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The Lowdown on IRCTC’s E-Commerce Tender: Commission Structure, Responsibilities, Selection Criteria & More

(By Apurva Chaudhary and Vikas SN)

After announcing its plans to enter the e-commerce segment last week, The Indian Railways Catering and Tourism Corporation (IRCTC), which manages the online rail ticketing for the Indian Railways, has floated a tender to shortlist a white label solution provider for this initiative. The company claimed that it currently has a registered user base of more than 26 million users.

Fees: As per the tender (pdf), bidders can submit their tenders along with a demand draft worth Rs 2 lakh as earnest money deposit and Rs 1000 as tender fees before March 19, 2013. Once IRCTC awards the contract, the earnest money deposit of unsuccessful bidders will be returned without any interest, within 90 days after the tender is finalized. It will also return the earnest money deposit fo the successful bidder without interest, provided the bidder furnishes the requisite Security Deposit to IRCTC.

Selection Criteria

– The bidder should be an established e-commerce or IT company and should be in existence for more than an year.

– They should have a minimum annual turnover of Rs 40 crore from B2C e-commerce business in the last financial year.

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– They must have a catalog from over 500 brands and suppliers and offer merchandise from minimum five product categories across Books, Mobile, Electronics, home furnishing, apparel, fashion accessories, jewelry and footwear among others.

– They must have deployed a white label solution involving commercial transactions to at least three white label partners in the current financial year and the last two financial years (2010-11 and 2011-12). They must have a minimum of one warehouse in the country and customer support offices in Delhi NCR to manage fulfillment, order tracking and rejections.

The successful bidder would be selected based on the highest tech support bonus quoted to IRCTC and the bidder will have pay the entire tech support bonus to the organization in 15 days from the date the contract was awarded. Also, the bidder should deploy the entire online retail system within 60 days from the date the contract was awarded.

Bid & IRCTC Commission: The minimum reserve price for tech support bonus has been set at Rs 30 lakh and IRCTC will be providing 10% incentive in commission with increase in sales to IRCTC. The bidder will be required to pay IRCTC a fixed sales commission depending upon the product category and the gross amount collected from all product bookings on the white label platform.

For instance, bidders will have to pay 7% sales commission to IRCTC on books category if the average sales registered was Rs 2 crore or less, however if the average sales increases to 2-3 crore per month, the bidder will have to pay 6.3% commission to IRCTC and so on. Similarly, bidders will have to pay 2% commission to IRCTC on mobile phone sales if the average sales registered was Rs 2 crore or less, but the commission dips to 1.8% if the average sales increases to 2-3 crore per month. Here is a complete list of commission that bidders will have to pay IRCTC:

IRCTC commission

Activities That Bidder Will Be Responsible For

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– The bidder will be responsible for developing a white label shopping platform for IRCTC, which will be managed end to end by the bidder. The entire catalog offering will be at the same or lower pricing as available on bidders self owned platform (B2C website). The backend software should provide flexibility and the ability to update the product listing in real time. IRCTC should be given equal access to the backend interface.

– This white label platform should offer customization on the user interface and storefront design to match IRCTC look and feel.

– It should also offer a secure payment gateway which supports multiple banks and is compliant with RBI directives for online payments of goods and supplier payment settlements. The platform should have atleast minimum of two payment gateways among ICICI payment gateway, Citibank ICICI payment gateway, Amex payment gateway, HDFC payment gateway and Axis payment gateway; two net banking options from HDFC, ICICI Bank, IDBI Bank, Citi Debit, Axis Bank, State Bank Of India, IndusInd, SBI Associates, Indian Bank and Federal Bank and one cash card option among ITZ Cash Card, I Cash Card, Done Card, Oxicash and Beam.

A penalty of Rs 10,000 per day will be levied in case any part of the site like payment gateway is not working or the entire site goes down for a day and the contract will be terminated in case the the failure continues for three consecutive days.

– The bidder should also deploy an e-commerce engine, requisite promotional tools and other analytics on the solution and provide IRCTC access to the commission management module and reports.

– The bidder should already have a B2C supply chain in place for shipment of the product and logistic integration with the logistic partners. The bidder will be responsible for monitoring the products booked by the customers, warehousing, and product delivery. It will also be responsible for sending order notifications via email, phone or SMS and for managing the complete order return & exchange policy and provide a confirmation to IRCTC.

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–  They should also provide technical support for the e-commerce website and manage the solution either on self hosted hardware & software or cloud.  They will also be responsible for managing complaints handling, escalation on delayed deliveries, out of stock products, handling defective products, customer support and help desk.

– The bidder will also be responsible in helping IRCTC in promoting products on the white labelled site. This essentially means is that IRCTC will just provide its brand name to its online retail expansion plans, rest of the operations will be managed by its partners

– Bidders should deliver the products to customers within seven days from the order is placed, failing which a penalty of 4% of the product value will be levied.

RelatedWhy Is IRCTC Venturing Into E-Commerce?

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