The Rs. 8000 crore express courier services, industry with 4500 odd courier companies has been forced to drop pace, with the slowdown in retail finance activities.
The cause is not too difficult to interpret. The BFSI segment gave the industry business such as delivering welcome kits, debit and credit cards, contract notes, policy documents, dividend warrants, annual reports and mutual fund statements. But credit card volumes have fallen 20% in recent times, thanks to credit aversion among banks. Things are no better with ULIP or direct equity investment by retail investors. As such, express courier market leader Blue Dart and Express It, which used to derive 25% and 90% of their business respectively from the BFSI sector, are hit to a larger extent.
Even pricing is a crucial factor in this industry. The low-margin, high-volume business largely means that economy of scale is very important to survive in this business. Also in the express courier segment, having a broader national presence helps.
Festive deliveries, such as DHL’s Rakhi Express for delivering rakhis during the rcently concluded festival, haleem during the Ramzan period by Gati courier offer as occassional booster to business. And recently Blue Dart has initiated Money Back Guarantee plans like Domestic Priority1030 and Dart Apex 1200 which ensures that documents and small shipments are delivered the next business day to selected regions at 10:30 a.m. and 12:00 p.m., or else the money would be refunded. Airline companies like Deccan is also toying with the idea of Cargo and Express Logistics Solutions within the country.
With their ability to track individuals and their addresses, credit collection on behalf of banks for a fee, and KYC forms are newer areas in which they could venture out. Yet the future is not bleak. As the government plans for financial inclusion, bank accounts are expected to swell to 600 million, up from 300 million. With banks moving towards automation and setting up more ATMs, debit cards show the promise of providing a lot more business.
But there is another risk from automation and digitalization, as in the near future the complete financial kit could be downloaded from the internet itself. We think that the courier companies need to revamp their strategy and need to work in close knit with packers and movers.
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