Full Steam Ahead

From a humble beginning covering only Delhi and the NCR region, the tickets are now home delivered to 83 locations all over India

The next time you feel the urge to relate an online business success story, you can use IRCTC.co.in as a case in point. This is the online ticket booking website of the Indian Railways, which has become one of the largest b2c e-commerce websites in the Asia-Pacific region within one year of its launch–clocking a whopping 2000% growth!

The website itself is a design disaster–the user interface is quite primitive and has no hope of winning any usability awards.

There is no fancy CRM technology at the back-end, not even simple web page personalization that is offered by petty e-shops on the Net.

Yet the site proves that all it takes is an offer of true value and customers will flock with little regard to anything else. And flock they most certainly did–so far there have been over 500,000 registrations for a single commercial service that the site has on offer–online ticket booking. The site offers free registration and also offers information on trains, availability of berths, timetables and PNR status to its members.

IRCTC.co.in currently handles more than 2,500 ticket bookings per day, clocking in revenues averaging Rs 40 lakh a day.

The numbers may not stand up to the 5.5 lakh reserved tickets that the Indian Railways reservation system books every day, but they are fast catching up, and the officials are talking of reaching the 10,000-bookings a day mark in another three to four months.

“With the Internet revolution taking place in the late 90s, the railways felt it was time to take the booking facility to the homes of the users via the Net,” says J Vinayan, deputy general manager (operations) at IRCTC. A two-year-old Indian Railways Catering and Tourism Corporation was given the mandate to build and operate the online ticketing system, with technical and IT support from Center for Railways Information Systems (CRIS). IRCTC is itself an extended marketing arm of the railways and handles catering, bedrolls and its food plazas, besides marketing the railways’ own bottled water brand “Rail

Neer”.

The ticketing function has been so successful that it earned a total revenue of Rs 55 crore in the first year of operations (August 2002-August 2003). To put that in perspective, according to research carried out by IDC India, the total b2c market in India in 2002 was Rs 238 crore. A successful and over two-years-old portal like Indiatimes.com earns an estimated Rs 45 crore a year through e-commerce, while India’s first pure-play online retailer, Fabmall.com, earned only Rs 12 crore as revenue in 2002.

The actual process for ticketing transactions is done live on the railways’ two-decade old passenger reservation system (PRS), which has been developed by CRIS. The IRCTC website merely serves as a front-end for the PRS, but it handles payments independently.

IRCTC has decentralized the different functions of ticket booking. It relies on PRS for the bookings and on a third-party courier service for time-bound ticket delivery. From a humble beginning covering only Delhi and the NCR region, the tickets are now home delivered to 83 locations all over India, and more locations are being added rapidly and continually. “Foreign users can book tickets too and have them delivered at their chosen airports or hotels,” informs

Vinayan.

Initially, only credit card payment was accepted for the tickets for which IRCTC had a tie up with ICICI Bank and Citibank payment gateways. But for customers who did not have or want to use credit cards, an additional payment mode of direct debit from their accounts through online banking was added. A total of nine banks–including public sector banks like State Bank of India and Corporation Bank–now offer the direct debit facility on the site. The banks are also registering heavy volumes through the site. “HDFC Bank does transactions averaging Rs 90 lakh a month, while ICICI Bank does about Rs 70 lakh,” says

Vinayan.

While ticket delivery is free, the site charges a substantial amount as service charge–Rs 40 for a sleeper class ticket and Rs 60 for an A/C class ticket. Isn’t this too high an amount for a routine transaction? Vinayan defends the charges saying: “Our rates work out lower than that of an agent. Besides, at current rates we have not broken even till date. We need a critical mass of 3,000 to 4,000 tickets a day for us to break even and start making money.” The entire fare for the ticket goes to the Indian Railways’ kitty, which is as high as 98% of total revenues earned by IRCTC, the rest 2% being the service charge contribution and the actual earnings for the site. 

Thankfully, for the site, many corporates have recognized its potential and have started advertising in a big way. Deals are already in place with some big corporates like Citibank, ICICI Prudential, Baazee and Kerala Tourism Development Corporation (KTDC) for banner space on the site. IRCTC has signed deals worth Rs 30 lakh to Rs 40 lakh for the next three months. But an assessment by an advertising agency reveals that the site has the potential to earn advertisement revenues to the tune of Rs 1 crore a month.

“We wanted to study the potential and deliberately kept our rates as low as one-fourth to those being charged by popular websites,” informs Vinayan. He adds that he is offering highly focused campaign offers for marketers–targeting only 1st class passengers, passengers traveling between Delhi and Mumbai, Rajdhani train travelers, women traveling from Chennai and so on. And the marketers are seeing value out of the passengers’ response. KTDC, for example, is getting leads from places as far as Jammu and Guwahati for its travel offers. Baazee has done business of around Rs 10 lakh upon leads from IRCTC customers.

While the IRCTC team can now bask in the glory of its achievements, the journey has been anything but smooth. Remind him of the early days and Vinayan curls in his seat. “The team faced some tough times in the first few months. The Internet infrastructure in the country being poor, it took ages for pages to load up on customers’ computers and they often erroneously booked tickets more than once by clicking repeatedly,” he says.

Even the payment gateways started cracking up under the deluge of volumes. There are multiple links in the ticket booking process, involving multiple clients like banks, card authorization companies, PRS and finally the IRCTC’s own website. One of these links often failed and packets got dropped out, leading to failed transactions. A typical booking failure that affected a whopping 20% of total transactions in a day meant that a customer’s account was debited while no ticket was issued. “Since those were the early days and there was no automatic process for refunding the tickets, the payment gateways deployed extra people whose only job was to refund the money for the failed transactions,” says Vinayan. Though IRCTC has worked towards reducing the glitches, nearly 100 to 150 transactions out of 3,000 are still affected everyday.

Having come this far, what does IRCTC have planned for the future? “There are four major initiatives we are testing right now, which could be rolled out in a month from now,” says Vinayan. First, both the ICICI and Citibank payment gateways are being upgraded to support latest security features. “Our site is pretty secure even now, but we would like to be in line with global trends and offer the latest in security to our customers,” he adds.

Second, beginning with HDFC Bank and ICICI Bank, a call center module will be set up, which will let a registered customer book a ticket by calling up his bank’s call center–the call center executive would do the booking on the railways’ behalf. A tie-up with cellular service providers is on the cards as well.

Third is the corporate module that will let companies sign up on the site and book tickets for employees through a single account. There is a limit of four ticket bookings a month for individuals, which is in place to keep middlemen and agents out of the system, but this restriction will not apply to

corporates.

Fourth, IRCTC is looking at the possibility of peddling other goods and services through its site. “We have everything from a large and rapidly increasing customer base to a full-fledged payment mechanism and a nation-wide delivery system, so why should we limit ourselves to railway tickets,” asks Vinayan. IRCTC is in the process of examining offers of selling goods from corporates. Maybe, six months from now, after the current round of upgrading is over, the site may don a new avatar and become a general e-commerce site. “We shall limit ourselves to selling travel-related goods and maybe electronics, but never T-shirts and shoes,” Vinayan adds.

The new initiatives will only add more fuel to the scorching growth already witnessed by the website. The present is so good and the future can only get better. Indeed, here is one more success story that India can be proud of.

RISHI SETH in New Delhi