E-commerce has experienced an exponential growth in the recent past and one of the rising stars of the E-commerce portfolio is Online Recharge. These days one can recharge their mobiles, data cards, DTH etc from third party providers. We are moving on towards a future of E-wallet and probably mobile wallet. But right now the online recharge market is cluttered with scores of such third part providers.
Porter's Five Force model is an efficient tool to analyze market; applying it on the Online Recharge Market we get the following results.
1. Bargaining power of supplier is low as there are sufficient suppliers in the market and one can choose the most efficient one.
2. Bargaining power of customers is very high as there so many options available and it is very easy to access competitors.
3. Threat of new entrants is also very high as setting up an online recharge market involves less investment and suppliers are readily available.
4. Threat of Substitute products is high as online recharge is competing with established ways of recharge like going to the retailers and scratch cards. Internet penetration also plays a role to make people choose substitute services.
5. Competition within the industry is very high and there are new players entering the market at regular basis.
Such high level of competition has commoditized the market. It is a well known fact that commoditized market is very price sensitive and most of the online recharge providers have restored to consumer promotions. Discount coupons and promo codes are the driving force of this market. This strategy decreases the profitability of the company and leads to cut throat competition in the market. Standing out in this clutter has become really difficult.
Establishing a brand in this scenario is truly a goliath task. Companies should rely on quality of online recharge services provided and ease of operation for customer retention. On the other hand wooing new customer requires consumer promotions. Another good idea would be to develop strategic relationship with various other companies like DTH service providers or Telecom service providers who don't have their own facility.
The real winner out of all these would be the one who has the ability to innovate and think ahead so that he can ride the tide of change. Product life cycles have really shrunk and the need to innovate is strongest than ever. One must not only sustain its current level of quality but also come up with latest innovations to keep the customer engaged.
Anamika Ghosh is one of those modern homemakers who like to be aware of the technology solutions available to them to make things easy for them and their families. Anamika has been blogging actively about gadgets and online recharge services. Some of her blog posts have been noticed and quoted by the mainstream media.
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