B2B Recharge Industry : The Good, the Bad and the Ugly

[Editorial notes: The B2B recharge industry in India is going through defining times. The below article will give you a complete picture of the model and the challenges associated with it.]

The Good

All telcos in India have their own individual distribution system. In conventional recharge distribution, a shopkeeper is approached by distributors of all 20+ telcos (Mobile & DTH). A shopkeeper needs to pre-buy and maintain sufficient balance in all the telcos’ accounts separately. Thus they require superfluous rolling capital to maintain balance in 20+ accounts.

In aggregation B2B recharge model, shopkeepers doesn’t need to deal with 20+ distributors and need to maintain only one account with the aggregator.

The bad

A fundamental obstacle for B2B recharge aggregators is that they are perceived as competitors by established telcos. This might be true to an extent given the encroachments into profits of airline industry by GDS ( global distribution systems).  Telcos too fear that once B2B aggregators become big, they’d arm twist telcos into giving them more commissions.

On the flip side, small telcos find it very hard to find distributors who are willing to take up their distributorship due to their low sales and market share. Thus recharge aggregators are their only hope. Recharge Aggregators actually help spring up new telcos like MTS, Videocon etc by giving them access to the market and in return, new telcos pay higher/workable commissions to the aggregators.

This is the reason why big telcos like Airtel and Idea have declared war and stopped entertaining recharge aggregators altogether, thereby effectively warding off competition by killing the distribution channel that gives new telecom players easy access to the market and reduces their entry barrier.

Unfortunately, with the 2G scam, new operators have been hit the hardest, which in turn has further damaged aggregators.

The Ugly

New players are entering this market on a daily basis without knowing what is fundamentally wrong with this industry.

So instead of making profit, most of the aggregators make losses on transactions. Then the question arises – how do they make money?

Small and new aggregators collect an initial setup/account fee from shopkeepers and their distributors to provide login accounts and shut down soon once this money is burned in op-ex and transaction losses.

The existing big aggregators are instead bleeding their capital earned in high-commission era (before 2010). Many have received funding from VCs in hope that their retail network will orient themselves in Mobile Payments industry. Some hope that they’ll become MVNO some day but this expectation is far fetched and in near future I see many of them on the verge of default.

After talking to some senior executives at big Telcos, it is clear that the situation would only get worse for aggregators in the near future.

What are your thoughts?

[About the author: Rahul Yadav started B2B recharge company, Recharge123 in March 2011 from his dorm room in IIT Bombay and sold it recently to one of the existing players in the industry.]

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Acer Launches Aliyun OS Phone as China’s E-Commerce Giant Challenges Android [HANDS-ON]

Today, the mobile OS created by Alibaba, China’s biggest e-commerce company, is getting its first big-name hardware in the sleek shape of the brand-new Acer CloudMobile A800. This is the third smartphone to carry the cloud-oriented Aliyun OS – coming after two less convincing efforts with some minor phone brands (from Haier and K-Touch). In May of this year, the one million sales milestone was reached for the platform as a whole – but that’s a tiny slice of the tasty smartphone pie.

The new flagship phone is launched this afternoon at an event that’s starting right now in Shanghai with Acer GM Dave Chan and the Aliyun department president Wang Jian in attendance. We actually got a chance to have a lengthy hands-on with the new Acer CloudMobile A800 over the past weekend at the company’s annual AliFest event. In terms of hardware, the Acer (TPE:2353) phone has a 1.5GHz Snapdragon (MSM8260A) dual-core processor and a crisp, 4.3-inch hi-res screen that barely shows any distinguishable individual pixels. The phone’s back looks classy with a dimpled rear cover that looks and feels like that of the Nexus 7 tablet made by Taiwanese rival Asus. It’ll cost 2,999 RMB ($470), putting it slightly below recent Android flagships like the wildly popular Samsung Galaxy SIII.

Going hands-on with new Acer CloudMobile A800 and the Aliyun 2.0 sofware – which is not based on Android, but can run Android apps and games – the emphasis is still on web apps, on which the phone is focused more than anything else.

