c llb a bilcellbazaar: a mobile bdbased emarkt lketplace

C llB A bil b d k t lCellBazaar: A mobile‐based e‐marketplace

Dialog Telekom17 J l 200917 July 2009

This work was carried out with the aid of a grant from the International DevelopmentResearch Centre, Canada and the Department for International Development, UK.

Key takeawaysKey takeaways

• CellBazaar represents a working form of e commerceCellBazaar represents a working form of e commerce for the developing world– “Successful” in providing market information to a wider audience than

otherwise possible (elite + non‐elite)

• Several issues of trust, infrastructure and policy hi h d t b t t d th iwhich need to be overcome to extend the service

– Infrastructure and policy will be the most problematic

CellBazaar: The "Craigslist of Bangladesh"CellBazaar: The Craigslist of Bangladesh

• Potential buyers and sellers can search for, and post information on goods and services for sale

– Price (optional)

– Description

– Seller contact info and location

– Photo (optional)

• Can be used through Grameenphone mobile (SMS/WAP/IVR*) and computer (Internet)

• System operates in English language (except IVR)

Search Negotiation Monitoring

CellBa aarCellBazaar

* For limited search only

Different e marketplaces provide one or more f i i i h hfunctions, starting with search

Dispute l iresolution

Feedback mechanism

Delivery

Payment

Order

SearchSearch

CellBazaar focuses on search onlyCellBazaar focuses on search only

CellBazaar Amazon MarketplaceCellBazaar Amazon Marketplace

Dispute resolution

Feedback mechanism

Dispute resolution

Feedback mechanism

Delivery

Payment

Delivery

Payment

Order

Search

Order

Search

CellBazaar Amazon MarketplaceCellBazaar Amazon Marketplace

stages included stages not included

Posting and searching through SMSs (min. 5)WAP and Internet posting also available but SMS most popular; IVR option alsoWAP and Internet posting also available, but SMS most popular; IVR option also available for search

69 predefined categories to select from69 predefined categories to select from

4 0004,500

osts

Post categorieswww.cellbazaar.com, 17 April 2009

4 500

Top 15 post categorieswww.cellbazaar.com, 17 April 2009

5001,000 1,500 2,000 2,500 3,000 3,500 4,000

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• Communication devices (mobiles, computer parts, TVs, computers,laptops) constitute 5 of top 15 post categories

• Used (mostly) and new• Wholesale (mostly) and retail agri‐produce

Some categories sub‐divided into new and usedSome categories sub divided into new and used

3 0003,5004,0004,500

New vs. old items for salewww.cellbazaar.com, April 17, 2009

639

3610

0500

1,0001,5002,0002,5003,000

New Used

Agri‐produce sub‐divided into wholesale and retailAgri produce sub divided into wholesale and retail

771

535700800900

Wholesale vs. retail agri‐productswww.cellbazaar.com, April 17, 2009

535

306 278 271 269 253 245 199 191108 64 59 38 25 1943 32 60 11 62 26 8 5100

200300400500600

0

• Posts can be updated as needed

Wholesale Retail

p

Revenue streamsRevenue streams

• Revenue share with GP (largest mobile operator,Revenue share with GP (largest mobile operator, most popular data service, more than 50% Internet connections via EDGE)– WAP browsing fees BDT 0.02 /kb 50%

– SMS charges (BDT 0.02) 25%

– IVR platform charges (3 BDT/min) 20%

– Web browsing charges which (99% from Bangladesh) 5%

C ll lti f i i (20 ll t)• Calls resulting from enquiries (20 calls per post)

• Targeted advertising platform for Brac Bank

Success?Success?

• 1 million + users (2008)• 25% repeat users

• 1,000 new posts per day– 51% from rural areas (CB internal market study)

• Our calculations: 45% from Dhaka 55% outside Dhaka (17 April 2009)• Our calculations: 45% from Dhaka, 55% outside Dhaka (17 April 2009)

– 15% monthly growth– 75% posts via mobile

• “Two out of ten sellers surveyed were able to sell their items within yten days of posting” (survey reported by CellBazaar)• Successful transactions?

• cumulatively, ~USD45 million worth of products posted every h ( l f d )month (value of goods)

• Multiple awards (e.g., 2008 GSMA award for best use of mobile for development)

Why?Why?

• High mobile penetration, low Internet penetrationHigh mobile penetration, low Internet penetration– Requires minimal mobile handset capabilities (SMS)

• Affordable access– Large market for second hand handsets, with low prices

– 3rd lowest TCO

• Entrepreneurial culture• Exclusively partnered with largest operator

– 20 million+ potential user base (47% market share), with extensive rural coverage (98% of country plus part of India)

– Association with established, trusted brand

What makes it work in Bangladesh?What makes it work in Bangladesh?

