Even as we were marveling at the way internet has changed our life styles, the increasing popularity of the Mobile Phone and developments in mobile technology has heralded a new era in mass communication and commerce for the masses.
Touted as the next-generation of e-commerce, Mobile Commerce (m-commerce) enables users to access the Internet without needing to find a place to plug in.
A vast segment of the population who neither had a landline nor a bank account (unbanked) against their name have made a generation leap and not only do they own a mobile handset but are now well poised to transact on their mobile. And this is a realty today, thanks to a progressive regulatory regime, huge capitals outlays for network expansion by Telcos, reduced tariffs and consistent reduction in the cost of mobile handsets.
Having said this, should one write the fate of M-Commerce on the lines of E-Commerce which only 5% of the total Indian population is using to transact? Will M-Commerce too burst after a rapid boom? Not really. The mobile penetration is at 10 times of the PC penetration and is expected to become one billion by 2014.
The mobile channel has provided a rare opportunity not only to leapfrog years of poor infrastructure development but also in bypassing geographical constraints to bring massive benefits and lifestyle changes to millions of under-served people across India. The average Indian does not own a PC, but the Chaiwala, the Taxi-wala, the farmer, the housewife, the Kabadiwala, just about everyone, has a monthly budget to keep their mobile phone alive.
There is this school of thought that the existence of a huge unbanked population and the lack of credit card penetration will hinder the growth of M-Commerce in India. I wouldn’t subscribe to this. And my reasoning stems out of my interactions with various global M-Commerce players, over these years. Let us take markets like Vietnam and even Cambodia for instance which are much poorer economies as compared to India and have much lesser credit card population and yet, M-Commerce has already evolved in these countries.
Given the above, can we then say M-Commerce will be a definite success in India? Well, a straight-forward answer will be difficult and the reason being, the industry is in its nascent stage and is evolving every passing day…so it will be difficult for anyone to conclude on the success or failure, as yet, of M-Commerce in India. Well if one were to draw a “menu card” of what could make or lead to the success of M-Commerce in India then each one of the stakeholders in the ecosystem viz., Content Developers, Telcos, Regulators, Banks & Financial Institutions, Users (consumers) and even the Media has a definitive role to play.
The one common factor between music and love is that both do not require any language to be experienced. But for all other things, language matters and Mobile Content including Applications are no exception either. India is a land where there are as many languages spoken in as many States across the country. Having said this, only 2% of the Indian population prefers reading in English. If the Content is in local language, it will not only ensure quicker adoption by the user but also will be an instant success.
Further, Content developers are tempted to look at India as one market. Well, there is nothing wrong in this approach except that there are more players to share the pie. Whereas, if one were to observe the emerging trends in the recent past, the regional markets are growing exponentially and offer a huge potential for developers especially the start-ups.
Not withstanding urban or rural markets in India, there exists a huge B2B market for M-Commerce in India as well. Suvidhaa has a B2B Application called Suvidhaa Mobile which very innovatively offers a huge basket of G2C/B2C services on the mobile and yet facilitates payments by Cash. With 91% of transactions happening in India are by way of cash and cash continuing to be the most preferred payment option for the common man in India, such marked-to-market mobile applications will play a significant role in making M-Commerce successful in India.
The Telcos are in many ways the most appropriate of all the stakeholders to provide the much needed support for the Content developers. Who else but the Telcos can better understand the market, the customers and more importantly their profiles? Therefore it calls for a greater forthcoming on the part of the Telcos to help the Content developers with their market intelligence.
Telcos can either Fund such start-ups or offer Project specific funding assistance. Having said this, even the best of the best products or services will go down the drain if they are not marketed well and don’t reach the target audience which requires huge marketing budgets, again an area, where start-ups can ill-afford to even think of. Many a good Applications may not even cross the ideation stage, the moment the thought of marketing it creeps in as a nightmare.
If Telcos prefer not to risk, funding a Project or a start-up, they can look at the option of evaluating and supporting quality projects by taking up the responsibility of marketing the Content. With such a backing from Telcos, the start-ups can approach potential investors and seek funding for the Project. To me, such a step from Telcos will change the whole dynamics and will encourage many young Turks! Some of the Telcos that I know are in favour of this and have already made a move in this direction but others should also follow suit.
With half a billion mobile subscribers in India and still counting at a rate of 10 million every month, the success of M-Commerce can only be a reality if the customer is at ease in accessing and using the various Applications on his/her mobile. Today, be it Mobile Applications or Content, by and large, they are all dependent on whether or not the user is “connected” and that is the first challenge with it faces the first deterrent.
An average user in India is generally under the notion that data connectivity is only for high-flying working executives and that it would add little value to him. And here I agree with the user’s notion for it is the Content or the Application that brings value to the user and connectivity is only incidental. It is also true that the user who is not connected will never be able to comprehend the potential of the connected world or for that matter M-Commerce and will never think of downloading the Application or Content.
