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July - 2010 - issue > Technology
M-commerce-Commerce-for-the-Masses
Nayan Bheda
Monday, July 12, 2010
Even as we were marveling at the way the Internet had changed our lifestyles, the increasing popularity of the mobile phone and developments in mobile technology have 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 that neither had a landline nor a bank account (unbanked) in their names have had a rapid leap and now not only they own a mobile handset but are also well poised to transact on their mobile. The sped of mobile penetration is 10 times faster than 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 (tea vendor), the taxi-wala, the farmer, the housewife, the kabadiwala and just about everyone has a monthly budget to keep their mobile phone alive. The huge unbanked population and the lack of credit card penetration can little hinder the growth of m-commerce in India. Let us take markets like Vietnam and 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. So, can we then say m-commerce will be a definite success in India? Well, the industry is in its nascent stage and is evolving every passing day, and each one of the stakeholders in the ecosystem viz., content developers, telcos, regulators, banks and financial Institutions, users (consumers), and even the media have a definitive role to play.

Content Developers
India is a land of many languages but only 2 percent 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, and there are more players to share the pie. Also emerging are the regional markets, growing exponentially and offering a huge potential for developers especially the startups. These apart, there exists a huge B2B market for m-commerce in India as well.

Telcos
Who else but the telcos can better understand the market, the customers, and importantly their profiles? Telcos can either fund the startups or offer project specific funding assistance. If telcos prefer not to risk funding a project or a startup, they can look at the option of evaluating and supporting quality projects by taking up the responsibility of marketing the content, thus saving huge marketing budgets for startups. With such a backing from telcos, the startups can approach potential investors and seek funding for the project. To me, such a step by the telcos will encourage many young Turks. Some of the telcos that I know have already made a move in this direction but others should also follow suit.

With half a billion mobile subscribers in India and still adding 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 or her mobile. The average person in India who is not connected will never be able to comprehend the potential of the connected world. Telcos need to promote content bundled with the connectivity and extend the market to even unconnected users. The cost of the connectivity could get absorbed by the restricted or 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 at Rs. 10 per month, then an estimated 25 percent users download the content. At Rs. 5, 40 percent, and at Rs. 2, 60 percent people download the content. At a charge of Re. 1 per month, it is estimated that more than 80 percent of the users will download the content. Once the user experiences the content, chances are high that he will opt for an upgrade to standard data plans and hence would evolve into a full-fledged data user.

Banks and Financial Institutions
With less than 59 percent of the total Indian population having access to any banking services, with connectivity and electricity continuing to be a pressing challenge, the mobile becomes the ideal device to access the common man living in the remote villages of India. The RBI guidelines were largely SMS based until recently when it relaxed the norms allowing domestic remittances and fund transfers through the mobile. The domestic remittances market in India has a huge growth potential as over 30 percent Indians are migrants in urban areas. With the new guidelines, 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, it must be noted here that most of the banks are yet to develop their m-payment gateway; and the need for a robust m-payment gateway on the lines of the e-payment gateway cannot be underestimated. 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 the mobile.

Role of Media, the Opinion Builders
For m-commerce to be a success in India, the media has a great role to play in taking the issues of the ‘value-creators’ that include the content developers and telcos, and getting them heard by the regulators and the government. The industry players need to come together to establish industry standards for m-commerce transactions. As ‘opinion builders’, the media has a well-defined role to play in creating the curiosity and confidence in the mindsets of the consumers to try and experience so that m-commerce becomes a ‘cannot do without it’ or ‘must have’ service.

Government, Regulators, and Policy Influencers
The impact of the global recession and economic slowdown in the recent past was minimal on India and the Indian companies, mainly because of our regulatory framework, corporate laws, and the existence of effective policy guidelines and tax regime. Thanks to the Telecom Regulatory Authority of India (TRAI), the country has a much evolved telecom industry. The government should also consider extending financial support to application developers, easing the tax laws for service providers engaged in m-commerce, and offering special tax rates for m-commerce transactions.

Conclusion
The mobile, with its greater penetration than the Internet in India has already changed for ever the way people interact in their daily lives. The issues of physical presence at an outlet and access to the Internet, amongst others, are fast getting eliminated, giving the consumer the opportunity to transact anytime, anywhere. Yes, m-commerce is evolving in India, but if the stakeholders in the ecosystem put their heads together and join hands to address these critical issues, the mobile could become the universally accepted de facto commerce tool.

The author is Vice President – Strategic Development, Suvidhaa Infoserve
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