Cash card transactions are much higher in India. Why?

There are two types of e-commerce transactions on Internet. First, the consumer who makes the transaction on his behalf or family or for a friend and secondly an agent (ICT kiosks, Internet Cafes, etc) who completes the transaction on behalf of his customer.

Indian e-commerce industry minus IRCTC is almost like we are still in infancy stage. So it is clear that insights from IRCTC would help us in understanding the e-commerce trends. Fortunately, every month, IRCTC publishes actual statistics on transactions with complete details on its website.

If you observe statistics of any month, first thing is that you would wonder that cash card transactions are like 1/3 rd of total transactions (rest are credit or debit or netbanking). And in fact, cash card transactions growth rate is much higher than all other modes of payment. Then you start feeling like you have never heard of them anyone using it, but how come such large number of transactions?

Being an insider in this industry I would like to you give you a detailed story behind this wonder. First, let us see the business model of a cash-card company:

Platform: It is two sided. Cash-card companies just tie-up with numerous merchants/service providers (like telecom or ticketing etc). And later they start acquiring agents to use their technology platform. Typically these agents are: ICT Kiosks owners or Cyber cafes or computer education centers or the latest PCO/STD 2.0 etc.

Target Audience: Who all can’t goto a website and/or can't pay through credit or debit card for remote payments. This means, those agents become the middlemen between the remote customer and the service provider.

Commission: Most times, cash-card companies get discount from the service providers (usually 3% to 5%), a portion of which would be passed to their agents (for example air ticketing works in this manner!). Otherwise, customer is charged (for example, IRCTC don't give any commission to cash-card guys and so, agents would charge customers on top of the ticket cost).

Other revenues: Of course there could be a small percentage of direct consumers who would use the cash-card on web. But that is not what makes significant cash-flow for a cash-card company.

Future: So it is obvious that cash-card transactions would become much higher than credit or debit card transactions when cash card companies can acquire much more agents (in particular rural areas) along with more service providers (such as electricity/water distribution companies).

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Now comes the biggest disclosure: In fact, strength of any payment card system lies with the following three points.

1. They must tie up with as many merchants as possible.
2. Technology/process that makes the consumer to use the card for payment.
3. Card distribution should be efficient.
   

Now, how are the famous credit card companies (VISA or MasterCard) placed in the above points. Firstly they are accepted with innumerous merchants. Secondly consumer can use the card at merchant outlet or online or telephone or SMS or etc. Thirdly, Banks issue credit/debit cards to the consumers on behalf of VISA/Mastercard. Now coming to the costs of this ecosystem of digital payments is usually less than 5% of the value of the transactions (VISA, Banks, Merchants share this 5%). As the Mobile payments is getting matured, this value is getting closer to 3%.

Of course, companies involved in this payment ecosystem also have additional revenue through other value added services such as interest charged to the customer by providing them credit, etc.

Suggestions for Rediff, Sify, Indiatimes etc

For the past many years, I had some ideas regarding how to utilize e-mail service and offer various other services effectively. As I have weakness with my writing, I never put it down until last year. I wrote the following e-mail (November, 2007) to all top brass of Rediff.

I just would like to share few thoughts on Rediff's offerings to make it more competitive over other players like Google, Yahoo, Facebook etc.

The goal of any Internet company is make the users addicted to its services. Counting over 50 Million users, Rediff has great strategic advantage over its competitors having a specialized focus for Indian Internet users. Straight to the point, my observations are below:

1. Rediff should design a service similar to iGoogle where in, logged-in user would have all the offerings as widgets. This page should incorporate Web 2.0 features such as the following.

2. All widgets are available to the user on a single page(or multi-tabbed screens) and moreover he would have control over placing/ordering of those widgets.

3. When a user clicks on a widget for maximizing it, then the widget turns into a full-screened service (similar look of current offering). However on a specific corner, he would see more IMPORTANT STUFF of other services (I would explain this in the following notes).

4. By default, when a user logs into a particular service,say email, he would see the maximized screen of that particular widget (in the example scenario, it is email).

5. Each user would have a public profile and a private profile (this categorization can be increased to 3 or more, however let us stick to two types of profiles for the sake of explanation).

6. Public profile of an user contains all the widgets containing the services those he would like to share. This could be his personal photos, personal videos, Blogs, personal notes etc. Also remember, this includes the favorite stuff such as photos, videos, bookmarks, blogs etc all those but of others (content).

