With the user base for telecom and DTH subscribers growing leaps and bounds, a number of third party recharge players are trying to tap into the market. What is the business all about?
Imagine you reach home late at night after a long day at work. Suddenly you realize that you have to make an urgent call and you have run out of cash balance.
What do you do? Cut to another situation. Your monthly DTH recharge has exhausted and you do not want to make the effort of going all the way to a recharge shop to top-up your account. What do you do? Well, there is a simple solution to both these problems: simply log on to a third party recharge website and recharge your mobile or DTH account within minutes. And that too at the convenience of your home! Could this be a potential business opportunity for many? In this article, DARE focuses on the nitty-gritty of entering doing such a business.
How big is the market?
The telecom industry in India is growing at breakneck speed, and the majority of the growth is contributed by the wireless or mobile segment. In July 2009, TRAI estimated India’s tele-density to be 41.08 with the total telephone subscriber base reported to be 479.04 million. Of this, while the wireline base was just 37.41 million, wireless subscription (including GSM, CDMA and FWP) accounted for 441.66 million connections. What is even more interesting is that a majority of the wireless connections, almost 90% of them are prepaid. Given an ARPU of around Rs 200, we can assume that an average recharge is Rs 200 per month, or Rs 2400 per year. Based on these numbers, the recharge industry size works out to be approximately Rs 9600 crore per year.
Talking of DTH, though the number of players in this sector are few, they are also reportedly expanding at 35-40%. India’s TV viewership is believed to be the second highest in the world and is expected to swell up to 35-40 million by 2012. The installed base of DTH is very small compared to this number. So, this space also remains mostly untapped and could offer a big opportunity to third party recharge players.
|The Industry Landscape|
|Mobile connections in India||441.66 million|
|Prepaid connections (90%)||397.49 million|
|Average recharge per month per person||Rs. 200|
|Average recharge annually per person||Rs. 2400|
|Total Recharge Industry||Rs. 9600 crore|
The recharge market in India is vast and is on the lookout for new channels to expand. Currently, the market can be broadly split into two – offline and online. The offline sector is dominated by scratch cards that are distributed by telecom players and sold through retail outlets ranging from cellphone sales and repair shops to the more generic pan shops. On the other hand, the online recharge business is serviced by several channels – the service providers through their own websites and recharge through ATMs have been the traditional methods here. Third party recharge players such as Rechargeitnow.com, Fastrecharge.com and Onestoprecharge.com are the new entrants in the fray.
|Today, in one family there are several mobile connections, and often a younger member of the family goes out to get the recharges done. We ease this process by providing a single platform having recharge options of all telecom players and at the convenience of their homes
Currently, the market is dominated by recharge cards than by e-recharges. The scratch card segment works through a PIN recharge model, wherein a telecom service provider sells a 16 digit PIN to the user through the scratch cards. For this, a number of background processes take place at the service provider's end including the generation and scrambling of the 16 digit PIN, printing it and then the customer (or more usually the retailer) SMSes the code to the service provider to recharge the customers account.
Typically, each service provider has multiple recharge plans (usually 5 or more) running at any time and each telcom circle has about 5 players. So, a retailer has to stock 25-30 different varieties of scratch cards. In practice, the retailer stocks only the more popular plans and sometimes is even selective about the service provider. So, a given retailer may actually stock under 10 different recharge options.
The margins in the recharge business is wafer thin, with the retailer earning between 3-3.5% margins and the distributor earning 1%. There is no concept of wholesaler in this business. For most retailers, recharge cards are top-up income or at best help draw customers who may also buy something else from him. More money is to be made from activation (selling a new prepaid SIM card to a customer and activating his number) than from selling a recharge coupon. The online recharge model does away with the retailer—if the third party recharge player is large enough to deal directly with the telecom service provider or acts as the retailer, buying inventory from a distributor.
How does a third Party Recharge model work?
Of late, several vendors have entered this space and have started providing recharge options to customers. There are several reasons behind this. From the point of view of consumers, this option offers convenience. According to Sharat Jain, President and Co-Founder of Online Recharge Services, the promoter of Rechargeitnow.com, “Today, in one family itself there are several mobile connections of different telecom service providers. Often the younger member of the family goes out to get the recharges done. We ease this process by providing all the recharge options of all telecom players on a single platform and at the convenience of their homes. Moreover, the expertise of the telecom service provider is to provide service rather than selling recharge coupons. So this feature is even difficult to find on most service providers’ websites”.
Since the user interface of these players is a website, the target audience is mostly urban population. Defining the target audience base further, only those with easy internet access as well as those who feel comfortable purchasing online are currently customers to this service. According to a study conducted by the Internet and Mobile Association of India (IAMAI) and IMRB International, India had an estimated 45.3 million ‘active’ Internet users as on September 2008, of whom 42 million were from the urban areas. This could as well be the potential customer base for an online third party recharge player. There are some moves by the online players to dramatically increase their target base. More about that later.
Recharges can be done in two ways, either by getting a sixteen digit PIN of the service provider or through flexi-recharge. These websites also tie up with several payment gateways, net banking services for money transactions.
written by VELOCITY COMMUNICATION, June 28, 2011
written by ISHTDEV SHARMA, June 23, 2011
written by Parimal.Bhatter, June 22, 2011
written by Mohammed Aveezuddin, June 21, 2011
written by Pardeep Dhingra, May 14, 2011
written by pardeep, April 27, 2011
written by Bhushan joshi, March 21, 2011
written by Arvind Kumar Rastogi, February 13, 2011
written by vikas, February 07, 2011
written by S S Gandhi, January 07, 2011
written by kingsley s, January 07, 2011
written by kingsley s, January 07, 2011
written by deep, January 06, 2011
written by anandakumar, December 10, 2010
written by arshad ali, November 14, 2010
written by arshad ali, November 14, 2010
written by manohar jayswal , November 12, 2010
written by martin soren, October 31, 2010
written by ASLAM SAYYED, October 19, 2010
written by nfl football jerseys, October 09, 2010
written by Shirole, October 05, 2010
written by EASYLIFE ONLINE SOLUTION, August 10, 2010
written by Vijayasarathi, July 28, 2010
written by jaypraksh, July 09, 2010
written by animal rubber bands, July 02, 2010
written by deepak, June 20, 2010
written by M.S.Abyshiva, June 13, 2010
written by ASLAM SAYYED, April 28, 2010
written by nisha, April 12, 2010
written by Kshama, April 03, 2010
written by jagjit singh, March 17, 2010
written by krishna murthy, March 16, 2010
written by rohan, March 09, 2010
written by ashok mali, February 26, 2010
written by Jas, January 31, 2010
written by DTH, January 09, 2010
written by hashemi noudehi, December 05, 2009
written by ezRecharge Support, November 14, 2009
|< Prev||Next >|