A phone for online retailers

Click to enlarge

Perhaps unsurprisingly, the mobile software has a strong slant towards online shopping and retailing – but not quite in the same way as Amazon’s Android-based tablet efforts, which are more about consuming mobile content. One of the core new features of the updated OS (“Aliyun OS 2012 Autumn edition,” says the phone’s settings) on the Acer phone is a specialist web app for merchants on Alibaba’s two biggest consumer e-commerce sites, Taobao and Tmall (pictured below). The e-tailer merchant web app gives lots of data – in line with the company’s recent push into real-time data on shopping habits – about where the visitors to your online store is coming from, the number of page-views, and some visual analytics as well. Another web app syndicates industry news relevant to online store owners on the Alibaba platforms.

Sure, that’s not whizz-bang awesome stuff for the average phone buyer, so the Aliyun OS as a whole still faces a huge challenge to lure folks away from the myriad charms of Android (the dominant smartphone OS) or iOS. But at least the hardware is now at a level that it stands a better chance of luring punters away from good-looking Apple, HTC, Samsung, and Huawei phones.

Cloud apps versus Android apps

Even my lousy camera shows that the HD screen looks crisp and lovely (Click to enlarge all images).

The Aliyun homescreens, as you swipe left or right, are mainly web apps – apart from that first, more familiar, grid of icons that you see. It can be a bit jarring at first to be thrown into loading web apps after swiping the screen (we’re used to having to tap our way into apps), and that’s another area where it’s a tough sell up against Android or iPhones. But the advantage of web apps is that they never need updating, as developers can update them in real-time.

Android apps do run within Aliyun, and the main homescreen features the company’s own app store which plays host to lots of recognizable and popular apps and games, both paid and free.

The pre-installed apps on the Acer phone are the same as when the Aliyun OS launched last year – things like cloud notes, email, and online maps – all created by Alibaba itself. Other core features include automated backups to the cloud once you connect the phone to your computer (using your PC’s web connection), and a ‘find my phone’ service that comes with remote lock-and-wipe options.

We’ll have to wait and see if this more credible Acer hardware can drive stronger sales. As well as Android in general, this is also up against the rival cloud-oriented mobile OS from Baidu (which is a fork of Android), China’s search engine giant, which also has three smartphone partners so far. Plus, it’s not really a great day to launch a new phone, as Chinese geeks wake up to the new iPhone 5 that was revealed overnight.

Above: the Aliyun app store; Below: the exclusive web app for Alibaba's online marchants

Above: Aliyun's own online mapping service; Below: The newest version of the mobile OS.

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Chinese E-commerce Giant 360Buy to Expand into Games

China’s B2C e-commerce specialist 360Buy is stepping onto new ground. According to Yicai, the online shopping giant will be launching its very own online games. The new expansion is still undergoing production and it will be tested internally starting on the 20th of this month.

This project has been pretty much kept under wraps and ostensibly 360Buy wants to keep it quiet for the time being, at least until their games are ready for launch. The first launch will see about four to six games on its platform. However, it remains unclear the type of games that 360Buy will be experimenting with (i.e. mobile, browser-based, MMOs, etc).

As reported in the article, a 360Buy representative revealed that this new project has been in the works for three to four months. The company, China’s second-biggest B2C shopping site, will outsource the games to third-party developers and they will play more of a “platform” role in this project.

This is an interesting move for 360Buy as engaging games will generate a new revenue stream for the company. More importantly, it will also improve the current system of payment collection. According to 360Buy, 70 percent of its payment comes only after users have received goods. The issue with “after-collection-payment” system is that it requires high capital as the company needs cash liquidity for logistics, delivery, and more problems when users reject the items for whatever reasons. It’s part of the reason that 360Buy tries to pay for the stock it buys as late as possible – a source of tension between the e-tailer and some of its suppliers.

