E-commerce needs the support of offline reach: Pramod Saxena

Oxigen is aiming at enhancing its market presence with facilitating cash and wallet payment collection options for Big Bazaar Direct products through its network of 200,000 retailers across India. Commenting on tie-up with Big Bazzar Direct, Pramod Saxena, Chairman and Managing Director, Oxigen Services spoke to Indianretailer.com.

Tell us about the payment service you will offer for Big Bazaar Direct products?
Most of the time when consumer goes to purchase an item, he/she needs to locate the item and also stand in a long Q to pay. There are certain standard regular buying products, which consumers can buy online and pay to nearby oxygen stores through cash or wallet instead of travelling far to the Big Bazaar Direct stores. The products can be delivered to the customers directly from the warehouses through a secure point. Our retailer will have to stock no inventory.
At the time of delivery, if the customer is not available at home, we are bringing the product to our retailer where the payment is already been made and from there the customer can pick their product. He doesn’t need to travel to Big Bazaar Direct store and spend money. This saves consumer's time and travelling cost.
This is a more reliable reach for the consumer; the concept is going to be relevant all across.

Initially how many oxygen stores will offer the payment services for Big Bazaar Direct?
Out of our 200,000 retailers, Big Bazaar Direct products will go to 10,000 retailers in the first year in phased manner. We have already signed up with around 200 retailers and more retailers will join once they understand the convenience of the model.

What is your target of sales with each store?
We hope that each store does Rs 20 lakh of transaction a month. Our retailers can accept the payment for items ranging from pressure cooker to frying pan, gas range to luggage and garments in addition to what is selling from Oxygen retail stores today. For wallet transfer, our retailers will help customers create their wallet account. We will be covering around 16,000 pin codes across all regions, including North-East.

What will be the revenue sharing model?
We have thoroughly worked out our revenue sharing model. Revenue will be there in the sale of the product. In services, retailers commission varies from one to two percent and in products, if a product has high margin, retailer gets more margin. All I can say is retailers gets bigger share margin than us. If there is 10 percent margin in the product, then the retailer will get 8 percent. Because he is doing the business, bringing footfall, serving the customer and we are just enabling it. We are making retailer a centre point and an important aspect.

How this partnership will enhance your presence and contribute to your growth?
With this partnership we are developing a habit not by just putting money into the customer’s wallet, but by helping them to do a transaction and telling them the benefit of wallets and it is going to be a gradual process.
This tie-up is the example of how e-commerce needs the support of offline reach. Availing Big Bazaar Direct's wide range of products, our customers will increase our sales volume along with enhancing our payment service capabilities. Most of our retailers are kirana store, PCOs and small time telecom shops owners etc.
Our growth is driven by retailers. When these retailers get more services to promote and have more margin, their business enhances which also enhance our business. Henceforth, in addition to our services of recharges, money transfer and bill payments, we will also offer the payment collection service for Big Bazaar Direct products which will enhance our presence in the market. More you serve the customer, more products you are able to offer. Around 70 percent of our revenue comes from retail stores. In oxygen we offer three.

What are your future strategies to enhance this partnership?
To further enhance this partnership, we will add more retailers in our network to take orders for walking customers and accept payment in cash or through oxygen wallet and then our final reach will become large. We have around 200,000 retailers at present and it will grow over 5 million to 10 million over the next 5 to 10 years.
We have already served 150 million customers across our network for payments; so far there is only services payment. Our retailers are becoming comprehensive provider for convenience of payment collection services to the last customer and we have seen good traction with them.

Like Big Bazaar Direct, which retailers will you be tying up with in the future?
Apart from Big Bazaar Direct, there are other names also. Big Bazaar Direct has thousands of products and we want to make a success of this model. We will keep tying with more such retailers, we have tied up with one more company and the announcement will be done on 20^th March.

How do you see the competition from Paytm?
Paytm only has online presence, compared to that we have wide offline retailers network as well as online wallet and that’s our strength. In some places people don’t have credit card, debit card, internet access and way to transact and in this condition our model works.
There are two hundred million people who may have smart phones, but still there are 600 million people who may still not be using smart phones at all. And people who have smart phone don’t like doing e-commerce transactions.

How do you see mobile wallet changing the e-commerce scenario?
Mobile wallet is going to become a way to pay in retail. But, in retail the consumer is stuck with cash on delivery (COD) model, around 95 percent of transactions are still done through cash, wherever comfortable consumer pays through mobile wallet too. For customers, paying cash is the most convenient process as there is no entry or password.
With COD, difficulty is that most young people doing e-commerce transaction are not at home to receive the item. So the product goes back and the company incurs huge cost of transport and logistics. Also meanwhile consumer can change his/her mind.
Discounting competition is a never ending process, but ultimately the business must sustain. Retailers have started realizing that the business will not grow by offering discounts and paying cash, it has to be sustainable.

What is your current turnover?
Last year we closed at GMV of Rs 10,000 cr and we have already crossed Rs 15,000 half way through last year. This year I assume we will close at Rs 18,000 cr.