Finacle Blog

This also brings me to the point of how a mobile phone has made its foray into the business world. One of the most promising business avenues that we have seen emerge in recent times from the rapid consumer adoption of mobile phones has been mobile commerce or m-commerce. Mobile marketing is quickly gaining momentum, with a reported 74% of online retailers planning mobile commerce strategies, with 20% of them implementing their complete plans, according to a study by the National Retail Federation

I also read a BBC news report published earlier this year that pegs the total mobile subscriber base to more than five billion mobile connections worldwide. Another study indicated that out of the total mobile phone users, about 75% are prepaid subscribers. In an emerging market like India, this percentage could well be as high as 90%, while the figures in the developed economy will be no less encouraging. That any m-commerce strategy implemented must ensure inclusivity of this burgeoning prepaid customer base is therefore a foregone conclusion.

What I think is the reason for the stupendous success of the prepaid model is the ease and simplicity this model offers both to the customer and the telecom operator. For the customer, it results in getting a phone connection easily, with low outlay (around $1) and without too much paperwork. It also works on the pay-in-advance and top-up as per usage model, which is especially popular with today's Gen-Y. For the telecom operator, it is an attractive low-risk option since payments are made in advance, and the necessity for itemized monthly bills and the corresponding effort and resources spent on supporting the billing function is eliminated.

There is no doubt that m- commerce is fast changing the way businesses are conducted, especially in the telecommunications, IT, media and financial services space. However, as I said before, it is important for any business wanting to sell online to recognize the 'strength in numbers' and implement m-commerce strategies that include the prepaid population as well.  The inherent challenges, I perceive, for devising marketing plans for prepaid businesses mostly stem from the lack of insightful consumer data. This calls for innovative and path-breaking strategies to reach this segment.

If we had to group the various stakeholders that have a role to play in the m-commerce ecosystem, they could be consumers who interact with businesses through mobile phones; companies (Manufacturers, Distributors/Retailers) who provide relevant applications, content and transact with consumers; mobile product & service providers who develop supporting technology for device, data source and network; and regulators who provide regulations, standards and guidelines. It goes without saying that all these stakeholders must play their part in a collaborative fashion for the ecosystem to thrive.

With $119 billion estimated to be spent on goods and services purchased via mobile phones by 2015, m-commerce is no doubt the business of the future. And with almost 3 out of 4 mobile phone users being prepaid subscribers, the potential for prepaid m-commerce is incredible! But don't take my word for it. Leave your comments to let me know what you think.