Success factor 1Success factor 1

• High mobile penetration, low Internet penetrationHigh mobile penetration, low Internet penetration– Requires minimal mobile handset capabilities (SMS)

ICT use and ownership (% of BOP)

Use a mobile O n a mobile Use the Internet O n a comp ter95 90

59 5276 74

41 37 34 3250

69

0 6 2 1 0 7 2 816.3 17.7

0 4 3 4 0 6 4 0 0 911.8

Use a mobile Own a mobile Use the Internet Own a computer

0.6 2.1 0.7 2.80.4 3.4 0.6 4.0 0.9

Bangladesh Pakistan India Sri Lanka Philippines Thailand

Source: Teleuse@BOP3, LIRNEasia

Success factor 2aSuccess factor 2a

• Affordable access (handsets)Affordable access (handsets)– Large market for second hand handsets, with low prices

– Not the cheapest in T@BOP3 study countries, but…


Brand new

Second hand

Brand new

Second hand

Brand new

Second hand

Brand new

Second hand

Brand new

Second hand

Brand new

Second hand

Mean 58 35 47 27 48 35 65 36 63 28 96 38Mean 58 35 47 27 48 35 65 36 63 28 96 38

Std Deviation 27 24 45 22 36 20 51 32 33 19 83 38

Mode 43 29 39 26 33 33 46 28 54 22 0 0

Source: Teleuse@BOP3 LIRNEasiaSource: Teleuse@BOP3, LIRNEasia

Success factor 2bSuccess factor 2b

• Affordable accessAffordable access– User only pays standard SMS/airtime/WAP charges

– Cost of 5 SMSs within Grameen = USD 0.07

Afghanistan Nepal Bangladesh Pakistan India Bhutan Sri Lanka Maldives

SMS charges in South Asia (February 2009)

Afghanistan Nepal Bangladesh Pakistan India Bhutan Sri Lanka Maldives

On‐net 0.048 0.013 0.014 0.013 0.020 0.021 0.009 0.015

Off‐net 0.048 0.025 0.014 0.013 0.020 0.021 0.018 0.039

Source: LIRNEasia Mobile Benchmarks http://lirneasia.net/wp‐content/uploads/2007/08/09‐02‐sa‐baskets‐explained‐v1‐0.pdf

Bangladesh among the lowest priced in the world, according to Nokia and LIRNEasia


• Entrepreneurial culturep

1423

15 17

Use of the phone for financial, business or work‐related purposes (% of BOP mobile owners)

8

2117

15

3

7

710

9

2

4

4

4

2

14

0

3

2

3

6

5

1

1

2

3

1939

23

50 Never

Less than once a month

Once a month

Two‐three times a month

72

3142

21

49

32

14

14

1554

Once a week

Twice a week

Daily

Daily use



• Exclusively partnered with largest operatory p g p– 20 million + potential user base (47% market share), with extensive

rural coverage (98% of country plus part of India)

– Association with established trusted brandAssociation with established, trusted brand

Success? CellBazaar estimated revenue sharesSuccess? CellBazaar estimated revenue sharesAssumptions

Sellers (annual) 200,750 Each ad posted by unique seller; 550 posts * 365 days

SMS per seller 5

Seller SMS generated (annual) 1,003,750

Buyers (annual) 799,250 Total 1 m users (annual) ; 1m less sellers

SMS per buyer 7 At least two posts viewed

Buyer SMS generated (annual) 5,594,750

Total SMS generated (annual) 6,598,500

Revenue per SMS (USD) 0.014

Total SMS revenue (annual, USD) 95,596

Total SMS revenue (monthly, USD) 7,966

CellBazaar revenue estimate 1 (monthly, USD) 1,992 25% revenue share with Grameenphone



Potential for expansion beyond search?Potential for expansion beyond search?

Potential for expansion?(Considering the more complex case of goods)

• What will it take to go fromWhat will it take to go from

Search Negotiation MonitoringSearch Negotiation Monitoring

CellBazaar

to

Search Negotiation Monitoring

E marketplace X?

E marketplace X

Problems with shopping in e marketplacesProblems with shopping in e marketplaces

• Asymmetric informationAsymmetric information– Seller has better information than buyer; incentives for

• False representations (adverse selection)

• Bad behavior (moral hazard)

– Problems more pronounced where goods are less standardized and second‐handstandardized and second hand

• For any commercial transaction trust is necessary– Even more in e marketplacesEven more in e marketplaces

Pre‐transaction concerns and optionsPre transaction concerns and options

Concern Options

Trustworthiness of seller information • Feedback system to regulate seller behaviorfeedback on seller’s past behavior from a few dispersed past buyers distributed to many potential bbuyers • Initiation cost (Grameenphone SIM)

Payment concerns and optionsPayment concerns and options

Buyer SellerGood

Buyer Seller

Third

2

Money

1

Money

3Third party

guarantor

Concern Options

Assurance that seller will deliver; assurance that buyer will pay

• Introduction of third party guarantor to assurepayment and delivery

Trustworthiness and security of payment mechanism; ability to track payment (buyer); promptness of payment (seller)

• Use of mobile payment system (accessible, affordable). Barriers:

• Lack of policy framework for mobile payments• Possible lack of uptake among BOPpayment (seller) Possible lack of uptake among BOP

Post‐payment concerns and optionsPost payment concerns and options

Concern Options

Assurance that seller will deliver within reasonable time; assurance that seller will respond to complaints

• Feedback system to regulate seller behaviorfeedback on seller’s past behavior from a few dispersed past buyers distributed to many potential bbuyers • Initiation cost (Grameenphone SIM)• Dispute resolution options, e.g., cancellation of account

Secure, cost‐effective delivery mechanism with tracking options

• Private courier companies; affordable?• National postal service; reliable? Adaptation and modernization will be required to support e commerce

Key takeawaysKey takeaways

• CellBazaar represents a working form of e commerceCellBazaar represents a working form of e commerce for the developing world– “Successful” in providing market information to a wider audience than

otherwise possible (elite + non‐elite)

• Several issues of trust, infrastructure and policy hi h d t b t t d th iwhich need to be overcome to extend the service

– Infrastructure and policy will be the most problematic

Full report available upon request

www.lirneasia.net

c llb a bilcellbazaar: a mobile bdbased emarkt lketplace

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