MARKETING SPECIAL ....STRATEGY..... Companies devise new strategies to keep pace with rapid rise of mobile commerce

Companies devise new strategies to keep pace with rapid rise of mobile commerce

Just two seconds can make a difference of hundreds of crores of rupees in some businesses. That's the premise on which HDFC Securities is re-inventing its stock trading app for mobile phones. The new app will feed real time stock quotes to users' phones, shaving the 1.5 to 2 second lag that exists in the current app. This, among other things, HDFC Securities believes, will help increase brokerage earned from transactions done on mobiles from 2.5% of total revenues to 50% in two years."Globally, 35%-40% people use smartphones for stock trading. India will exceed that as we are a mobile first country," says Aseem Dhru, managing director and CEO, HDFC Securities. HDFC Securities is setting up demo centres even in small towns like Asansol, Burnpur, Nagpur to familiarise new users on how to navigate the app.

It's not just in stock trading. Mobile commerce — buying and paying for goods or services via mobile phones — is growing incredibly fast in many nooks and corners of the economy. The value of such transactions leaped from Rs7,800 crore to Rs36,000 crore between FY13 and FY14, according to Forrester Research. These were routed through m-wallets, mobile banking and interbank mobile payment services.

Last year, volume of transactions doubled, but value more than quadrupled. This is a sign that Indians are now comfortable with making larger transactions on their smartphones.

This blistering pace of growth in m-commerce will continue. "Smartphone penetration will increase from 8% by end 2014 to more than 21% in 2017 — ensuring that a large population is mcommerce ready," says Katyayan Gupta, analyst, ebusiness & channel strategy, Forrester Research.

Adds Rajan Anandan, managing director, Google India: "India adds five million new internet users a month and all are on mobile." He believes there are 230 million internet users out of which 130 million are mobile internet users. "Three years back less than 2% transactions were on mobile; now half the transactions are on mobile apps, particularly for e-commerce companies. By 2017, I see 70%-80% transactions via smartphones," he says.

Almost overnight, boardrooms of consumercentric companies are discussing mobile strategy. Banks want to empower account holders to do more with their smartphones; car makers may never close a sale on a mobile, but smartphones are powering several other engagements with customers; food outlets are looking to turn the mobile into menus to save precious minutes of waiting. Companies are realising that the mobile may soon become the most important way to talk to customers. Many of them are in fact building a 'mobile first' strategy, where products and services are first made available through mobiles before they find their way into other conventional channels.

"Till early 2014, most of the discussions were using mobile as an information channel. Now, companies realise the potential of mobile to transact business," says Praven Senger, analyst Gartner.

From e-commerce to m-commerce

Exactly a year after it launched a mobile app, Amazon India gets half its traffic from smartphones. "The significance of mobiles is much higher in India than anywhere else as most of first time internet users will come on the mobile," says Amit Agarwal, country manager and vice president, Amazon India. "The mobile will be the first point of contact for customers here."

Flipkart.com, the poster boy of e-commerce, now prefers to be called a mobile or m-commerce company. Says Mausam Bhatt, senior director, marketing, Flipkart.com: "We are an m-commerce company rather than an e-commerce company. Our mobile traffic has increased more than 50%, from under 15% a year back. We believe the future of mobile commerce will be written in India."

Rival Snapdeal.com is experiencing the same pace of growth in m-commerce. Says Amitabh Misra, vice president, engineering, snapdeal.com: "60% of our transactions are on mobile, up from 18% in March 2013. In two years we expect 80% of our business happening on smartphones."

In Bangalore, students of Christ University are part of a pilot by a mobile ad services provider in which they see ads even when the screen is locked. A student walking by a McDonald's or a Lacoste outlet will be pushed relevant ads to encourage him or her to walk into the store. Taj Group and Oberoi Hotels are piloting mobile wallets for frequent customers. Stored value on a mobile will automatically be deducted against the bill while checking out, without presenting any credit or debit cards or waiting in check-out queues. Starwood Hotels already offers this service via its passbook app — to book rooms, check out reward points, pay bills and so forth.

In fact, old economy and new economy are converging on the smallest screen to get buyer attention — like Meru cabs pushing happy hour deals on smartphones between 9 am and 4 pm on select days (get Rs100 off on a minimum ride of Rs150) and transact business — kirana shops doubling up as ATMs using Ezetap terminals. Ezetap card readers sync up with mobile phones to authenticate debit cards and make cash payments. The shopkeeper makes Rs5 commission per transaction.

Three million of HDFC Bank's 23 million customers have downloaded its mobile app which enables 65 transactions spanning cheque book requests to paying bills. Says Nitin Chugh, head, digital banking, HDFC Bank: "Time critical transactions are done via the mobile. People are more likely to pay bills via mobiles rather than book fixed deposits." On internet banking (on desktops) HDFC offers 135 different transactions. 75%-80% of fixed deposits are booked via internet banking. "With more people using smartphones, we are adding more transactions to mobile — like enabling customers to take a loan against credit cards or adding a beneficiary for fund transfers."
Citibank is encouraging customers to use mobiles. It's looking at charging extra for customers visiting the branch. "Instead of all industry players adopting m-commerce it's a few early movers. They will show the way," says Sanchit Vir Gogia, chief analyst & CEO, Greyhound Research. "Other banks are still struggling with a mobile strategy." 