However, games by nature are not items you pay for after consumption. Most of the time, payment is made when you purchase the game. As such, 360Buy’s cash-flow might improve.

As e-commerce and games usually attracts different crowd of users, 360Buy will be hoping to increase its user-base. I would reckon that this is a good move for 360Buy, especially after a bloody price-war in which I’m still very unclear who – if anyone – really won.

[Source: Yicai, Image]

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NCR based BigBite brings smaller restaurants online

In the recent years, the startup community has been extra gracious to the foodies. Where once upon a time, pleasing ones gastronomical senses required a visit to a restaurant  or at least call for a takeaway, now all that is required is a mouse click.

Delhi duo Himanshu and Sajal, take the experience a step ahead by their venture BigBite, which aims to be the one stop place for online food ordering (offers features like menus from restaurants to online table reservation).

In comparison to other existing options, the focus here  is on small eating joints apart from high end restaurants. The idea is to catalogue a pan Delhi listing of restaurants which can deliver food and provide a richer experience to the consumer and drive the sales of the small joints.

Currently operating only in the Delhi NCR, BigBite gets a vast majority of its sales from Noida and the Gurgaon region. Which apart from having the maximum number of user base also boasts of a large number of the restaurant listing for the platform. The interface suffers from the lack of a visual flair but it gets the job done. Apart from the usual choice of  narrowing down the search via the location or cuisine, the items are added to a virtual cart followed by checkout for the purchase.

First time users would need to sign-up and add their address details for the delivery of food and currently all the payment would be via cash-on-delivery to the employee of the eating joint. But by the end of this month BigBite will launch a mobile ready website and would start accepting payments on both the mobile and the desktop.

BigBite: Restaurant Menus

The bootstrapped venture takes typically around 10% of the transaction made, as a means of its revenue stream and they are betting big on the new wave of ordering food online.

They are soon launching campaigns across colleges in North Campus, IIT Delhi and institutions in Noida for the brand awareness. The company is working on the B2B model as well and will integrate with corporates to make ordering of all the food via BigBite. According to co-founder Himanshu Garg, this would solve the pain points of tracking the food expenditure of overtime employees easier for reimbursement and also provide incentives in the form of reward points for the food they order anyway.

There are number of services out there, which apart from having a multi-city presence also dabble in things like table reservation. But where BigBite scores well,  is its focus on small eating joints, the ones which remain hidden from  mainstream listings.

If you are in NCR region, do give BigBite a bite and share your experience.

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Let the Smuggling Begin: iPhone 5 Already Priced at $1,500 in China’s Gadget Malls

Combining Tao Te Ching levels of “WTF” and “Meh, I’m not really surprised,” China’s finest smugglers are preparing to sell the newly-unveiled iPhone 5 for a cool 10,000 RMB – that’s $1,500, a more than 100 percent markup over its Hong Kong price of HK$5,588 (4,560 RMB). The fast-working grey importers say they’ll be ready to start selling the iPhone 5 on September 21st, its initial global launch date, thanks to smuggling in the phone from Hong Kong.

Thereafter, plenty of other nearby Asian launch locations – such as Singapore – will keep the flow of grey imported stock high for hungry mainland Chinese buyers. The iPhone 5 has no set launch date for China via any official channel, and it’s normal for it to take two to three months to pass regulatory approval and hit shelves. By which time, most early adopters will have already gotten theirs from the third-party vendors who get human gadget mules to haul sack-loads of iPhones across the Hong Kong-Shenzhen border, or in luggage from other countries.

(You might like: 11-year prison terms stirs fear among China’s e-commerce secret smugglers)

A grey importer and seller told Techweb that stores in Shenzhen will get the device the same day as the Hong Kong launch, and some early buyers in Beijing might get it the same day if the express couriers are up to the task. He quoted a price of “not less than 10,000 RMB” ($1,500) for the initial batch. Only after a steady supply for a week or so will the price go down to something a bit more normal.

