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"I Can Live Without Money, But I Cannot Live Without E-Wallet": Comparing Business Models of E-Wallet*

CASE STUDY, E-COMMERCE
ET Cases - GSMC, 8 Pages
AUTHOR(S) : Jyoti Pandey, Research Scholar, Marketing, IIM Indore, India and Khadija Ali Vakeel, Research Scholar, Information Systems, IIM Indore

Case Preview

“I Can Live Without Money, But I Cannot Live Without E-Wallet”: Comparing Business Models of E-Wallet

 

Since the inception of e-commerce, the trend of virtual money has gained importance due to cashless transactions. Paytm, the leading provider of virtual wallets has 20 million users. E-wallet has become the new buzzword as you can park your money in the account and use it while transacting online (Exhibit I). The anonymity and  delinking from the bank accounts has helped e-commerce users readily adopt it. This prepaid instrument is now changing not only how e-commerce works but also  influencing adopting of m-commerce as easy and user-friendly tool coupled with security and privacy advantages. In addition to telecom-led model, banks are also  coming into play as the number of people using mobile is seeing sharp increase. According to Telecom Regulatory Authority of India, for every 100 people residing, 74 have telephone connections.1 India is among top 10 countries with highest mobile e-commerce in year 20142. The challenges like lack of standard platform, cost of infrastructure up gradation is now grappling the e-wallet players.

Exhibit I: Different Payment Channels in Online Commerce

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1 Passport, Mobile Payment Provider Gets Go-Ahead to Launch M-Wallet in India (accessed date: October 28th 2015)
2 Euromonitor, today’s mobile payments landscape (accessed date: October 28th 2015)

Teaching Note Preview

“I Can Live Without Money, But I Cannot Live Without E-Wallet”: Comparing Business Models of E-Wallet

 

Synopsis

The case study is designed to make students aware about the e-wallets in the industry. The case study puts students in the shoes of Chief Technology Officer (CTO) of a company, who is responsible for the start of e-wallet for his company. The case study helps discuss the e-commerce industry in India, boom of e-wallet as means to cashless transactions and two illustration of ICICI pockets and Paytm. The two studies of ICICI Pockets and Paytm are two different kinds of model, their advantages and disadvantages are discussed. Finally, analyzing the industry and taking decisions regarding the new proposal of e-wallet project to be started by their company.

Expected Learning Outcomes

  • • Advantages of new technology and barriers to technology adoption
  • • Business models for new technology companies starting e-wallet services
  • • Marketing approaches for changing the mindsets of consumers towards new technology

 

Case Positioning and Setting

The case study is suited for MBA Program in E-Commerce, Strategy, Marketing and Information Technology course. Moreover, it can also be brought into the  coursework as a business models suitable for new technology companies.

Assignment Questions

I. Which business model would best suit a new e-wallet company?

• Different e-wallet model like bank owned model and telecom based model should be highlighted

  • • Advantages and disadvantages of open, semi-closed and closed models should be discussed

 

• Importance of service differentiation through e-wallet and its benefits should be highlighted. Service differentiation can be the key to competitive advantage by  providing value added services and improving its quality. The main components of service differentiation includeordering ease, delivery, installation, customer training, customer consultation, maintenance and repair and returns

• Reliable, resilience and innovativeness by having low error rate, high uptime, emergency handling, payment channel issue handling, etc., should be modeled properly.

II. What are the criteria to decide the market segment via segmentation, targeting and positioning of e-wallet?

• Need for STP as users vary in requirement according to the demographic, psychographic and behavioral differences
• Targeting early adopters who can communicate the advantages of e-wallet service though positive work of mouth though weak and strong ties in their group

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Product code: ECOMM-1-0004, ECOMM-1-0004A

Abstract

The recent shift from brick and mortar stores to e-commerce has resulted in cashless transactions. In this digitization age, e-Wallet has become the new trend. An e-wallet is an online prepaid facility, which offers an online account where customers can park their money, to be used when required. This has created a completely new space where everyone including banks has come forward with new value propositions. Though, the industry is in its nascent stage in India a surge of mobile wallet users has been already witnessed in the recent past as there are 115 million e-wallet users since its inception in 2007. Companies are yet to exploit the untapped market of online mobile users, which currently is 975 million in India, growing at a rate of 140% in the urban areas. The benefits of e-wallet include ease of use, reduced risk, accessibility, and anonymity among others. The opportunities and challenges of the upcoming industry have been discussed in detail in this case study. The case study also helps to compare the business models of the leading e-wallet companies in India. The comparison of these companies is based on business strategy, cost, revenue, sustainability and target segment.



Pedagogical Objectives

  • To gain an insight on the advantages of new technology and barriers to technology adoption
  • To understand the business models for new technology companies starting e-wallet services
  • To understand the marketing approaches for changing the mindsets of consumers towards new technology

Case Positioning and Setting
The case study is suited for MBA Program in E-Commerce, Strategy, Marketing and Information Technology course. Moreover, it can also be brought into the coursework as a business models suitable for new technology companies.


* GSMC 2016, IIM Raipur

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