The rapid deployment of mobile infrastructure and the growing availability of affordable smartphones have led to an increased usage of mobile-only internet in developing countries, which, in turn, is boosting mobile commerce in these countries. India with over 1 billion mobile connections is optimistic about a surge in m-commerce transactions, which will change the way online business is conducted in the country and lead to a marked shift from the prevalent e-commerce to an m-commerce business model.
On May 15 2015, Myntra –An online fashion store, took a big step in the e commerce industry by closing its website and turning to app only model. There was huge uproar about this step in media as it was first of its kind in the e commerce industry. Myntra had its statistics and figures to justify its shift. But the doubt in the country continued. Soon, its owner company, Flipkart declared that in September it will adopt the app only model. The doubts were increased further.
Later by mid of august 2015, flipkart postponed its app only model planned for some time without any surety of future date. Suddenly the analysis of the future of m- commerce was questioned as the biggest e commerce firm got confused about the shift from e commerce to m commerce. What made it do that, raised doubts further about whether it was an actual shift or a myth?
Emergence of M-commerce
Digital marketing came as a modern trend to the world of marketing and, henceforth, it created a world of its own. It included all those activities which used some sort of digital medium for reaching to the consumers. Leaving back the traditional norms of marketing, it evolved. With the internet gaining prominence in India, digitization of business processes revolutionized the ways of selling.
E-commerce emerged. Defined as a medium where in the buyer and seller interact, negotiate and finally strike the deals via internet, this business model, turned into an industry in its own right. As the reach of internet increased and so began the boom of the E-commerce segment. As per the statistics of 2014, the internet penetration reached somewhere between 15-19 %, which even helped this industry as the E-commerce also touched the mark of 3% in terms of unique purchases made, which is a huge number in absolute terms. This data showed a promising opportunity for the industry.
But the industry is dependent on various factors for its growth, such as the internet penetration, the use of computers in the country, the habit of buying online and the lesser rates of products. Due to this dependency, this segment is not profit making one. As a result of high investments and no returns the industry experts began using each and every mode of digital marketing as well as digital selling which would make them reach a larger mass. This paved the way for a new method of purchase, a new platform to serve the offerings; the M-commerce.
The mobile penetration in India is growing phenomenally. 70-75 % of Indians have a mobile phone in their hands and this number is continuously rising. But the best part is the penetration of smart phones in India. The smart phone penetration in India is around 16.8% and it is rising at a CAGR of 32%. As per the reports, out of the 354 million internet users in 2014, 213 million are mobile internet users. Also the mobile internet is growing at the rate of 28%.The e commerce companies also observed a 41% of Indian e commerce to be mobile based. These figures proved to be a boon for the e commerce companies for the present as well as for the future. Smart phone devices at cheaper rates and internet data pack at lower costs with better speed also added to the thought of m commerce in India.
Mobile payments and demonetization
The m-payment industry has recorded a significant growth over the past few years as users have realized the ease and convenience of transacting on the go through their handsets. As per industry estimates, mobile wallet transactions grew tenfold from 60 million worth Rs 10 billion in 2012-13 to 600 million amounting to Rs 490 billion during 2015-16. Reserve Bank of India figures show that mobile transactions tripled in the second quarter of 2016 as compared to
- This growth is set to further accelerate as more Indians are taking the digital payment route following the recent currency demonetisation. As per industry reports, the subscriber base of
M-payment channels/mobile wallets has grown manyfold post demonetisation. Paytm, for example, hit a record five million transactions a day within a week of the government’s announcement. Similarly, MobiKwik app downloads doubled and the provider added 2,000 users every day during the initial week. Meanwhile, Ola Money, the digital payment solution from the Ola mobile app, reported a 1,500 per cent increase in recharges across the 102 cities of its operation, a day after the note ban. Oxigen also stated that all the previous records of money loaded on its app, or transaction counts, were broken during the week following demonetisation. Meanwhile, the National Payments Corporation of India, an umbrella organisation for all retail payment systems in India, claimed that between November 8 and 9, 2016 the usage of its domestic card scheme RuPay almost doubled to around 800,000 transactions a day as against a daily average of 400,000 transactions earlier.
Telecom operator-owned wallets have also seen some growth in business post demonetisation. For instance, Idea Cellular saw a significant rise in the usage of its wallet, along with a surge in money being loaded in the wallet by customers through debit cards and internet banking. Further, demonetisation is expected to play a key role in increasing merchant acceptance of digital money, which continues to be extremely poor in India. Merchants in India have always insisted that payments be made in cash, as electronic payments eat into their margins.
However, with cash draining out of markets in the past couple of weeks, merchants and retailers, who earlier operated only in cash-and-carry mode, have been forced to accept mobile payments. They are now working on tie-ups with digital wallet companies. For instance, Paytm claimed that offline person-to-merchant transactions have grown to contribute over 65 per cent to their overall transactions. FreeCharge, too, has announced its plan to ramp up the on-boarding of merchants on its platform and attract one million merchants during the next year.
Telecom operator-owned wallets are also aggressively working on getting more merchants on board. Significant activity in the m-payment market will be extremely beneficial for the evolving m-commerce ecosystem in India.