Scalpers often prove a problem at Chinese launches of major gadgets, and so Apple abolished the first-come, first-serve overnight queues for the new iPad in Hong Kong in March of this year, and will likely do the same this time round for the iPhone 5. It’s not yet clear if that will scupper the gadget mules in their bid to source phones for the China-based sellers. If so, that grey-market price will remain high for quite a few weeks.

[Source: Techweb - article in Chinese]

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How a hack with MIT’s technology is solving India’s biggest internal security threat

An early morning meeting at Koshy’s, one of Bangalore’s oldest surviving restaurants turned into a narrative of how a journalist from India’s troubled heartland, technologists from Massachusetts Institute of Technology and volunteers from Bangalore, teamed up to help tribals in Chhattisgarh- the epicenter of India’s biggest internal security threat.

As a journalist employed by international media houses like The Guardian and the British Broadcasting Corporation in the nineties,Shubhranshu Choudhary, was flush with cash. For over 10 years, he’d covered the wars in Southeast Asia, the coops, the cyclones and had seen much violence.

Visiting Chhattisgarh, now the center of Maoist violence on an assignment to cover the killing of over 100 people, Choudhary watched the “boys and girls” who studied with him in a tribal school, become the foot-soldiers of the Maoist revolution– killing and ready to be killed. Something had to be done, because for him, Chhattisgarh was home and it was burning.

“I was clueless in the beginning. But when my soul, my home, started burning, I had to something about it,” he says. Soon, he was asking questions that went beyond the number of dead people and caliber of the firearms used. “The problem was a complete breakdown of communication,” says Choudhary, who is a Knight International Journalism fellow.

Maoist Heartland Chhattisgarh (Image credit: IISS.org)

The problem, he describes, is that the Hindi speaking elite got their due and sometimes more by communicating with the administration directly or indirectly through the media but tribal voices went unheard. “The Maoists are  exploiting this to create a class war,” he says. Policies that were made, based on media reports by Hindi speaking journalists who gather information from Hindi minority, ended up angering the majority. “For instance, the minority Hindi speaking population have water. They might be in need of Coffee. We report that. Government sends tonnes of Coffee to Chhattisgarh where 90 % do not have water to drink,” he explains.

The next step was to start breaking the communication barrier and bringing unheard stories from India’s heartland to the mainstream.  “Democratising the media,” he calls it. In 2004, the experiment which was to “fail” soon began.

First it was a Yahoo! group on which reports that were neglected  by mainstream media were discussed. But Internet had limited reach (.7 %) in tribal areas and did not serve the purpose.  Later, he tried a simple setup which included many community radio stations bridged by the Internet. The original idea behind CGNet Swara was to have citizen reporters armed with radio transmitters call in to report news. That attempt was a failure. Costs of setting up radio stations were too high and government regulations did not allow effective radio communication in the region.

Choudhary says that now CGNet Swara gets more than 200 calls to listen and about 10- 15 people record messages everyday. Besides Chaudhary and Thies, the team which works on the experiment includes Arjun Venkatraman, a social entrepreneur and Anoop Saha, an IIT Kanpur graduate who grew up in South Bastar district of Chhattisgarh.
How it works

Shubhranshu Choudhary

The impact?

Before Choudhary could talk about the impact, he runs out of time. The tea is cold and the restaurant is buzzing with breakfast chatter. There is much to be done to make this a sustainable project, he admits as he bids farewell.
But the story doesn’t feel complete without talking about its impact. From the project’s website, it seems that through the portal, they have managed to get officials to return bribe money to adivasis, get a ration dealers son arrested for beating a dalit lady, procure land deeds and subsidized food for adivasis. More stories from interiors of Chhattisgarh have begun showing up in mainstream media and policymakers have started taking note.

PS: If you come across stories and people making an impact on the ground, we’d like to hear from you.

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M1 To Offer iPhone 5 On 21 September in Singapore

M1 today announced it will offer iPhone 5, the thinnest and lightest iPhone ever, to customers in Singapore beginning September 21, Friday. Prepare your Apple queueing survival pack, Apple fans.

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