Bharat Petroleum Corp. Ltd., India’s lumbering state-run fuel company, is planning use its nationwide network of 12,800 gas stations to deliver online retail to rural India.
The oil refiner and retailer is hoping it can leverage its outlets and logistical staff across India to succeed as a latecomer to India’s ongoing online retail boom. It is upgrading its technology and logistics network to be able to sell farmers everything from fertilizer to smartphones.
The e-commerce push will begin December, with BPCL’s rural gas and cooking gas distributors starting to accept orders and payments online, said BPCL Chairman and Managing Director S. Varadarajan. As early as next year, the company is also considering using its urban branches to sell and distribute groceries.
While the early movers in e-commerce in India such as Flipkart Internet Pvt. Ltd.’s flipkart.com, Jasper Infotech Pvt. Ltd.’s snapdeal.com and Amazon Seller Services Pvt. Ltd.’s amazon.in are still struggling to find cost-effective ways to reach the hundreds of millions of Indians who live outside the biggest cities, BPCL already has employees and properties throughout the country.
“About 30% of our retail outlets are in rural India,” Mr. Varadarajan said. Rural customers can shop online then “pick up stuff when they fill fuel at their local gas station.”
India’s state-run oil refiners are desperate to find new sources of revenues as the fall in oil price as well as increased competition from the private sector weigh on their sales.
BPCL’s retail ambitions are “a response to competition by improving margins,” said Deepak Mahurkar, head of PwC’s Oil & Gas Industry practice in India.
Analysts say that while BPCL does theoretically have unique access to much of India’s middle class, which uses its stations to refuel their cars and motorcycles, whether this traditionally slow-moving company can capture a corner of the rapidly-evolving online retail business remains to be seen.
BPCL has prime properties on the main streets and highways across the country, but few of its gas stations have the facilities or the staff to do more than pump gas. Many don’t even have running water in their bathrooms, much less the Internet connections, storage facilities and delivery technology a vibrant e-commerce company would require.
Diving into e-commerce would necessitate a big change in mindset for BPCL which is not used to worrying much about competition or consumers, said Anand Kumar Jaiswal, who heads the Centre for Retailing at IIM Ahmedabad, an Indian management school.
“I am really skeptical about it,” said Vishnu Kumar, an assistant vice president for research at Chennai-based broker Spark Capital Advisors (India) Pvt. Ltd. “If I am a consumer I am not going to check with BPCL for a microwave.”
Even people within BPCL’s own network doubt the company can pull it off.
Sachin Shah, the manager of a company that delivers BPCL cooking gas cylinders to more than 20,000 customers in the southern city of Hyderabad, said the company will have to radically improve its logistics system to guaranteed delivery if it wants to sell more than gas cylinders and gas stoves
“If Bharat Petroleum doesn’t deliver, I will lose face,” he said.
BPCL’s Mr. Varadarajan said the company is confident it can deliver because it will use its best dealers and a new distribution system to get products to customers.
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