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How do online recharge websites give heavy discounts to their customers?


Date: 20 May 2015    Group: E-commerce    Category: Online Shopping   

There are a lot of online recharge sites which give heavy discount (as high as 50% sometimes) on mobile recharges. How is it possible? From what I know, commission on recharges is just 3-4%. How do they make profits in that case? Any information will help me in understanding their business model.

Puzzled about how online recharge sites rake in the profits despite high discounts to customers? Get an understanding on the possible reasons for this from this Ask Expert page.


Author: Timmappa Kamat    21 May 2015      Member Level: Platinum     Points : 4  (Rs 4)    Voting Score: 0

On the face of it, it appears as if these firms are not making any profit. But, why will a company continue working without profits? Following are some possible ways they are earning and as a way of building customer loyalty are parting with some part of this income by giving cashbacks -

1. They eliminate the middlemen or the chains of sales rung and are directly working with the operators and as such may be getting more commission.

2. The online recharge sites indulge in content sponsorship in the form of coupons. You get Rs.10 talktime on buying some xxx brand toothpaste. For this kind of a marketing, the companies pay huge sum to the recharge sites.


Author: Paresh Gujarati    23 May 2015      Member Level: Gold     Points : 2  (Rs 2)    Voting Score: 0

1. Online recharge companies like Freecharge, Paytm earn majority of their earning via coupons they provide during online recharge. This coupon brings customer to the company website and by this way increase in sale. For this companies give commission to parent company like Freecharge, Patym etc.

2. Paytm on the other hand also involved in online shopping store which earns money via discount earnings from seller for a product sold on Paytm.



Author: Mahesh    29 Jun 2015      Member Level: Diamond     Points : 6  (Rs 6)    Voting Score: 0

Most of the online recharge sites have affiliation with the brands who want customers. So they offer some percentage on the product and in turn this creates a way for the recharge website to have a revenue model in between the customer and brands. So they ask brands to sponsor them and then customer lands for the offer making the lead complete. So this way both customer and brands are happy. Making brands to sponsor your recharge website however is harder. So you have to work on the leads and make sure that brands are benefiting from the lead as well. It takes time for this to work out but slowly the leads do build if the recharge platform is popular.

Author: Aman    04 Jul 2015      Member Level: Diamond     Points : 5  (Rs 5)    Voting Score: 0

Yes, its right to mention that money earned by these sites from recharges is not actually the major source of earning income. The main role is played by the advertisements which are present on these type of online recharges websites. Advertisements pay them well. Like on Freecharge, you can see different sponsors like Domino's Pizza, McDonald's etc. which gives good amount of money to these sites for promoting them via coupons.

Coupons are also one of the major source of income for such type of websites. These sites provides coupons to the customers while recharges. Which the indirectly attracts the customer to buy something from that website. And the best example of such site is PayTm. It gives many coupons to the customers while they do recharges and then they are attracted to use those coupons on that website to buy something which indirectly becomes one of the major source of income for such websites.

They also earn some amount of money from the commission they get.


Author: Muddassir    12 Jul 2015      Member Level: Diamond     Points : 3  (Rs 3)    Voting Score: 0

Such sites earn money through various ways. Some of them are :

1. They get commission from telecos and other companies for selling their products.

2. They earn money from advertisements.

3. Major barnds sponsor their products through these sites. Hence, they earn good amount of money from it.

4. They also get commission from ecommerce sites.


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