Submitted By:

Varun Verma ROLL NO: 131158

freeCharge.in A REPORT ON THE MAJOR INDIAN ONLINE RECHARGE PLAYERS INTERNET MARKETING STRATEGY.

Institute of Management, Nirma University

Introduction FreeCharge is a one stop shop online portal for carrying out payment activities and recharges

for mobile bills, prepaid cards, DTH, data cards.

Web Address www.freecharge.in

Mobile app available Yes

Type of site e-Commerce

Company Accelyst Solutions Pvt. Ltd

Headquarters Mumbai, Maharashtra, IN

Founder Kunal Shah (former CEO)

Current CEO Alok Goel (former COO at redbus.in)

Started in August, 2010

Key investors Tandon Group, Sequoia Capital, Valiant Capital, Tybourne

FreeCharge has built an advertising platform that captures online and offline purchase

behaviour and brand preferences of consumers, by offering discount coupons and incentives

to users to transact on its platform.

Reasons for freeCharges exponential growth and popularity among internet users:

- Convenience of recharge

- Huge untapped market

- Free coupons- virtually free recharge

Internal and External Factor Analysis

STRENGTHS

1. USP and pioneer of coupon distribution inIndia

2. High popularity and credibility of brand

3. Good investment backup

WEAKNESSES

1. Refrains from direct marketing

2. Very low margin business

OPPORTUNITIES

1. Can expand into other services

2. Acquire payment gateway service

3. More online payment services can beincluded

THREATS

1. Competition from paytm is very high

2. Industry is witnessing many new players

3. Telecom service providers can foray intoown convenience payment portals

4. Threat of being acquired by other bigpocket companies

FreeCharge Business Model FreeCharge provides facility for its users to recharge any prepaid mobile, post-paid phone

bills, data cards and DTH in India through its mobile app or desktop website. Recently, it has

also started providing facility to pay bills online for Mahanagar Gas and Reliance Energy for

Mumbai residents.

The recharge amount paid by the user is paid back in form of shopping coupons of top

retailers, restaurants, taxi services thereby delivering virtually free recharge. The first two

retailers were Barista and McDonald's. These were followed by other big service providers

and retailers such as Domino's Pizza, Caf Coffee Day, Puma, Croma, Jet Airways and Shoppers

Stop.

Suggested coupons are customised based on the location of the user, for example, a user in

Ahmedabad will be suggested retailers and restaurant coupons of Ahmedabad city. Premium

discounted coupons are also available on paying an extra amount.

The primary revenue source for freeCharge is commissions from Telcom companies for which

customers carry out recharge. This commission ranges from 2% to 5%. Large & Established

operators give low commission but provide large volume transactions. Other new and small

retailers and operators require to pay high commissions for every payment made. This again

depends on whether freeCharge is directly connected to the service providers recharge

platform or it is using an Aggregator (like Euronet, Cyberplat, Oxigen). The margins would be

lower in this case.

Since the large operators constitute bulk of the transaction volumes, the average commission

received per payment transaction would typically be in the range of 2.5 to 3%. Average

payment-gateway charges are usually in the 1.8-2% range. The net revenue per transaction

thus are further reduced.

The other revenue stream, pioneered in India by FreeCharge, is the commission from retail

and service brands on redemption of their free coupons available on freeCharge. However,

the redemption rate for most free coupons except for few major service providers (like

McDonalds) is pretty low and may not contribute as much as one would expect to the total

revenue. But this is the core of freeCharges value proposition and the main attraction for its

user base to choose freeCharge over other competitors.

FreeCharge might also be generating money from the convenience-fee that it charges users

for physical delivery of coupons through courier service.

FreeCharge markets itself as the unique player in online recharge who has core business on

the coupon business. They have also filed a patent for this business model. FreeCharge

assumes that no other player, or even telecom player has a core focus on coupons and this

makes them stand apart from other players in market.

Typology of freeCharge User/Customer A typical potential customer of freeCharge is anyone who recharges his/her mobile or TV DTH

regularly. And that encompasses almost three generations!

FreeCharge mostly targets the youth as they would be the future loyal customers for next few

decades. Youths are the most exposed ones to new technology and service products. They

look for new ways to find convenience in other wise mundane acts of mobile and TV recharge.

Youths also want more for what they pay. And here is where freeCharges USP works as the

ultimate marketing weapon. It promises virtually free recharge and provides attractive

coupons for which youths are most interested in like restaurants, retail outlets and movie

tickets.

