Strengthening the educational initiatives remains our special focus, where we want to leave our footprints beyond the immediate neighbourhood of our projects and target going national at some point in the future
What is interesting amount Freecharge’s business idea is that the founders have identified a gap that is unique to India. Pre-paid mobile and DTH services are unique in our country and a large number of people recharge their pre-paid services at a neighbourhood store or on the service provider’s website. Now, Freecharge has come up with an interesting twist by giving away coupons equivalent to the recharge amount to, possibly, make it the destination of choice for consumers to recharge their pre-paid services. “We believe consumers come to us, simply because they get rewarded for doing something as mundane as a top-up and something they have to do anyway,” explains Kunal Shah, founder-CEO of Mumbai-based Accelyst Solutions that runs the portal. Once you recharge on the portal, the company gives you the option to pick multiple coupons (each valued between Rs 50 to Rs. 600) from various brands including the likes of Shoppers Stop, Domino’s, Pizza Corner and Big Cinemas.
Entrepreneur at heart
Shah is a firm believer in technology as an enabler in making various mundane processes simpler. “Also, the yearning to be in an online business pulled me in and I thought this was the perfect time to get in. Once I got out of the vicious cycle of EMIs and mortgages, I decided it was time to chase what I love doing,” adds Shah who, with Sandeep Tandon, started FreeCharge on August 15, 2010 – calling that his personal independence day shared with the country. Deap Ubhi, who founded and sold burrp, is the COO of the company.
The initial round of funding was from a consortium formed between the Tandon Group and Sequoia Capital and according to Techcircle.in the company raised Rs. 20 crore in series-A funding from Sequoia Capital.
Innovating on service
Learning from others’ mistakes, the founders were clear that the company would not be a copy-cat business but would instead try to solve challenges specific to a developing economy. “The coupon and rewards layer is what makes FreeCharge so much fun and rewarding to use,” he says.
The portal evolved a business model that puts three parties in a winning position; the customer, the service provider (mobile voice, DTH, data card) and the merchant (who gives away low value coupons). Customers get great rewards as they recharge; for operators this is an effective and efficient recharge channel for its customers and merchants benefit from the awareness, trials and footfalls the coupons provides them. “We generate revenues from all of our constituents in one way or another,” adds Shah.
The company has a range of partners among mass retailers who offer coupons to its customers, which Shah believes has been possible because of its honesty in seeking partners who would add value to its customers, thus helping them expand their reach. “As long as our interests are aligned, our retail partners will always want to work with us. It’s the core reason why we’ve so many exclusive deals on FreeCharge,” he points out.
Rising above challenges
Scaling up was a big challenge and Shah admits that the company may have been a bit late in investing more heavily in technology/product-related aspects and more people. “But you live and learn. We corrected our course along the way and we’re nowhere near perfect, but we’ve got a great stable business and a solid underlying framework to build upon,” he shares, candidly.
“The world is moving so incredibly fast and where we can stand out is by giving customers the solutions that they actually need. For now, we know what our focus is and we’ve got our heads down to achieve our goals,” he adds. The company aims to become the world’s most rewarding utility payments and digital delivery products ecosystem. It has been able to establish a large customer base because of its service range as well as word-of-mouth marketing.
Recently, the company launched an innovative form of branded entertainment with its partners at TheViralFever (http://www.youtube.com/watch?v=KRaPZkSJOvc). Seeing its success, FreeCharge is contemplating a longer-term investment in branded entertainment when it comes to marketing, which would supplement the ongoing traditional marketing initiatives.
It also launched a FreeCharge Campus Rockstars (FCR) programme, a campus marketeer league launched for students from some college campuses across India. This includes tie-ups with top colleges like IIT-D, IIM-A, IIM-B, II- C and other top-notch engineering and management campuses. “With the FCR programme, we aim to engage our smartest college-going minds to develop non-traditional marketing campaigns in campuses reaching out to over 80,000 students. The FCR programme is also a one-of-a-kind campus engagement model, which we will continue to invest in,” says Shah.
While FreeCharge currently enjoys a first-mover advantage, the key to staying on top is to remain ahead of its peers in terms of innovation while addressing real, large-market challenges for developing economies. As a first step in that direction, FreeCharge has built a team that culturally thinks out-of-the-box. Today, the company boasts of a customer base of three million and 100 percent growth quarter-on-quarter. It is on target to register a turnover of about Rs. 400 crore to Rs. 500 crore next year, shares Shah.
Seizing the opportunity
From a market size perspective, Shah is completely charged up. India has over 900 million mobile connections, out of which only 600 million connections (both prepaid and postpaid) are active (TRAI, 2011). According to Shah, “Around 75 per cent of the prepaid connections are in the urban market, of which less than 2 per cent of users opt for online recharging. Hence, the scope seems huge and it will only increase with time.”
The total number of transactions being done across recharge sites lie in the 4-lakh range (which means FreeCharge currently holds around 10 per cent of the market share). However, he expects this number to increase to around 20 lakh transactions per day, by 2016. “We sense a huge opportunity here as Internet penetration in increasing and about five percent of people use Internet banking for transactional purposes,” points out Shah.
The online recharge business is easily the largest category when it comes to transactions per day, and only two percent of people recharge online currently, providing the company a huge opportunity to expand its base.
And for that, FreeCharge will continue to do the simple things that work very well for them such as search engine marketing and search engine optimisation. “But we are ready to go out on a limb and experiment to establish FreeCharge as a brand,” concludes Shah, aware that some experiments may fail, but he’s convinced the odds are stacked on his side.
Accelyst Solutions – FreeCharge.in
Founders: Kunal Shah, Sandeep Tandon
Investors: Tandon Group and Sequoia Capital
Service: Freecharge.in – a online recharge for pre-paid services, with a twist of giving coupons equivalent to the recharge amount.
Revenue target: Rs. 400 crore next year
Concept in brief:
Mumbai-based Accelyst Solutions started a portal, FreeCharge.in, has come up with an interesting business model to enable the online recharge for pre-paid services (DTH, voice mobile and data card). The company gives its recharge customers, free coupons from various brands for a value equivalent to the recharge amount.
The founders of the company have also relied on interesting online content marketing strategies, in addition to relying on traditional SEO and SEM campaigns. Kunal Shah, the company’s founder, believes that the market opportunity is tremendous and operational execution and brand building, will be the key in the growth journey ahead.