RANDOM ACCESS. Time for a PSU Flipkart?

A couple of weeks ago, India’s largest public sector steelmaker, Steel Authority of India Limited (SAIL), added about half-a-dozen ‘stock keeping units’ (or SKUs, which is what the retail trade calls what you and I know as products) to the over 15 million SKUs already available on e-commerce portal Flipkart.

No, they’re not selling rail tracks or torsion bars there. Search for ‘SAIL’ on the Flipkart site and several assorted stainless steel utensils pop up, ranging from tea cups and saucers to dinner sets and casseroles, priced between ₹750 and ₹3,500. These are all manufactured at SAIL’s Salem Steel plant, which produces high quality stainless steel, much loved by Indian housewives, who prefer its durability and lasting shine for their kitchen utensils.

Now, practically every Indian knows SAIL makes steel, and possibly, quite a few might even know that it makes stainless steel. But I’m willing to wager that very few (except perhaps in the south of the country, where stainless steel is the uncrowned king of kitchens) would know that the public sector behemoth, which produced 12.9 million tonnes of steel last fiscal, with a turnover of ₹51,866 crore, and net profits of ₹2,616 crore, actually made plates and spoons as well. Well, it does, and has been for years.

That cosy anonymity may well change, now that SAIL has dipped its toes into the online ocean. India is in love with online shopping. So are retailers. And it’s not just the big brands that are there online. From plastic bucket manufacturers in Indore to brassware-makers in Moradabad to silk weavers in Madurai, the low cost of entry to the online marketplace has meant that a whole host of businesses, from home hobby to global transnational in scale, have suddenly discovered a much larger and more vibrant marketplace than what they could have ever accessed on their own steam.

The numbers tell their own tale. According to a recent study by PwC for industry body Assocham, the Indian e-retail business is already well past the ₹1 lakh crore mark in sales, and is clocking an average growth rate of a sizzling 35 per cent a year. Over 4 crore Indians shopped online in 2014, a number PwC expects to grow to 6.5 crore this year itself. Over one-third of all Indian internet users are shopping online, and with connectivity improving in both reach and quality, these numbers are expected to skyrocket. In five years, PwC expects the e-retail industry to cross $100 billion (over ₹6,31,000 crore at today’s rates).

Currently, most of this spending is accounted for by apparel, electronics and mobiles, which together account for over 42 per cent of sales. Travel accounts for another sizeable portion, particularly since the high values in air travel and the humongous volumes in rail travel push the gross revenues up. The average spend per consumer per year is expected to jump by a whopping 67 per cent — and this is a truly impressive number, given that inflation is only around 4 per cent and average pay hikes at under 8 per cent — to ₹10,000 this year itself.

And the geography of the online marketplace is changing as well. Discount T-shirts and cheap mobiles may still be dominating, but big ticket items are there in serious number as well. From full HD TVs priced over ₹3 lakh to furniture sets to pricey diamond jewellery, price is no longer a deterrent for Indians to buy online. Even builders and car-makers have entered the market. If you’re really interested, you could buy yourself a new apartment or a brand new car (certainly a pre-owned one) from your smartphone.

It’s no wonder that the world is beating a path to India’s online door. Within a day of Flipkart scoring $1 billion in additional funding, rival Amazon announced that it was pumping $2 billion into its India business. Japan’s Softbank invested $627 million in Snapdeal and $210 million in Ola Cabs last October, and is scouting around for more deals.

And it is no coincidence that the global big daddy of online retail, Alibaba’s Jack Ma whose spectacular IPO has made him China’s richest man, visited India within weeks of his record-busting arrival on the global stage.

The one sector missing from this gold rush is the government. Which is puzzling, because online retail offers an easy, low-cost and relatively pain-free solution to the biggest problem faced by PSUs with a consumer interface — marketing.

The government, via either central or State-owned undertakings, is already making a bewildering array of consumer products, from soaps and detergents to textile and apparel to trucks and tractors and even branded jewellery.

Add the millions of product lines supported by arms of the government — from handlooms and handicrafts to cottage industries, and you will have enough SKUs to rival Flipkart or Amazon.

Oh, some do have some kind of e-retail presence, but most of them are creaky and inefficient, and given the government’s penchant for reinventing the wheel, based on obsolete technology.

Now imagine if, instead, you had an online marketplace for all PSUs under one roof, so to speak. A single portal, with perhaps B-to-B and B-to-C sub-verticals. It could readily tap into most of the fast growing sections of e-retail (with the exception of electronics perhaps) and will also offer the opportunity to consolidate and build brands.

Consumers in India — who still trust the government, incidentally — would be happy to look at choices which offer quality and reasonable prices. At the producer end, it will offer the chance for millions of poor Indian artisans to increase their earnings and work their way out of poverty.

There wouldn’t even be much fresh investment needed. Whether technology or bandwidth or manpower or logistics and storage, India’s State and central PSUs have enough capacity, a lot of which is idling unproductively at the moment.

Don’t forget, government engineers built (and run) one of India’s most successful e-commerce portals, the Railway ticketing site.

All it would need really, is a change in mindset. It will be Make in India, Sell in India, a win-win for all. It’s time we had a PSU to take on Flipkart and Amazon!

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