As more people carrying plastic cards are skipping the routine and making real purchases from the virtual malls from their bedrooms, a new market is taking over North India’s vibrant consumer economy. Full of opportunities, the new market has its own brighter and the flip side. Saima Bhat spends a week with Srinagar’s courier agencies to understand the complicated system of purchase and delivery of Rs 2000 crore turnover that has alerted the taxman, finally
Every day at 9am, Muhammad Irshad, 25, dons his red-and-white uniform, puts an extra-large backpack over his shoulders, and leaves for work. A resident of Kanipora in Srinagar’s outskirts, Irshad works with Ecom – a New Delhi based courier service operating from Hyderpora.
Once in Hyderpora, Irshad, parks his motorcycle, joins other delivery boys, and takes his share of load for distribution. Irshad is one among 240 delivery boys working for Ecom, assigned to deliver parcels across Kashmir. These parcels flying from Delhi daily, is the routine merchandize that Kashmir procures on-line.
A year back Irshad, a father of two-year-old girl, worked as a salesman earning just Rs 3000 a month. “Working hours were long and confined to the four walls,” says Irshad. “Besides it was impossible to run my family with that pay.”
At Ecom, Irshad draws monthly Rs 10,000 plus incentives and actual costs he incurs on fuel and his cell phone. “Life is better now. I spend a lot of time with my family,” says Irshad, a Class 12 dropout.
With lot of free time at his disposal, Irshad is exploring possibilities to start something on his own to add to his income.
Ecom’s Kashmir innings started in mid-2013 when Bilal Ahmad Bhat, 33, a graduate in commerce, approached the Delhi based company. “The motivation was to help local unemployed youth,” says Bilal. He knew the courier line. In 2008, Bilal and his brother jointly started running First Flight courier services in Srinagar. “We started with Rs 50,000 only,” says Bilal. It had a good start but gradually the business proved sluggish.
After most of the business correspondence moved online B to B (business to business) courier services like First Fight started downsizing their operations. “The new in-thing was e-commerce, so I switched over,” says Bilal. The switchover helped Bilal to tap the market left by his previous company.
Bilal’s brother is still working with First flight, as its Kashmir zone head.
Starting with twenty delivery boys, E-com launched its operations from Sopore, Islamabad and two centers in Srinagar. “After three years we have now three hundred employees,” says Bilal. Ecom also generates employment to vendors and landlords at 14 different locations including Srinagar, Islamabad, Kulgam, Shopian, Pulwama, Sopore, Baramulla and Ganderbal.
Bilal, who heads Ecom’s Kashmir operations, directly reports to his seniors in Delhi. “All Ecom employees, including myself, are on company’s payrolls. We have all benefits including provident fund,” says Bilal.
A private limited company, Ecom Express is a logistics solutions provider to the Indian e-commerce industry. Founded in 2012 by former executives of Blue Dart by raising Rs.75.5 crore from private equity firm Peepul Capital, the company has grown rapidly and emerged a leading player in the e-commerce logistics space in less than four years. With 15000 employees across India, it services 2800-plus pin-codes through 675 delivery centres and manages 50 million consignments in a year. It is leader in Kashmir for last two years. In India, it is Kashmir alone where it is the No 1 courier.
Courier services mainly handled letters, documents, and official communications and then the PDF transfer on line triggered a crisis. Finally on-line shopping reversed the trend. Bilal thanks online shopping portals for getting parcel delivery business back to fashion.
The surge in online orders that Kashmir places on day-to-day basis has kept Bilal and his team on their toes. Dr Umar, who spends most of his time between his private clinic and hospital, purchases everything online to save time. From toiletries to grocery, Dr Umar shops everything online. “There is limited choice in Kashmir, besides shopkeepers often take you for a ride,” feels Dr Umar. “In comparison online has variety to offer and it is reliable.”
Dr Umar’s wife is equally crazy about online shopping. “You have reviews, rate difference, and international quality available. It is awesome.”
As online shopping picked up in Kashmir banks operating in the valley started focusing on e-commerce. A number of banks have personalized staff in place to deal with e-commerce. In last few years, the number of credit card holders have increased manifold in Kashmir.
