Chota recharge big pain for cell dealers

Chota recharge big pain for cell dealers

Author | Source: The Economic Times | Friday, Oct 07,2005 7:14 AM

Chota recharge big pain for cell dealers

The chota recharge is proving to be a bada headache for dealers. While Hutch's hoardings across town have led to enquiries for the product, this is one time that dealers aren't in any mood to smile. The reason being the low margin on the product. Margins are usually about 3% of product cost. In this case, it works out to 25-30 paise for a recharge coupon of Rs 10. “I have to spend so much time explaining the product to the customers.

For 25 paise, it's just not worth my while,” said a dealer. Savvy customers who have to balance budgets usually end up ensuring that the talktime is stretched to cover the period of validity, usually a month for most low-value cards. “It is only in case of emergencies that you may need to use the Rs 10 recharge card,” sources said.

The introduction of the 'satchet' pack of mobile recharge coupons may end up serving as a branding exercise, rather than a product to take the market by storm, as the satchet packs did for the shampoo market. “Unlike the shampoo satchets that led to increased market penetration and growth in the shampoo market, the mobile 'satchet' packs are unlikely to revolutionise the cellular industry,” said industry observers.

However, Hutch sources said the product is doing well. “Dealers have to understand that these coupons mean extra volumes. Users who would come only once will now return for top-ups. Also, the Rs 10 coupon is just one of the products.

Customers end up going for higher recharges of Rs 50 or Rs 100 or Rs 198 where margins are higher,” they said. Hutch has introduced the small value top-up coupon at Rs 10 that offers full talktime without access charge. This coupon ensures the user pays access charges only once a month, but is able to talk at minimal cost. It has done away with the access charge on recharge coupons of Rs 50 to Rs 198.

Tags: e4m

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