cellbazaar, a mobile based e marketplace: success factors...

CellBazaar, a mobile‐based e marketplace: Success factors and potential for expansionSuccess factors and potential for expansion

Ayesha Zainudeen, Nirmali Sivapragasam & Rohan Samarajivay , p g jMobile2.0: Beyond voice

ICA preconferenceMay 2009

Study rationale and objectivesStudy rationale and objectives

• E commerce reduces frictions in markets– “e marketplaces” expansion of markets and development of new

ones• Developing world has lagged behind due to access, affordability andDeveloping world has lagged behind due to access, affordability and

infrastructure (e.g., secure payments)

• Mobiles offer new opportunities for developing world

• Examine the reality of e marketplaces in developing countries;Examine the reality of e marketplaces in developing countries; example of CellBazaar (Bangladesh)• Evaluate CellBazaar

• Evaluate potential for expansion• Application as is (success factors)

• Extension into more of the e commerce domain

E marketplaces defined in this research as:E marketplaces defined in this research as:

• Any type of application which electronically supports y yp pp y ppany component of a commercial transaction– Can be PC‐based, mobile‐based, hybrid, etc. (as long as

there’s some e in any one of the components)

Transaction

there s some e in any one of the components)

Search Negotiation Monitoring

Determining price, availability and

attributes of good/service

Coming to agreement on price and terms; order;

payment; delivery of good/service

Ensuring terms are adhered to;

dispute resolution

g /

E marketplaces . . .E marketplaces . . .

• Reduce transaction costs (costs of making economicReduce transaction costs (costs of making economic exchange)• Increase consumer surplus

• Increase producer surplus

• Reduce wastage (in the case of perishable goods)

• New markets opportunities (esp. long‐tail products)

• Reduce cost of setting up shop for small sellers (under certain circumstances)certain circumstances)

Different e marketplaces provide one or more f

Dispute resolution

functions, starting with search

resolution

Feedback mechanism

Delivery

Payment

O dOrder

Search

Different e marketplaces provide one or more ffunctions, starting with search

CellBazaar Amazon Marketplace

Dispute resolution

CellBazaar Amazon Marketplace

Dispute resolution

Feedback mechanism

Delivery

Feedback mechanism

DeliveryDelivery

Payment

Delivery

Payment

Order

Search

Order

Search

In developing countries . . .In developing countries . . .

CellBazaar E marketplace X ?

Dispute resolution

CellBazaar E marketplace X

Dispute resolution

?

Feedback mechanism

Delivery

Feedback mechanism

DeliveryDelivery

Payment

Delivery

Payment

Order

Search

Order

Search

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)


CellBa aarCellBazaar

* For limited search only

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

Num

ber o

f po

1 5002,000 2,500 3,000 3,500 4,000 4,500

mbe

r of

pos

ts

‐500

Mob

iles

Com

pute

r par

tsCa

rsTV

sM

otor

cycl

es(m

obile

, com

pute

r, …

Hom

e fu

rnitu

rela

med

ium

tuto

ring

Rice

Com

pute

rsLa

ptop

sFr

idge

sFi

shom

pute

r, IE

LTS,

etc

)Ca

mer

asPh

otog

raph

ysh

med

ium

tuto

ring

PS, U

PS, g

ener

ator

, …Bo

oks

Land

(to

buy)

Apa

rtm

ents

(to

buy) Dal

Frui

tG

arm

ents

Po

tato

sVe

geta

bles

ater

ing,

dec

orat

ing)

atch

, sou

nd s

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Poul

try

Vide

oing

ser

vice

sSe

eds

Full

time

jobs

obile

, ven

ue, s

ound

…A

Cs

Han

dicr

afts

Oni

ons

Mus

ical

inst

rum

ents

Bus

hire

Feed

DVD

pla

yers

MP3

pla

yers

Mic

row

aves

Off

ice

furn

iture

Flat

s (f

or re

nt)

Part

tim

e jo

bsCh

illie

Was

hing

mac

hine

sSh

rim

pRe

nupo

na

Cow

sM

usic

cla

sses

Mac

hine

ryO

ffic

es (f

or re

nt)

Lang

uage

cla

sses

Des

hi C

hick

enPe

t bir

dsSh

ops

(to

buy)

Goa

tsH

ouse

s (f

or re

nt)

Mus

hroo

ms

Pet f

ish

Corn

Shop

s (f

or re

nt)

Pet d

ogs

Off

ices

(to

buy)

Buff

alo

Cam

elPe

t cat

sPe

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bits

‐500

1,000 1,500

obile

s

r par

ts

Cars

TVs

cycl

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ile, …

nitu

re

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Rice

pute

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ridg

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Fish

achi

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mer

as

Num

Repa

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Com

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Cam

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

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

Success?Success?

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

• 550+ new posts per day• 51% from rural areas (internal market study)

• “almost all” via mobile

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

M l i l d ( 2008 GSMA d f b f• Multiple awards (e.g., 2008 GSMA award for best use of mobile for development)

• Said to be cash‐flow‐positive, but revenues appear modestSaid to be cash flow positive, but revenues appear modest

CellBazaar estimated revenue shares (based on LIRNEasia

estimates (May, 2008) with information available in public documents)

Assumptions

Sellers (annual) 200,750 Each ad posted by unique seller

SMS per seller 5

Seller SMS generated (annual) 1,003,750

Buyers (annual) 799,250 Total 1 m users (annual)

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



Can the model work elsewhere? Success factors in Bangladesh

Success factor 1Success factor 1

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

Mobile ownership vs. Internet use (% of BOP)

b l h ( f ) ( f )

41 37 34 32

50

69

Mobile ownership (% of BOP) Internet use (% of BOP)

0.6 2.1 0.7 2.816.3 17.7

Bangladesh Pakistan India Sri Lanka Philippines Thailand

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@BOP 3 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

Success factor 2bSuccess factor 2b

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

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 0.02 0.021 0.009 0.015

Off‐net 0.048 0.025 0.014 0.013 0.02 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

Cost of 5 SMSs within Grameen = USD 0 07Cost of 5 SMSs within Grameen USD 0.07

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

Success factor 3Success factor 3

• Exclusively partnered with largest operatory p g p– 20 million + potential user base, with extensive rural coverage (98% of

country plus part of India)

– Association with established trusted brandAssociation with established, trusted brand

• Entrepreneurial culture

Use of the phone for financial business or work‐related purposes (% of BOP

83

10

2

42

0

26

5

1

2

19

14

3923

50

15 17

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

Never

72

49

14

21

14

17

15

7

7

5

10

94

4

4

143

3

5

1

3

Less than once a month

Once a month

Two‐three times a month

Once a week

Twice a week

Daily use

3142

21

49

32


Daily

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


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

ConclusionsConclusions

• Great potential for mobiles to transform e commerce in pdeveloping countries– Reduced transaction costs across components of a transaction

more efficient marketsmore efficient markets

– Limitations in access, security, etc. have thus far precluded uptake

• CellBazaar represents a working form of e commerce for the developing world– Further research on economic impacts with respect to agri‐products

(similar to Jensen (2007) and Aker (2008)) would be useful

• Several issues of trust, infrastructure and policy which need to be overcome to extend the service

Infrastructure and policy will be the most problematic– Infrastructure and policy will be the most problematic

cellbazaar, a mobile based e marketplace: success factors...

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