The $ 500 billion domestic retail market is still dominated by cash-based payment systems, with credit cards and allied facilities largely limited to urban areas. In addition, consumers have been traditionally reluctant to utilise alternative payment techniques.
However, the retail sector is in the midst of a broad transformation, with e-commerce and m-commerce becoming key components of an omni-channel strategy of organised retail. And, that’s because the number of internet connections in the country along with smartphones users exceeds 150 million, with these largely younger consumers increasingly purchasing online.
As a result, it is becoming
common for shoppers in Ranchi
and Coimbatore to order their favourite pizza as well as T-shirt merely by clicking a few buttons
on their mobile phones. This, in turn, has forced retail chains to offer ‘mobile wallets,’ or secure payment systems, that enable shoppers to complete their transaction online without much ‘fuss’.
A view that was also shared by the research firm Gartner, which pointed out that mobile-based payments are expected to nearly triple to $ 720 billion by ’17, globally. In India, too, the size of this market is valued at about billion dollars annually, and is also expected to grow aggressively over the next few years, given the consumer boom currently underway in smaller towns across the country.
To leverage the emerging opportunities, players like Money on Mobile (MoM) are offering an array of mobile-based solutions to brick-and-mortar retail chains as well as e-tailers.
Converting physical currency into digital format
There are many players offering mobile wallet services, however, most of them are only tapping the banking users, which consists of one-third of our population. The remaining 70 per cent of the population, who is excluded from the banking privileges, require a viable cash payment option. “This is the segment that we are targeting,” says Shashank Joshi, MD, Money on Mobile.
MOM offers a mobile wallet, which is a ‘one-click’ experience for customers to buy a range of products and services from the mobile phone. People using cash need a financial instrument and the m-wallet provides this option.“We convert physical currency into digital format
and make it available on the mobile phone to spend,” he adds. It
enables subscribers to buy prepaid mobile top-ups, DTH recharges
and make utility bill payments using their cell phones instead of cash
or plastic money.
Joshi also stresses that their application eliminates the need for shoppers to provide bank account details, and they simply have to enter their email address and contact details.
It’s not just in India, but mobile wallet apps are en vogue overseas, too, with customers ordering more than 5 million coffees and lattes each week at Starbucks via a similar app. A senior official at Starbucks, in a recent media statement, said, “Apart from making it easier to complete the transaction, it also helps to enhance customers’ experience in-store.”
They are not alone, and several e-retailers across the globe and leading department store chains are offering a similar experience to shoppers.
MOM’s solution to the e-commerce industry
The e-commerce industry is grappling with several challenges including low penetration of internet in rural areas, cash on delivery and security issues, to name a few.
As a solution to the above mentioned challenges, MOM facilitates e-tailers with ‘cash before delivery’ (CBD). This is a ‘retailer cash payment network’, which helps a seller or merchant collect cash from its customers before shipping the products. This service allows customers to cash book products in advance at the convenience of visiting a local mom and pop store. The CBD option provided by the company is functional at over 2 lakh retail outlets.
It offers benefits to e-tailers as they don’t need to create additional retail points for cash paying customers and can ride on MoM’s distribution network. Besides, the cost per transaction at a MoM outlet is far less than the cost per transaction of COD. It further helps them to address those consumers who are outside the ambit of internet.
On the other hand, it offers benefits to customers. Besides, paying in cash, it eliminates the fear factor of sharing bank details to purchase products.
Road Ahead
Joshi highlights that more than 80 million people have used MoM between 2011 and 2014 and he predicts that the number will reach 115 million by March 2015.
Clearly, MoM will transform the shopping experience by simplifying payments.
We are aiming for 115 million users by 2015”
The m-commerce segment is poised for rapid growth, and MoM’s mobile wallet offers substantial convenience to consumers as well as retailers. In a candid conversation, Shashank Joshi, MD, Money on Mobile, highlights the company’s strategy to differentiate themselves from peers, and also, reveals growth plans.
There are 150 million online users in India, however, only 1 per cent use online apps, which presents a huge market. How do you address such vast market?
To address that huge market, the spread and distribution has to be large. And that’s what we have been doing since the past three years. We haave created a distribution network of over 3,000 distributors across the country, serving about 1.5 lakh retailers, and these are all small retail touch-points which could be a grocery or gift shop.
How is the response from smaller towns?
When we started, we thought of restricting the services to metros and mini-metros. But we are getting the best response of our services from the interior parts of Rajasthan, Jodhpur, Dhanbad, Ranchi, and Jamshedpur.
Your future plans?
There are about 80 million people who have used MoM in past three years, and we expect that number will reach 115 million by March 2015.
Copyright © 2009 - 2024 Franchise India Holdings Ltd