Ending May 2015, J&K Bank, the largest private sector bank in the state, has around 3.2 million card holders. Out of it 46,344 are credit card holders. Its rival, HDFC Bank has 35000 credit cards.
J&K bank provides credit cards with an outstanding of Rs 60 crore when the billing cycle starts. In HDFC Bank the net outstanding on cards is Rs 80 crore.
Even if, the total amount of transactions through J&K Bank credit cards, as per RBI, was Rs 16.25 million (through ATM) and Rs 291.59 million (through Point of Sale – PoS machines) and through debit cards it was Rs 18322.20 million (through ATM) and Rs 372.22 millions (through PoS) till December 2015. But Zubair Sheikh, 27, who is in e-commerce business since 2006, says that majority of people in Kashmir prefer Cash On Delivery (COD).
Every day Ecom handles around five thousand parcels at its Srinagar office containing everything between books and large home furnishing items. These items are purchased from online portals like flipkart, Snapdeal, Jabong, Myntra, Homeshop18, Naaptol, Amazon and many others.
Ecom’s Srinagar operation costs it Rs 60 lakh. “It includes salary, office and go-down rents, phone bills, petrol, and other expenses,” says Bilal. Ecom’s Jammu arm handles around 500 parcels a day.
Industry insiders believe Jammu’s proximity to big cities like Jhalandar, Ludhiana, Chandigarh and New Delhi, gives its people option to buy things from there. “People regularly visit these cities to shop,” says a Jammu based Ecom employee.
The journey for Srinagar bound parcels is often long and tiresome. Sent directly to Srinagar airport from Delhi, the boxes are then taken by cargo vans of Associates Courier Cargo and Co-loaders (ACC), an intermediary and a separate business that delivers to assigned courier companies in the city. Ecom receives their parcels at its 2000 sq ft Hyderpora facility.
The next step is to pack and sort these parcels in district-wise consignments, which are first uploaded on their computers and then dispatched through load carriers and cargo vans. Delivery boys like Arshad pick their load for their area from these dispatch centres.
“Initially the delivery boys used to call. Now they know address and my parents,” Dr Umar told Kashmir Life.
As the most senior man in JV Express, Zubair Sheikh is another major player in the courier circuit.
Before JV, Sheikh has worked with First Flight courier service from 2006 to 2010, then jumped to Delivery for a year and spent two years with Ecom Express. Shifting to JV Express was purely because of CEO of his company, who is his close friend but now, Sheikh is satisfied with his decision.
JV Express started its operations in J&K in December 2013. Sheikh, a commerce graduate, handles more than 95 employees in the company’s seven office in Kashmir: Islamabad, Sopore, Baramulla, Budgam, Pulwama, Pampore, Soura and Humhama and three offices in Jammu: Jammu, Sambha and Udhampur. Off 95 workers, Sheikh says 70 are their Ground Staff Assistants (GSA) or delivery staff. They serve at 31 pin codes across.
With its hub in Humhama, presently spread over 1500 square feet area, Sheikh says that his company is building a new office in same locality, with more space to operate from, which will be having a processing centre, quick shipments- from where orders will be delivered within 24 hours. Otherwise, everyday their consignments get delivered on Srinagar airport at six in the morning.
“By 7 am we get these orders delivered at our Humhama central hub. By 8 am we start processing them on our computers, by 9 am we get them delivered to different area offices and by 10 am our GSA leave for delivering the orders,” Sheikh said.
Presently, JV Express takes orders from Snapdeal only. On an average they get above 15,000 shipments a day for Kashmir and around 600 for Jammu region, with a delivery rate of 90 per cent. “We are the only courier services who deliver orders in hartals and curfews.” After a year in field, JV Express was awarded with ‘best service award’ by All J&K Courier Services Association. Besides that Sheikh is enlisted in the company’s backbone list.
For any new entry under GSA in JV Express, boys are supposed to have a two wheeler and mobile phone, where they get basic salary of Rs 9500 in hand, and Rs 600 for their vehicle maintenance, phone bill and refreshments and Rs 2.5/km for fuel.
