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Online Mobile Prepaid Recharges – Moving Forward from Comfort to Freebies !

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The telecom industry in India is growing at a breakneck speed, and the majority of the contribution has come from the mobile segment, what with the fixed line phone business in India logging a negative growth in 2009-10. Going much deeper into the wireless segment, another interesting fact coming out is that the post-paid (or billing) segment hardly constitutes lesser than 1/5th of the overall mobile users.

So, going by the above calculation one can say that from 635 million wireless users, more than 500 million are pre-paid mobile users. This brings me to the opportunities awaited in the humungous size online and offline (16 digit PIN through scratch card) recharge business in the Indian telecom market.

While most of the big telecom operators already have a dense (offline) network of distributors and retail outlets at crucial locations and various market places – it is the business of online pre-paid recharge that seems to have prompted me to write about today’s article, after I came through the news of a latest entrant in this space – Freecharge.

With the user base for telecom subscribers growing by leaps and bounds, a number of third party recharge players such as Rechargeitnow, Fastrecharge, Ezrecharge and Mobikwik amongst quite a few other ventures, have already started jostling for this burgeoning segment. Other than that, the traditional channel of accessing online prepaid recharges has remained limited within the domain of telecom service providers themselves – through their own websites.

The online prepaid recharge business currently contributes to less than 1% of the total prepaid recharge, but given the volumes of the Indian telecom industry even this amount runs at a whooping Rs.100 crores of business. Having said that, once the more tech-savvy younger generation starts tapping this emerging market of online prepaid recharge, this nascent industry is all set to grow from here.

Presuming that an average recharge per person, per month could fall in Rs.200 range; the market for prepaid recharge business sums up to a pretty lucrative figure of over Rs. 10,200 crore annually – and 1% of this works out to a cool Rs.102 crore in terms of revenues.

The latest entrant in this space – Freecharge – has come out with a unique offering to tap this growing market. Of course, their basic product is no different than the usual online prepaid recharge, but the USP from this start-up venture is ‘Discount coupons.

freecharge_logo_small

Yes, this newly launched e-commerce initiative enables it’s users to recharge any prepaid mobile phone in India, and claim reimbursement in the form of shopping coupons of some of the top Indian retailers to the extent of the amount of recharge carried out by the users on their site – thereby rendering the recharge costs of the user virtually free.

Currently, the site is launched with attractively valued coupons of frequently visited food chains such as McDonald’s (Fast food joint) and Barista (Coffee joint). Further, the start-up venture expects to see more coupons of renowned national brands of restaurants, multiplexes, apparels and grocery stores.

But, like any other offerings, there is a small caveat in this too – and you need to be aware about it. The start-up firm charges you Rs.10/- as coupon delivery fees. But, looking at the wafer-thin margins involved in selling products online – it is quite obvious that they won’t bear the postal charges for the freebies passed on to you, which in itself is a unique value-added offering against your recharges. However, in my opinion they could have come up with something like e-coupon, instead of the discount notes that they send as in hard copy.

Lastly, the potential of e-commerce in India cannot be under-mined, though the newer initiatives should be well backed-up with enough resources and proper insight into the consumer behavior and the user experience of the target market.

What do you feel about the prospects of the online prepaid recharge market in India?

"Online Mobile Prepaid Recharges - Moving Forward from Comfort to Freebies !", 5 out of 5 based on 1 ratings.
  1. gaurav says

    low margin high tension businessperson not provide margin or direct api so that all api provider make money to make people foolish.presently all major brand leave online recharge market because maintenance cost is more than margin like website,hosting,integration cost,long code short code ,virtual no,sms gateway,payment gateway,registration cost (nagar nigam gumasta ca audit fees taxation bank a/c maintenance cash deposit charges annual maintenance developer cost) etc.

    so please go in this business please check return of investment of your time and money.

  2. ankit says

    share your idea that how we can increase sales and what unique and extra we can provide to customers accept coupons.

  3. ankit says

    thanks for all comments but its all about old ideas which has been used actually so if you guyes wanted to come in this online recharge business ,come with new innovative ideas like freecharge is giving free coupons like that only we have to think some thing unique which we can prove in this business and blast the market.. so please guyes share your ideas..

  4. Vinaya Pandit says

    start your all in one mobile recharge business website and earn website cost just 2500/-

  5. Arvind Sharma says

    basically compart e services pvt. ltd. is not a good company and its service standered is much below than any other company of india.

  6. Ruchi Sharma says

    Thanks for providing this useful information.

