is today one of the largest e-commerce players in the country, raking in about US$730 million – of a total e-commerce market estimated to be between US$1.5 billion and US$2 billion in 2008-09 – through online booking of train tickets. This was a remarkable growth of over 120 per cent over the previous year’s revenues of US$355 million. As many as 1,60,000 e-tickets are booked on the IRCTC site on an average every day, translating into a traffic load of 3,00,000 passengers a day. Nalin Shinghal, director, tourism and marketing, IRCTC, in an interview with Aarti Gupta. How has IRCTC grown over the include petrol pump owners, cyber-café for-money segment – these are typically last few years? or PCO operators, or even those who are people who like to travel in the sleeper We have been steadily adding features part of a state government e-governance class and stay in hotels in the sub-US$20 to our online booking service. When we project. category. Because of the range of offer- started in 2002, one could just do the There are about 50,000 agents who ings, our portal last year won the national booking and get an i-ticket, while the phys- book tickets for passengers for a minimal tourism award. In a short time, the portal ical ticket was delivered through a courier. fee of Rs. 10 (or about 20 US cents) a did business worth almost US$6 million In 2005, we started the system of e-ticket ticket, for those who do not have access last year. We are hopeful of soon doubling – booking online and taking a print-out; to a computer or a credit card. This chan- or tripling that figure. this can be done just three hours before a nel is already giving us 30 per cent of our We attempt to offer an entire assort- train’s scheduled departure. business. And we are in the process of ment of products. In addition to the com- Then, in May 2008, we started e-tick- expanding that reach. plete range of chartered hill packages ets even for the wait-listed category. Traf- over five regions – Darjeeling Himalayan, fic, as a result, is growing by leaps and What kind of e-commerce opportu- Nilgiri Mountain, Kangra Valley, Kalka- bounds year-on-year. Last year, IRCTC re- nities are there for IRCTC? Shimla and Matheran – we launched a ported a 160 per cent increase in through- The potential is huge. An estimated 17 fortnightly special train service, called the put (an e-commerce term to measure the million people undertake travel in India Mahaparinirvana, between October and amount of data transferred) and this year every day, of which the reserved travel March (the peak tourist season) last year. there has been a 120 per cent increase. market is about a million-strong. We are There are about 400 million Buddhists the currently tapping only about a fourth of world over and India is amongst the few How has IRCTC managed that kind the total reserved rail traffic travel; so the destinations of interest for them. Instead of growth, considering PC and In- scope to grow is huge. of going on back-breaking road rides to Bi- ternet penetration is still low in We are expanding our product offer- har and eastern UP, where many areas of the country? ings.
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