Spice Digital* has launched Spice Deck, an online payment service, offering to customers a mix of the following features: mobile and online recharge, a wallet service, coupons for its online store Saholic and loyalty points on every purchase, according to a banner the company (screenshot) uploaded on its Facebook page. With this Spice Digital becomes the second major mobile VAS company to look at the online recharge space, after One97 Communications, which launched Paytm*.
A few things to consider, regarding this move:
- Low barrier to entry for customers: Online recharge is a low barrier-to-entry business for acquiring customers and building a user-database. Most of India’s mobile user base is prepaid (over 95% of over 900 million registered connections, and around 670 million active connections), so this is potentially a means of customer acquisition, especially for upselling, which Spice appears to be attempting with Saholic coupons.
- Low barrier to entry for companies: everyone appears to be setting up online recharge platforms: Rechargeitnow may have been the first (from what we’ve heard), but the list of companies offering online recharge is only growing – there’s Sequoia Capital funded Freerecharge.in, justrechargeit, Paytm.com, MobiKwik and even Yebhi.com has launched its online recharge service. Soon, we’ll probably be asking which e-commerce companies are not doing couponing and online recharge, instead of asking which are.
- Given the increase in competition for customers, the Customer Acquisition Cost likely to increase. There also might be pressure on margins from telecom operators.
- Direct to consumer, or vendor driven? We’re curious about how this segment is going to shape up. Much of the offline digital ticketing business pushed by the prepaid card companies like Itz Cash has been about building a vendor community that uses their service for recharge. From a recharge (and not couponing) perspective, a vendor who recharges for others is probably more valuable than a consumer.
- Upselling: If the monetization is through coupons (marketing) and commerce, then it’s likely that these businesses will focus on direct consumers and upselling commerce. Which is where the integration with Saholic for Spice becomes even more interesting.
- Switch from VAS to Internet and Commerce? While it might not be a complete switch, as in VAS won’t die entirely, that the ecosystem is under pressure is an understatement. VAS companies will have to look at the Mobile Internet and perhaps one other key opportunity (we’ll write more in detail on that in a few days).
- Spice Loyalty points? We’ll check with Spice for more on that they’re doing with loyalty points.
One little usability issue we’d like to point out to Spice Digital: if a customer is making a transaction, why make signing in compulsory? Sure, capture an email address and encourage users to log in or register (the facebook integration is a good idea), but the easier you make it for a customer who is paying to make that payment, the more likely he is to close that transaction and return to the site. Also in that context, the first form I saw was for signing in, not for registration. For a new site, perhaps reducing barrier to entry for customers would be a good idea. If I can order from Flipkart without signing in, why can’t I recharge my phone the same way?
Disclosure: Spice Digital and Paytm are advertisers with MediaNama