Classification of customers New User: Newly registered to freeCharge. They are either new to online recharge or have

been using telecom service providers portal uptill now for recharge purpose.

freeCharges main focus area is to penetrate into the largely untapped market where mobile

and DTH users either use offline channels or service providers portals. Idea is to pitch in the

convenience of recharge through freeCharge website.

New Customer: Users who use recharge facility of freeCharge but do not use other facilities

or do not buy coupons through freeCharge.

Distributing coupons is freeCharges USP on which its whole business model stands. It brings

together marketers and consumers and creates value for itself by providing value to both

retailers, service providers and consumers. FreeCharge wants its new customers to do more

with freeCharge services and coupons and attracts them to use coupons for bundled products

and services.

Existing Customer: Users who recharge and avail free as well as premium coupons on

freeCharge actively.

Marketing goals for different customer segments Target:

Increase new user registrations

Increase recharge frequency

Increase per recharge amount

Shorten recharge period

Sustain loyal customers with best customer service

Motivate existing customers to use premium coupons more often

Brand Building Strategies Employed

Image Source: freeCharge.in

FreeCharge has made a strong brand in itself as being the pioneer of one stop shop for online

recharge in India. Its users rely on it completely because of high success rate of transactions.

FreeCharge also take care of refunding debited amount to users account for all failed

transactions.

FreeCharge uses social media as the primary platform to reach out to its potential consumer

base. Rather than depending on on direct advertising tools, the website focuses on

unconventional advertising to attract customers. In May 2013, freeCharge in association with

TheViralFever.com (TVF), an online youth-entertainment network, launched a promotional

video on YouTube which was a spoof of Emotional Atyachaar, a popular TV show among its

target consumer base. The name of the company was deliberately not mentioned directly so

that the video does not look like an advertisement. freeCharge has also launched campus

marketing campaign by the name of "FreeCharge Campus Rockstars" to directly reach out to

students in campuses of IIMs and IITs.

In March 2013, FreeCharge tied-up with film production-houses YRF, Sony Pictures, Viacom

18 and UTV Motion Pictures to promote their upcoming movies through its website.

Consequently, freeCharge was also made the recharge-partner of the movies released by

these top film houses such as Django Unchained, Man of Steel, Bhaag Milkha Bhaag and Mere

Dad Ki Maruti.

Freecharge is also one of the principal sponsors of Delhi Dynamos FC team which plays in the

football Indian Super League.

The freeCharge BRAND= Speedy recharge (Convenience) + secure payment (safety &

security) + attractive coupons (value for the otherwise commoditised recharge service)

Traffic Building Strategies

Image Source: freeCharge.in

FreeCharge is amongst the top 10 Indian websites in terms of daily transactions. Definitely

whatever it does to build traffic and attract users, it does it very correctly and strategically!

FreeCharge has a user-base of around 20 million and its mobile app has clocked 10 million

downloads in the past year (2014), as quoted by Founder Kunal Shah- Source: reuters.com

FreeCharge promises its users a faster and reliable payment for mobile recharges, Gas,

Electricity & Landline bills- in less than 10 seconds! Users can either keep their FreeCharge

account topped up for faster payments. They can also save their credit and debit card details

for ease of use in case of frequent online payments.

FreeCharge aims at building traffic to its website mainly by two of its key value propositions:

Ease of payment and recharge from anywhere, on the go!

Consumer get their recharge virtually for free in form of online coupons.

Their target is to create a psychological feel to customer that they are getting their recharge

at net zero expense as consumers are always amazed with the feel of getting services for free.

The company is also gaining user insights to develop new ad models. It recently partnered

with FMCG behemoths Pepsi and Britannia for a promotional stint where consumers

purchasing a product offline would receive free talk-time which is redeemable on freeCharge

website. It also came up with another promotion where users purchasing goods from third-

party websites like MakeMyTrip or Myntra gain cash-back into their freeCharge wallets (FC

credits) after logging-in on to Freecharge website.

The latest trend is to give partner with OLA cab services. FreeCharge users would get a free

OLA ride on recharge on Rs 50 or more. This promotion is aimed at promoting both OLA and

freeCharge by bundling an online as well as offline service product. Newer pricing strategies

and bundling services are the latest in internet marketing strategies, not just for freeCharge

but all other major players.

Channel Design & Payment Options

Image Source: freeCharge.in

FreeCharge value chain consists of only online channels and credit/debit of user accounts.

These accounts vary from bank account to service providers recharge account or free

coupons. Information transfer and money debit/credit are key deliverables. Transaction

reliability, safety and security is of utmost important for which freeCharge promises glitch

free transactions using 128-bit secure SSL security and safety from online threat powered by

Norton.