  7. omprakash says

    many compnies are there to provide recharge api but as i hear mobile operetors dint provide api so how the system works

  8. jeevan p says

    Mobile Recharge APIAs you know that online mobile recharge is a hottest online business of  India and every one want to get mobile recharge api with good margin to integrate with his/her website. Mobile recharge business is a hottest business because of its user which is more that 84 crore in India and more than 97% are using prepaid connection.Because of high density of prepaid user the mobile recharge api’s demands are increasing rapidly in Indian market. Here in India the margin are based on operators and all operators margin are different. The AIRTEL is a biggest player of India and they have maximum prepaid connection. Airtel and Vodafone are providing lowest commission on prepaid recharge in India because of user base and acceptance.Call us for more details at             +91 9650 590 590       or mail us  [email protected] India is an IT technology firm and working in this field since 5 years. Now they are providing Mobile recharge API with good margin at nominal cost. With the help of ITvision India‘s mobile recharge API you can recharge all mobile operators like Airtel, Vodafone, BSNL, MTNL, Reliance, Tata, TATA docomo, S Tel, Uninor, MTS etc. ITvision offers Mobile recharge API for entrepreneurs and agent, franchisee, Distributors network for small investors.ITvision India also offers customize mobile recharge application which will be based on your business logic. This application can be B2B mobile recharge or B2C mobile recharge or can be both. The costing of application is based on your business logic and criticality of application. ITvision India also provides Payment gateway for mobile recharge at affordable cost with minimum transaction charges.ITvision India have good and experienced developers for Mobile recharge application like sms based mobile recharge software, Virtual payment gateway integration, GPRS based mobile  recharge application, Payment gateway for mobile recharge, Online mobile recharge application etc.Call us for more details at             +91 9650 590 590       or mail us  [email protected]

  9. Jagan says

    It was a nice article with toplevel analysis.

    But surprising thing is that, why mobikwik floated this proxy website(freecharge.in)?
    Why not they promoted their brand directly?

    As long as it benefits the customer, initiative is good, but could not understand the business strategy behind it.

    1. Naman says

      @Jagan:Freecharge.in is an independent company. We are not connected to any other web company.

      Wonder how u came to that conclusion.

      -Naman

      1. Deepak says

        Hi Naman
        Nice to hear from you but as on average how much transaction does your website make???

        1. Naman says

          Deepak,

          I have moved on from Freecharge.

          I would guess above 5K/day.

  10. Nitin says

    I think its a developing model
    Though the margins are very low, but if you look at 3-way win-win situation

    1.FC gets user base.
    2.Operators get a steady source of recharge which they can track
    3. Retailers get an additional customer flow

    May be getting this user base, will be a starting point for an additional business that they may start.

    And yes the recharge here is real time. I just paid FC and got recharged too

    1. Viral says

      Perfectly agreed Nitin ! Thanks for the Comment.

  11. Viral says

    @ Sagar Bedmutha… In my opinion, the catch of the deal between the Online vendors and the Retailer is the prevelance of the win-win logic that thrives the model as follows:

    1) The retailer gets the opportunity to promote its brand through the coupon-led advertising initiative placed on the site of the online vendor providing recharge services. Isn’t it a form of promotional effort at free costs? (I hope it works like that!)

    2) Not just the brand, even the products are promoted by way of (discount) offerings through online vendors. The retailer gets the opportunity to market its product to an untapped customer, and sometimes even totally untargetted customer.

    I, usually, visit McDonald’s hardly 2-3 times during the year. But, if I get some lucrative schemes, I might as well visit it more frequently – if for nothing, at least to optimally use my coupons (subject to it does not have too many riders).

    So, the deal is a pleasant promotional effort for both the parties, the retailer and the online vendor both, working for both like the two sides of a same coin.

    Sagar… Thanks for your valuable thoughts.

  12. Sagar Bedmutha says

    Some thoughts-
    1. The recharge margin for the vendors is very thin. How these guys will make money giving along freebies?
    2. if “online” is the catch for convenience and to tap online users, the operator themselves can have the recharge facility on thier own website. And in this case the recharge will actually be done real time.
    3. The freebies have thier own * attached. You need to spend something to get the benefit of the coupon value. Would people be ready to spend 50 buks to get benefit of other 50?
    Just my initial thoughts. What’s ur view?

    1. naman says

      Thanks for writing about us Viral.

      @sagar: Your points are valid. Here are my thoughts.

      1. operators are already online but even they want to outsource this part as it is too much of work for them. Dealing with chargebacks and frauds is not something operators want to get it into.

      2. We are bringing in better coupons where the strings will be loose. Probably with no minimum buy.

    2. Viral says

      @Sagar… Your points are very well directed. But, one thing – some of these online vendor sites provide real-time recharge facilities, except during occasional error instances.

      Probably, yes… some of these discount coupons might be less lucrative for lower denomination recharges, but for higher ones it could be worthwhile. Of course, the riders vary from sites to sites.

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