“Since the unemployment is on rise in Kashmir I prefer to take unemployed youth with poor background,” Sheikh says, “And I have recruited some boys who were drug addicts because they were unemployed. And now, they have stopped taking drugs and are earning good amount.”
Seniors draw a salary of plus Rs 45000. At an average JV must be spending Rs 40 lakhs for its operations in J&K state. During September 2014 floods, this courier service delivered most of their orders in time when all others suspended their operations in Kashmir. “We not only delivered normal orders but delivered Aid, coming from all over India in the worst effected Bemina and other areas,” Sheikh says.
Prior to both of these courier services, GoJavas started its operations in Kashmir from May 24, 2012. After four years, they have limited their operations to three offices in Srinagar district spread over 2300 square feet area: Hawal (200 square feet area)- which is reverse office from where customers are connected in case they want to return their orders, Munnawrabad (700 square feet area) and Hyderpora (1300 square feet area)- which is their transit hub office.
Their operations head, Yasir Maqbool Wani, 28, a professional graphic designer, says that GoJavas started their operation with just five employees from Lal Bazar area in Srinagar but now, they have a staff strength of approximately 65 boys, out of which 55 are their Field executives (FE) or delivery boys.
Presently, GoJavas has a delivery rate of 70 percent. Wani, a resident of Hawal area in old city Srinagar, says that his company has kept down pin codes because of various challenges. “We cannot presently think of expanding our operations outside Srinagar district as we have hartals and curfews. It becomes difficult to run operations during such problems,” Wani says, “Besides that we have less manpower.”
For the satisfaction of customers, GoJavas has started a delivery app, which has reduced customer complaint level. “If our staff fails to deliver, at least we have proofs like snapshot of their entrance, call details, GPRS details that we visited their address. Otherwise customers used to complaint we didn’t attempt deliveries,” Wani said.
Presently, Sheikh Zahoor, president of All J&K Courier Association and head of Bluedart courier company, says that only 60 percent of parcels are inbound while as rest of the 40 percent goes back as refusal. “Many people order things and when, we (courier service) goes to deliver those orders, they reject them. Managing this 40 percent is mess,” Zahoor says. “We all are trying to find out alternatives to get rid of refusals.”
When e-commerce is on rise in Kashmir, people have started ordering things that costs more than Rs 5,000, which means taxable items. And incase, of return, this amount is not refundable. He adds, “Everyday we get around 2000 to 25,00 CoD shipments. While as rest of the shipments are either prepaid or are medical supplies and B toB.”
But now as per the budget 2016-17, it has been proposed that the threshold level of Rs 5,000 should be done away to give an advantage to local retailers as their products were earlier costlier being loaded with tax.
With market appetite increasing, the courier companies are making most of their business in different lines of products. Sana, a college going student told Kashmir Life that she is comfortable with online shopping because it neither involves bargaining nor an awkward moment to talk with male salesmen in the market. “It is sometimes embarrassing. Better is to do shopping online. Almost all my friends do the same,” Sana said.
Student of marketing in Kashmir University, Murtaza Shafi said that e-commerce is emerging as potent means of shopping. “This has led to increase in focus of banks to this sector and various top notch companies enter Kashmir to do their business,” Shafi said. “Courier companies are not letter dispatchers only, they are alternate channels.”
Since there are many players who sell and lot many who distribute and deliver, sizing Kashmir’s on-line market is slightly tricky. Interesting part is that every purchase is not through card because more of it flies as COD – cash on delivery. This has actually elevated the status of the courier companies from the distributors to cash managers.
Bilal Bhat said they have to ensure that the payments made are deposited in the company’s account next day.
But what is the volume. Zubair said on an average his company collects around Rs 10 lakh per day for delivery of parcels across J&K. Bilal’s smart estimation is that pre-paid business apart, his delivery boys routinely collect Rs 20 lakh a day. If all other players are managing only Rs 10 lakh a day, that makes the COD business in Kashmir to Rs 12 crore a month – nearly Rs 140 crore a year which is substantial. If pre-paid business is added, then the on-line commerce activity in J&K has already reached Rs 2000 crore a year.
That is the purchase. Are we selling anything on-line?