FreeCharge users get to topup their freeCharge account wallet (FC credits) in advance for

quick recharges when needed if they dont want the hassle of going through various steps of

authentication required during payment through either of bank account payment modes. This

amount can be used later on to debit and recharge quickly. It is beneficial for freeCharge if

they have more number of users with more and more amount of money in freeCharge as it

gets to earn the bank interest on this amount- another source of revenue!

FreeCharge Credit Advantages

Multi-channel PIN & PIN-less Top up Multi Operator Single PIN & PIN-less Top up Device & network independent Self-Recharge FC Credits Instant Recharge Bulk Recharge (API) Balance Transfer (MNO) Bill Payments (Utility) Top up Via Banking Transaction

Issues with traditional mobile recharge system

Voucher recharge is expensive, fraud prone, with logistics challenges

Recharge cards are unfriendly

Additional expense on paper, printing, distribution and customer care on these cards

Agents wish to deploy low working capital, more efficiently

Value Chain Analysis

User enters relevant details for recharge

Choice of payment mode

Bank credit/debit card or Internet banking

payment info forwarded to

payment gateway

payment gateway contacts concerned

bank

bank confirms debit of payment

payment confirmation passed on to payment gateway and inturn to

freeCharge

freeCharge transfers payment to

telecom/DTH service provider

recharge activateed.

Confirmation recieved by freeCharge

User gets the topup in service provider

account.

freeCharge coupons emailed to user's

registered email id.

freeCharge Wallet

(FC Credits)

User gets to choose coupons

Online Product Current product for freeCharge: convenience recharge facility + promotional coupons from

service providers and retailers.

Future/Modified products: freeCharge can venture into new products and services by

expanding through existing capabilities. Some of them can be:

Movie ticket booking like bookmyshow.com as it already partners with PVR and other

multiplex service providers

Restaurant online payment on the table- it can offer online prepaid payment or on

the table payment using mobile devices without the hassle of bill generation at

counter. This will be a popular stint at restaurants and eateries which attract large

crowds especially on weekends and holidays.

Many industry analysts keep asking and advice freeCharge to go for a full-fledged

payment gateway business. This would reduce the commission paid to the existing

ones and help expanding business to other online payment services.

In future they can adopt direct marketing approaches like SMS, email marketing and online

ads which they choose to refrain from until now. This will be necessary when they go for an

expanded business and extend other services to its customers.

Suggestions and Future Course of Action Recently, Snapdeal.com announced that it is in advanced stage of talks for buying freeCharge

for Rs. 2,800 Crore (around $ 450 million). If this happens, the deal will be the biggest deal in

Indian retail market surpassing flipkarts buyout of myntra.com for 2,300 Crore Rupees.

This merger has a lot of synergy as snapdeal works on a marketplace model and freeCharge

is seen more a value added recharge portal which brings together buyers and sellers online.

Snapdeal will have a freeCharges much larger userbase to connect with and promote deals

and products that it does by paying for online advertising. This will be beneficial for both

freeCharge as well as snapdeal.

Snapdeal can also go on to extend a payment gateway facility using freeCharge. This would

give them huge boost to overall profit per transaction- both for its own website as well as

recharges through freeCharge.

If snapdeal-freeCharge merger does not takes place, freeCharge will still have a threat of being

acquired by some other big player as industry consolidation in providing online services is

currently being observed. To avoid this and sustain in market, freeCharge will have to show

boosted profits and better growth for next decade of its presence. This will be possible if it

optimises its internet activities and value chain. It will also need to offer more services into

its kitty and even larger set of retail and service product coupons. Vertical integration is also

strongly suggested so show better and promising profits to its investors.

References https://www.freecharge.in

http://en.wikipedia.org/wiki/FreeCharge

http://in.reuters.com/article/2015/02/06/startup-india-funding-idINKBN0LA03J20150206

http://articles.economictimes.indiatimes.com/2014-09-02/news/53479945_1_mobikwik-

paytm-consumers

http://yourstory.com/2011/10/is-freecharge-in-on-path-to-becoming-the-ultimate-indian-

cult-couponing-brand/

http://www.medianama.com/2012/01/223-kunal-shah-freecharge/

http://economictimes.indiatimes.com/industry/services/retail/snapdeal-in-advance-talks-

to-buy-freecharge-for-rs-2800-crore-sources/articleshow/46534321.cms

http://yourstory.com/2013/06/join-the-freecharge-teams-geeks-and-freaks-night-on-14th-

june-for-man-of-steel-limited-seats-only/