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Why Is IRCTC Venturing Into E-Commerce?

The Indian Railways Catering and Tourism Corporation (IRCTC), which manages the online rail ticketing for the Indian Railways, plans to expand its offerings to books, footwear and mobile phones in future, reports The Hindu Businessline.

The corporation claims that this might help IRCTC to monetize its registered user base of over 2 crore. The report also states that IRCTC will outsource the back end jobs for the expansion into retail space, which we are guessing might include logistics from warehousing to shipping of the products. The front end of the retail outlet will be however be owned by IRCTC. It has also invited bids from companies in the e-commerce space for building and managing the platform.

Why eCommerce?

IRCTC’s plan to enter the ecommerce space doesn’t even make sense. For starters, its online ticketing site is never able to handle the traffic load. It’s slow and offers a terrible user experience to the customers. Why would IRCTC, instead of fixing these issues, venture into eCommerce? It should be noted that IRCTC also plans to to spend Rs 90-100 crore to increase transaction capacity of its website to support 72,000 tickets a minute, from the current level of 20,000 tickets a minute, but they’ve been talking about plans to improve their platform for over a year now, and it still sucks. Why not do the one thing they are supposed to do, and do it really well? Or at least get that to work before trying out other things.

The only reason IRCTC has such a large user base is because it is a monopoly, and people don’t have a choice, but to register. What IRCTC has smartly done, is create wallets, which allow users to put in money. The idea behind expanding to other segments is probably to encourage people to use that wallet base.

While we have our doubts about IRCTC’s entry into ecommerce, this might instead boost online shopping activity and mobile commerce in India. In December 2012, IRCTC reported that it registered an average 3.74 lakh bookings through its website, for the month of October 2012 and 31,457 individual bookings through mobile phones for October 2012.

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