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

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 1/5^th 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.’

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?