Online platforms bank on ‘sachet culture’ to sell digital content

Buying less more often may be key to ring in the next phase of growth for digital content platforms. The sector seems to be mimicking the ‘sachet sales model’, which helps fast-moving consumer goods firms increase revenues during a demand slump.

Audiobook platform PocketFM, for instance, has clocked 350% monthly recurring revenue growth for the last three months since it launched the micro payments subscription offer in February, Ashu Behl, senior vice president, content, PocketFM, said.

Under the offer, 15 million of its monthly active subscribers can access a section of a publication for a fraction of the price, before subscribing to the entire book.

In fact, more and more content platforms are asking users to pay a rupee or two instead of buying expensive digital content or subscribing to services at one go.

In December 2020, music streaming platform Spotify had introduced a ‘mini’ feature-heavy prepaid plan, to offer ad-free music streaming and offline downloads at ₹7 per day, or ₹25 per week. In a statement, a Spotify spokesperson had said that the Mini plans helped the company add new and paying users. “The sachet culture, coupled with the ease of payments with Unified Payments Interface, made micro payment options apt for Indian market,” he added.

Sachets were introduced back in 1983 by Indian FMCG brand CavinKare.

Today, sale of sachets account for 75% of the shampoo market in India, according to market statistics firm, Future Markets Insight.

Micro-transactions are also expected to help digital content platforms grow at a brisk pace, keeping in line with the growth of digital payments in the country.

A report on the Indian digital payments industry published on June 3 by consultancy firm Boston Consultancy Group (BCG) and Indian digital finance platform PhonePe said that digital payments in the country today have an overall valuation of $3 trillion, and is expected to grow to over $10 trillion by 2026. While about 40% of all payments made today are online, this will grow to over 65% in the next four years, and UPI payments will account for 75% of these transactions, as per the BCG-PhonePe report.

According to Ranadurjay Talukdar, partner and payments advisory leader at consultancy firm EY India, about 20% of all digital payments are under the micro-transactions category, and this has grown over the past year with more and more users coming online, and had the convenience of UPI. “To cash in on this trend, companies are offering ‘micro’ plans,” he added.

Like PocketFM and Spotify, vernacular live streaming platform Bolo Live’s revenue grew 4x in the past one year to ₹36 crore with an increase in sales of ₹10 digital items like stickers and tokens. Varun Saxena, founder and chief executive of Bolo Live, said over 350,000 users of the app are opting for micro-transactions.

Keerti Singh, co-founder and vice-president, growth, at award-winning gaming firm Hitwicket, said two out of five users make a micro-transaction as their first online payment.

“We have seen more than 40% of Indian paying users making the first purchase in the game through micro-transactions, which contribute up to 20% of our revenue. In India, we saw a 300% increase in the rate of conversion of non-payers to payers through in-app transactions,” Singh said.

EY’s Talukdar said it helps that there are no additional charges for a UPI transaction such as process fees. Affordable smartphones, with democratization of the internet through cheap mobile data plans, have helped the cause of cashless payments in India, he added.

Micropayments are helping platforms earn revenues from tier-II and III markets, as tier-I markets continue to generate high-volume online payments for now, a spokesperson from payments gateway Razorpay said. In 2021, tier-II and III cities “saw 45%, and 54% growth in online transactions, respectively,” and a chunk of it was “predominantly” from microtransactions, he added.

“In terms of sectors, the highest contributor was food and beverages, followed by gaming, bill payments and e-commerce. In 2021, the sectors contributed over 57% of the total transactions done on the platform,” he said.

“Users are finding microtransactions more democratic in nature, rather than the subscription models,” said Saxena. Live Mint