Reinventing the old world

It is perhaps inconceivable that anyone would buy a car over a mobile phone. But car makers are realising that the mobile will play a big role in how the customer engages with the manufacturer through the life cycle of the car.

Maruti Suzuki is using the mobile to improve efficiency at service stations and to optimise the customer experience at its showrooms. At Maruti Suzuki service stations, service managers take down servicing details of a car on a tablet. The information is transmitted to all departments involved in the servicing engagement. "This has brought down the visit time by half (from 16 minutes to eight minutes) and the car is also returned faster after service," says Rajesh Uppal, CIO, Maruti Suzuki. "People may not buy cars on smartphones; but customer expectations at our dealerships or service centres are different. We have noticed this change in expectations in the past two years and are using smart devices wherever possible."

Pharma major Lupin is using mobiles to give customers the power to ensure product authenticity. In an SMS-based authentication programme, 300 million drug packs were printed with a unique number to authenticate the product. "We are using mobiles as an anti-counterfeit solution to verify whether a drug is genuine," says Mayur Danait, CIO, Lupin. The company also uses 3G tablets for its 5,000 member field force to eliminate paper work, reduce time to generate doctor call reports (doctor's feedback on a drug), leave, expense and performance management system.

Not all companies though are making rapid progress. "E-commerce companies and a few private banks are moving quickly to mobile. Others like auto, pharma, FMCG will take about a year," says Google's Anandan. "Users are less likely to download a Maggi or a Kellog's app and more likely to go for a cab rental or m-commerce app."

But fast food chains are moving ahead. Globally, fast food giant McDonald's and Starbucks are separately trying out smartphone apps that let customers place orders and pay for it at a store or before they enter one, eliminating queues and cashiers. Such apps will find their way into India sooner than later.

McDonald's is already planning to introduce a 'deals' app and a virtual loyalty programme on its mobile app. Says Kedar Teny, director, marketing and digital, McDonald's India (West and South): "25% of our business comes from online and web ordering." This could move to smartphones now.

"Old economy companies have to think different to tap smartphone customers," says Subho Ray, president, Internet& Mobile Association of India.

Mobile natives
At the other end of the spectrum are a bunch of successful companies like MobiKwik, PayTM, Ezetap, FreeCharger that birthed all their businesses only on mobiles.

Ezetap, which counts State Bank of India, Amazon and Myntra among its customers sells a Rs3,000 device which syncs up with mobile phones to complete credit and debit card transactions. E-tailers offering cash on delivery and even Delhi traffic cops use this device to facilitate mobile payments. "Our device is helping accelerate use of m-commerce," says Sanjay Swamy, cofounder and chairman, Ezetap.

Ezetap bagged an order from SBI for its terminals this June. "SBI subsidises the device for small merchants (like kirana shops) to double up as an ATM or accept credit cards," says Swamy. There are 25,000 Ezetap terminals in use at present. SBI sells each terminal at Rs499 and plans to deploy five lakh such terminals in the next five years.PayTM, a two-and-a-half year old mobile start-up, sees 3.5 lakh transactions per day. A year back, 65% of the recharge was from desktops, now it's reversed and it does 65% recharges from its mobile app.
Says Anandan: "There are one million mobile topups per day, more than half are done via mobiles now, as compared to just 10% a year back."
PayTM is also working on a technology that will help buyers shop from offline stores through a digital wallet (stores money digitally to make mobile and online payments). The company plans to launch digital wallet for kirana stores in another six months.

In August, PayTM, whose investors include SAIF Partners, SAP Ventures and Silicon Valley Bank, was in talks with PE players to raise $100 million to expand mobile operations. Ezetap, which has PayPal's Peter Thiel and Yammer co-founder David Sacks among its investors has Rs74 crore in venture funding so far.
More to come...

E- commerce leader Flipkart is improving its app to deliver images faster. Says Bhatt: "Fashion does well on mobile. Customers share images with friends before buying and we are working to improve the experience." Snapdeal.com is introducing vernacular mobile — in Hindi, Tamil, Gujarati and Marathi.

An average Indian user has 17 apps on his smartphone as compared to 41 for Japanese and 33 for Europeans. Out of the 17, at least five to seven are active — used at least once a month. With more smartphones being used, more ads are also moving to the smallest screen.

At present, the $7.5 billion advertising market is predominantly traditional — TV and print; digital (internet) is worth only at $650 million and mobile is less than 15% of that, but doubling every year. "The base is small but mobile advertising is the fastest growing — definitely there is more consumption happening on mobiles," says Anandan.

Two-thirds of online adults aged between 18 years and 34 years have already used a mobile phone to purchase a product or a service, according to Forrester Research. While m-commerce is growing, challenges persist. At one end is regulation. RBI does not allow more than Rs10,000 money transfer via smartphones — you can't pay for say a LCD TV via your digital wallet on the smartphone. Besides, says Sengar of Gartner, "Companies look at the mobile app as a traditional IT project. You can't develop an app and forget it. You need to change user experience every two to three months, understand consumer behaviour and develop the whole ecosystem — payments, security, catalogue."

Gogia of Greyhound Research sums it up well: "When ATMs were first introduced, people were reluctant to use them and had all kinds of fears about security. Today, ATMs are a given. Transition to m-commerce will be similar."

Shelley Singh, ET Bureau | 21 Oct, 2014

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