BW Communities

The Mobile Advantage

BW Online Bureau Nov 08, 2014

<?xml version="1.0" encoding="UTF-8"?><root available-locales="en_US," default-locale="en_US"><static-content language-id="en_US"><![CDATA[In June 2003 Singapore's North East Community Development Council conducted an experiment where a group of Singaporean students competed to see whether they can survive for three days with nothing but a laptop and about $ 70. One participant said, "In all seriousness, until one has experienced both the pleasures and pains of surviving wholly online, we wouldn't appreciate the Internet for what it's worth - both good, and bad. Surprise surprise, e-commerce isn't as bustling as we all thought it to be." Ten years later the scope of the internet has extended to a point where consumers can remain in the comfort of their homes and use e-commerce to conduct every possible transaction like shop, pay bills, transfer funds and check their account balance. The things we can purchase online does not surprise us anymore. While the e-commerce boom began globally in 2008, India only saw its inflection point in the latter part of 2010, when internet adoption in India surged. The Internet and Mobile Association of India (IAMAI) states that the e-commerce industry in India has grown manifold in the last couple of years with the net market size expected to grow by 47 per cent to touch Rs 46,520 crore by end of 2011. While the growth numbers look good, the true potential of e-commerce has not been harnessed due to low internet penetration, which is critical for its growth. With India crossing the crucial 100 million internet users' mark in December 2011, it still remains under 10 per cent. When you compare this with the global average of 26.6 per cent, it becomes clearer that India has languished in this regard. The second factor that is a huge barrier to Internet access in India is the low penetration of personal computers (PCs) primarily due to the issue of affordability. The third aspect is credit and debit card penetration which was under 200 million in 2010. Add to this the fact the online payment market in India stood at only €4.2bn in the same year, which puts India at the smallest market in terms of potential value where the average online spend per person is lowest compared to global indicators (Source: Datamonitor Jan 2012 study). This is indicative of the fact that Indians are not yet comfortable transacting online owing to privacy and security concerns based on the need to reveal personal information at multiple sites while using debit or credit cards for online transactions. So while the e-commerce model is gaining traction in India-i.e. businesses are fast evolving from the traditional brick and mortar model to the e-commerce model- the challenges described above, are pushing these very businesses to now develop an m-commerce strategy. Let's take a deep dive into why.    Reach: M-commerce will be a game changer in a country like India where internet penetration has been much lower than that of mobile penetration. According to TRAI, the total Wireless subscriber base in India was 911.17 million at the end of February 2012. Additionally, while e-commerce mandates an internet connection, many m-commerce applications are SMS-based and do not require GPRS settings. E-commerce penetration has not yet reached tier III and IV cities in India, while mobile service providers offer all kinds of services in these areas as well. Clearly this is an opportunity bus that no one will want to miss. Affordability, portability: e-commerce misses reaching out to a majority of the population due to the high acquisition cost of hardware and the operating cost of an internet connection. M-commerce on the other hand is more inclusive due to the wide-spread adoption of mobile phones. Most people have one and they are available in sub-Rs 1000 range with SMS rates being among the lowest in the world. Also, mobile phones trump PCs in mobility as one does not need to wait to get to a PC or boot a bulky laptop. Ease of use, security: The interface for m-commerce is simple and easy-to-use, designed in a way that everyone can use while e-commerce may not always be an option for users who are not computer literate. M-commerce offers higher security levels with unique passwords that are required for every transaction. E-commerce has always been in the spotlight for security concerns. Alignment With The National Agenda: In the Indian context, the single most s significant reason for m-commerce adoption is the government's focus on inclusive growth and its commitment to bring India's unbanked population within the banking net. Two critical services provided under the m-commerce umbrella are mobile payments and mobile banking. RBI estimates show that about 450 million of the population is unbanked which signifies huge scope for growth in the banking sector in India abetted by mobile banking. Additionally, the RBI has been supporting mobile banking to achieve 100 per cent financial inclusion thus recognising the potential m-commerce has to reach India's unbanked population. Initially it had allowed non banking entities like carriers to offer a semi closed wallet with a limit of Rs 5000, later, it increased the limit to Rs 50,000 and then removed it all together showing a clear intent to accelerate financial inclusion through mobile payments. In conclusion, I believe that the opportunity for m-commerce is enormous with benefits that will accrue across the board to consumers, banks and the country at large. All we need is a level of education, awareness and a push in the right direction so that we can see it happening sooner rather than later. In about a year's time, an experiment like Singapore's NECDC on the m-commerce space in India will tell the story of a bustling space replete with opportunities. Its inflection point is fast approaching and to use a much clichéd statement - the future is mobile. The author is the VP & CMO of Obopay, a mobile payment services company