Railways: Largest contributor to India's e-commerce

With the Indian Railway Catering and Tourism Corporation pushing electronic booking of tickets and scores of online travel portals entering the business, the share of tickets sold online in the total ticket revenues of the railways has doubled to nearly 30 per cent this year.

"Until February, we sold 38.7 million tickets. This is already a 104 per cent increase over the total number of tickets sold online in (the whole of) 2007-08, which stood at 18.9 million," said an Indian Railways official.

The estimated gross sales for 2008-09 stand at Rs 3,400 crore (Rs 34 billion), which makes IRCTC the largest contributor to e-commerce in the country, accounting for over a third of the total e-commerce of Rs 9,000 crore (Rs 90 billion).

"I won't be surprised if IRCTC is the biggest contributor. Last month alone, it did Rs 412 crore (Rs 4.12 billion). I am sure it has a better margin than online air ticketing agents and the non-travel e-commerce players may not have similar revenue potential as a train ticketing website," said Mrutyunjay Mishra, co-founder of JuxtConsult, an IT consultancy firm.

There are about 7.9 million active online buyers, of which 80 per cent buy travel products.

The entry of travel portals like Cleartrip, Ezeego1 and Yatra into the fray has given customers more options, besides enhancing the customer profile. These portals have tied up with IRCTC and customers can buy railway tickets through these sites, too. The portals charge Rs 10 to Rs 20, in addition to IRCTC charges, as service fee.

Cleartrip, which is the largest player in railway bookings, has grown 100 per cent between January and March. According to Noel Swain, vice-president (marketing), Cleartrip, the company sells 3,000 tickets every day. Yatra, which started online railway bookings a month ago, has grown from 8-10 tickets a day to about 1,000.

On booking railway tickets from a travel portal, a customer now gets offers similar to those on air tickets.

"We have launched a 10 per cent cash back offer on railway tickets for all Master Card users on our website from April 1," said Cleartrip's Swain.

Mudit Khosla of Yatra added: "All the offers that were given on airline tickets are now being tried on railway tickets also. For instance, various consumer durables companies are now trying to push vouchers to rail tickets as well."

Neelu Singh, COO of Ezeego1, said that although the margins on rail tickets were not very high, she pushed the sales of other products.

Although the travels portals together account for a minuscule chunk of the overall e-bookings of the railways, they enhance the customer profile. For instance, both Cleartrip and Yatra have an AC to Non-AC bookings ratio of 70 to 30, while for IRCTC, the ratio is the opposite.

The scope for expansion is huge. According to the JuxtConsult study, only 9 per cent of the 35.09 million internet users buy products online as most of them do not have credit cards or do not trust the medium.