7. Common Private profile contains the stuff which the user would like to share exclusively with his personal friends.

8. Public profile content across all the services is searchable.

9. In any service, user has options to share with others. For example, while watching a video (ishare) he may would like to inform his friends as the video content is good and this should be through a "note from friend".

10. Also each widget can be customized by the user about its position/placing or other settings such as shared/unshared with a specific user.

11. On the usual e-mail screen, when the user moves the cursor over any email id (or on right click menu) he would be able to get many social network options such as "Add as my friend to profile, Scrap him, See his profile etc".

12. "Important stuff" which appear when the screen is maximized to a specific service are basically from the other services are: Scraps, Birthday Reminders, Updates on Friends private profiles, etc. "Notes from friends" could also be included here. This is the minimal line of
the total widgets page. Also these notes includes, chat applet and this could be a default option unless the user opts it out for a period.

13. Subscription to a particular service is by adding a widget. This procedure of addition is similar to iGoogle/Google Desktop gadgets.

14. Ads do appear in a particular fixed location of the screen.

15. When Rediff goes mobile, you can place the widgets as a linear list.

The goal of this is make all your services are interlinked with each other and the best, you would have at least 60 million user base for each of your offering. I believe that Google is having similar plans in mind in launching iGoogle. I came across a news that even yahoo has similar plans in this direction. However, specialized focus on Indian content would make Rediff to compete with global majors.

Surprisingly there was no reply from anyone of the top management at Rediff. Please wake up, don't be dumb!

Soapnut: The best soap & conditioner, also natural!

Note: This was originally posted in my other blog on Rural India. As it seems to be very unrelated to the context of that blog, I am posting it here.

I have been using Soapnut (or Ritha or Kunkudu kaaya) from my childhood. It is simply the best. It is very popular in South India. In particular, rural andhra pradesh people use soapnut for taking headbath (a bath that includes washing the hair on the head). Many other parts of India, soapnut is used for cleaning the jewelery or precious metals.

I have seen small companies selling soapnut powder but it is not effective. I think, innovation is needed in order to extract the juice of soapnut and preserving it. So it is a wonderful business opportunity to make soapnut into a liquid format for selling it as liquid soap/shampoo.

Other personal observations:

1. Telugu & Tamil people take headbath once in a week unlike elsewhere wherein bath includes washing the hair as well!
2. Soapnuts available in Andhra is fine for eyes however, soapnuts of elsewhere may hurt the eye during the bath.
3. I did an experiment for the past 12 years by not drying the hair after my headbath. Traditional belief is that one may face the risk of catching cold then. However, my observation is that one may face the risk of dandruff but not catching cold.

Social Networking opportunity

MySpace, Facebook, Orkut are not the end of Social Networking websites. You can still win.

Try to create a Social Networking website exclusively for residential societies, Companies, Institutions in collaboration with those organizations. This definitely makes sense as people who meet each other regularly may like to share more information than with strangers.

Build a house in 6 hours!

Toyota with its core technology of making cars, it has entered into House making industry!

Are Indian autoindustries taking the note of this?? So that they can enter into this evolving industry. See more details .

Click-everywhere : solving video piracy problem

These days many movie producers are loosing their business just because pirated video CD of a movie gets into black market within a week of its release.

Powerful business model to solve this problem: Producer himself releases the official video CD of the movie along with its regular release. That too, at the cost of a pirate CD.

But then, how can a producer make money out of it: when people watch the official video CD on computers, on the screen every item comes on the movie is a clickable item. For example, if the viewer clicks on a shirt that Amitabh wears or Sharukh's pant or Rajani's bidi or Chiranjeevi's lungi then it straightaway takes to a website of the item where it is auctionable (same item) or salable (similar item). This does not just remain with cloths or accessories. Every item which goes on movie screen can make a great appeal to the audience and in turn to the marketer.

This was an idea which informally came out among students of a top US university and I think it may soon get patented. But then, can you generate similar ideas for Indian businesses?

Showing stock market quotes .. Good business for billboards!

When I used to be at chennai and pass through Mount road I definitely look for temperature billboard, near hindu office. Because, in most cases I used to be stuck in traffic jam & had to kill the time.

So, keeping a small display box inside a billboard & displaying "Stock Market quotes" on it could be a good idea. That makes people to keep attention over billboard & as well as stock quotes, while passing over traffic jam.