What Telcos need to do is to promote Content bundled along with the connectivity thereby extending the market for the Content to include even non-connected users. Having entered into the connected world, I am certain that the user will only seek to explore more and more! And the cost of the connectivity could be easily absorbed as part of the Content cost considering its restricted and proportionate usage. Some of my friends in the telecom industry shared some very interesting pointers on the price sensitivity.
It has been estimated that if an Application is charged say Rs.10 pm then an estimated 25% users download the content. At Rs.5, 40% and at Rs.2, 60% people download the content. At Re.1/- pm charge, it is estimated that more than 80% of the users will download the Content. Once the user experiences the Content, chances are high that user will opt for an upgrade to standard Data Plans and hence would evolve into a full-fledged data user.
BANKS & FINANCIAL INSTITUTIONS
India has a huge population of unbanked and unbankable population, given the vast geography and infrastructural constraints which has resulted in less than 59% of the total Indian population having access to any kind of banking services.
With electricity continuing to be a pressing challenge in many parts of rural India, Mobile forms the ideal device to access the common man living in the remote villages of India. Recognising the need for financial inclusion and riding on the growing mobile telephony penetration, the Reserve Bank of India issued the guidelines for Mobile Banking Transactions in October 2008 permitting Banks to provide banking services on the mobile, which is a step in the right direction. Of course, it is still up to the banks to convert these guidelines into a secure framework prior to rolling out their mobile banking services.
These guidelines were largely SMS based until recently when RBI relaxed the norms allowing Domestic Remittances and Funds Transfers through Mobile. The Domestic Remittances market in India has a huge growth potential with over 30% Indians being migrants, working far away from their home town and can now easily remit to their dependents in a secured manner. The new guidelines has eased the domestic remittances/funds transfer process as the receiver no longer needs to have a bank account and can simply collect cash at the nearest bank or its agent’s (i.e., Business Correspondent) outlet upon producing the tPIN received via SMS and a valid id proof.
Having said this, the entire gamut of Banking Services is yet to be offered on the Mobile, which will significantly fuel the growth and success of M-Commerce in India. While most of the Banks are yet to develop their M-Payment Gateway, the need for a robust M-Payment Gateway on the lines of the e-Payment gateway, cannot be undermined.
While, regulations and guidelines are being evolved by the policy makers, it is also the assumed responsibility of the Banks and Financial Institutions to educate the common man to this effect and build trust. Banks must also come forward and take a bold step towards reducing the cost of transactions on Mobile.
ROLE OF MEDIA…THE OPINION BUILDERS
The role of Media for M-Commerce becoming a success can be broadly classified into two viz., (a) in taking the issues of the “value-creators” viz., Content developers, Telcos etc., and getting them heard by the Regulators/Government. This is a significant and yet peculiar role, which only Media can deliver especially in the case of M-Commerce where the industry is evolving and policy makers by and large would wait for the signals from the market players before they frame the guidelines. Industry players need to come together to establish industry standards for M-Commerce transactions and as “opinion-builders” Media has a well-defined role to play. This also calls for an unbiased approach and hence a responsible media alone can deliver. (b) in creating the curiosity and confidence in the mindsets of the consumers to trial and experience so that M-Commerce becomes a “cannot do without it” or “must have” service. This is critical for M-Commerce given the dynamics of its vast geography and population and who better than the media can reach the common man?
GOVERNMENT, REGULATORS & POLICY INFLUENCERS
The impact of the global recession and economic slowdown in the recent past was minimal on India and Indian Companies mainly because of our regulatory framework, corporate laws and the existence of effective policy guidelines and tax regime.
Therefore the role of a regulator and the regulatory framework cannot be undermined more so for an evolving industry viz., M-Commerce. While stringent laws and guidelines have to be in place, there is nothing wrong if these are determined as the market evolves. The Telecom Regulatory Authority of India (TRAI) has done a yeomen service to the development and growth of Indian Telecom Industry for we have a much evolved Telecom Industry at world’s envy.
Regulations and guidelines are like medicines and have to be administered based on the intensity and scale at the time of need. Typically, with M-Commerce growing, the mobile usage is only expected to grow. The Government should also consider (a) extending financial support to application developers (b) easing the Tax laws for Service Providers engaged in M-Commerce and (c) offering special Tax rates for M-Commerce transactions.
The mobile has already changed forever how people interact in their daily lives. There is no denial of the fact that majority of the population are ready to embrace M-Commerce and that the Mobile phones have greater penetration than the Internet in India.
When mobile was introduced not even the biggest telecom experts had predicted the impact of SMS on an average Indian’s life. From relationships to reporting to just about every small communication is now textual. With M-Commerce, even payments and transactions are facilitated through SMS. The future is here.
The issues of physical presence at an outlet, access to the Internet, amongst others are fast getting eliminated, giving the consumer the opportunity to transact anytime, anywhere. As things progress we should see Mobile becoming the de facto commerce tool. Nowadays, empowering the common man is in everybody’s agenda and M-Commerce is the panacea! Yes, M-Commerce is evolving in India but If the stakeholders in the eco-system put their heads together and join hands to address these critical issues, the success of M-Commerce in India, will be, but a certainty!