Online Exam organising : Wonderful business opportunity

As you all may be aware that, in future, most exams will be conducted online because of cost & time factors and (most importantly) effective reach. If one conducts exams online similar to Brainbench in India, that would be a great hit. Slowly they can take up the opportunity of conducting online exams for recruitments, admissions, online courses, distance education etc by renting "ready infrastructure" at Rs. 8000 a month (for a single computer). You can even reach to small villages through rural kiosks.

Wish to take-up?

E-commerce Infrastructure for small players : Wonderful business oppertunity

Online presence is a must in this 21st century. Small players cannot have web presence and moreover they can't regularly maintain the website. If we can provide basic e-commerce service (incl. online payments) with subscriber revenue model, it would be a big hit.

Interested??

Price comparision website : a good business idea

Indians are extremely particular about pricing. So if there is a website which provides details of product pricing comparision. That will be instant hit.

Are you ready to take-off with this idea?

Indian Movie database : No such website yet!

It is very true that Indians are extremely fanatic about movies. You see that most of Indian forums are about movies. However I am extremely surprised to to see that there is no website which gives good information of movies like http://imdb.com/.

What data such site should contain?
It should give all movie details, reviews. Telugu, Tamil, Hindi are the top ones to be looked at. Site should get RSS feeds from several news sources. Discussion forums. Songs streaming (not so desired). Lyrics of songs (in english and local language as well).

Note: It does not need much investments. Team of 5 people can succede in this venture.

Are you interested to make one such?

Franchise Model for Automobile repairs

Rohit Tripathy writes:

Specifically for India, franchise format development for automobile repairs is a money spinning idea. Standardize the offerings and rates: like puncture repairs, towing, body work, tyre replacement, engine/gearbox repairs etc, and come up with a standard prices for repairs. Offer a standard toolkit to the franchisees. The potential franchisees would be numerous car mechanics in the country. Charge them a fixed support fees of 7% of their entire sales. In return guarantee them customers, marketing support, and latest methodology.

The following infrastructure would have to be created:

1. National call center to arrange mechanics be sent to site of breakdown
2. Methodology and price list
3. An allocation software
4. Legal Contracts
5. National Advertisement and marketing program
6. Revenue sharing mechanism
7. Company website
8. Quality Management programme
9. A schedule for listing the host franchise company in NSE and BSE

The actual investments would be put up by franchisees. Collect a non-refundable joining fee of from them.So with a minimum capital investment, an extremely scalable business model can be created. This will have a very high visibility. Franchises are an under-developed concept in India, and stock markets would love it.

P.S. This can be done just not for automobile repairs but also numerous other small things that touches life of an average Indian.

Project: Sitar, veena on mobile; Are you interested?

Recently Motorola patented guitar on mobile and Indian techies can now think of Sitar, Veena. Interested?

Japan: Navigational service will be available in this month?

I recently discussed (rather guessed!) how navigational service on mobile can make good business in India. Japan is going to be the first country in this regard. According to this news:

KDDI has just revealed plans to launch a navigational service through its cellular phones. To locate a particular place or establishment, all you have to do is key in its telephone number or postal address. For public buildings, you just have to provide its name. Public transport schedules are also available.

When mobile service providers will bring this technology to India?

Latest in the block : Engineering process outsourcing

After BPO, KPO, LPO, now look at EPO numbers. It is expected that, in the next two years, India's export will be $10 billion. Engineering Export promotion council is much helpful in this regard. Are you there to take it up?

Navigational product services : Wonderful business oppertunity

SATNAV Technologies, an India based GIS products company has released a product in-vehicle navigation device for Rs. 38K ($875).

If this facility can be offered on a mobile for a low price, aiming 100 million users, then that will make another Indian Google company. Note that Google may enter into this area with its offering Google Local/Maps on mobile. If any Indian company comes out prior to Google entry, then Google may try to buyout that company.

Because this facility can be thought as yellowpages on move. Business model: targeting advertisements of shops, restaurents, hotels, movie halls, business houses, ATMs etc. Regular revenue can also be possible by making user as a subscriber.

Are you ready to take it off?

Background verificaion : Booming Industry

Can you guess how much is the fee for background check of a person on his qualification? It is anywhere between 3K-5K Rupees (quoted by an industry insider). This industry is booming because of Indians moving to many other countries and so their background checks are outsourced. I fear whether this increases the appetite of corrupted police because they are one of the major source in these checks.

India centric data research company : be first to do so!

There is a great oppertunity for data research companies in India like Gartner, Forrester, AMR, IDC.

Raja