Freecharge Business Model | How Freecharge makes Money?

Poonam Chauhan Poonam Chauhan
Jul 1, 2021 4 min read
Freecharge Business Model | How Freecharge makes Money?

Are you interested in gathering all the information about the business model of Freecharge? If yes, then here we have something that can help you out. Β In this piece of writing we will walk you through the journey of Freecharge.

Freecharge is an ecommerce website that has revolutionized the way people do business. It is the name that appears in everyone’s mind when somebody talks about doing phone recharge. It is one of the successful companies that has gained a million user base in its starting year. Cash shortages have punctuated Freecharge's path, shifting leadership, from conquering the Indian market via mobile recharges to clinching the most significant purchase ever in the country's startup community.

We all know about the Snapdeal Acquisition. Right? It was one of the biggest purchase made up in the startup community.

Axis Bank has purchased Freecharge from its parent firm Snapdeal for $60 million in the most recent development.

Freecharge- About
Freecharge- Business Model
How Freecharge earns Money?
Freecharge- Marketing Strategy
Conclusion
FAQs

Freecharge- About

Technical entrepreneurs- Sandeep Tandon and Kunal Shah established Freecharge, which was formerly known as Paisaback. Paisaback is like Groupon, a leading company in the United States that deals with promotional offerings such as rewards points, discounts, and vouchers. They began their business in Bombay. After discovering that a mobile phone retailer was deriving all of its revenues from the money generated by its prepaid client base, the company's partners came up with the concept of Freecharge.

Tandon and Shah eventually left Paisaback and launched Freecharge in August 2010. This website's first service was mobile phone recharging. They quickly expanded its transaction verticals, including postpaid cell phone bills, DTH, data packages, and utility bills such as gas, water, electricity, and telephone bills.

Soon after, they start handing out discount vouchers for popular food and shopping locations, equal to the recharge price. The site has 1.5 million customers and 10,000 sales daily thanks to partners including McDonald's, Puma, Domino's, Cafe Coffee Day, Crossword, Croma, and numerous e-commerce sites.

Freecharge has almost twelve million subscribers and five million smartphone app downloads, according to the latest survey. It's one of the greatest rates of growth in the recharging sector. Freecharge has partnered with numerous commercial websites such as MakeMyTrip, Myntra, and Amazon. If a user transacts on these sites using Freecharge, they get rewarded with Freecharge Credits.

Freecharge claims to have a transaction time of 10 seconds and a success percentage of 99 percent. It has a 70% customer retention rate and a monthly use frequency of more than five times each user.

founder of freecharge- Kunal Shah 

Freecharge- Business Model

Now comes the section where we are going to put light on the business model of Freecharge. It depends on two things which are direct recharge or online banking, and the second is a brand advertisement. One can access their service via a website or mobile app. When customers utilize their services, they are rewarded with money for shopping vouchers for major stores, restaurants, and cab services, making it a nearly free recharge. It operates in the same way as Freecharge's large-scale advertising does, and the voucher owner receives more visits than any local news media, so it's not a waste of resources for them.

Now talking about the second source, which is a brand advertisement. For this particular, Freecharge has made tie-ups with several brands such as Dominos, Puma, Croma, Shoppers stops, and much more. When you recharge, you will get Β rewards or discount vouchers for local shops. Premium vouchers can also be obtained by paying a small fee. Ultimately, your recharge gets topped up with deals equivalent to the recharge amount, thus rendering it accessible. So it is a win-win case for both other brands as well as Freecharge. Freecharge creates customers for other brands, and customers are happy with Freecharge because they are getting free vouchers.

How Freecharge earns Money?

Now the mystery must be sprouting in your head, how Freecharge is making money. Freecharge collects the email addresses of the users. They continue to post offerings to keep you connected to their family. They will also alert you if the membership has not been renewed. When is the time to recharge as they have your contact information stored. Promotions and discount coupons are delivered to this email. Freecharge has also formed partnerships with several banks, which give discounts for utilizing their products.

They earn money from two sources.

1. Service Providers - Freecharge profits similarly as the local shop gets some commission from telecom operators by offering recharge services for the company. Still, since it serves a far more extensive consumer base, its revenues are correspondingly higher. There are around 10 million users on the platform, so their revenue is comparatively high and the most significant source of income for the company.

2. Coupons from Various Companies - This choice may appear counterintuitive at first, but it becomes apparent after you grasp the business aspect. Companies pay Freecharge to have their discounts shown on the portal, which you may access for free and for a nominal fee. Now the question must be why corporations would enable individuals to buy their items using coupons. Still, the entire couponing process is a marketing technique used by a company to increase sales.

Freecharge- Marketing Strategy

Freecharge has a long list of lucrative and fantastic items to its credit, and it has run several promotional campaigns to establish itself as a household brand. Its business approach is based on creative concepts. In India, television is a popular advertising medium with a large audience. Freecharge utilized this electronic media to begin its nationwide marketing. Coupons have been a critical difference for Freecharge since it offers unique alternatives that aren't available elsewhere.

Because its clients are its brand ambassadors, the firm also depends heavily on word-of-mouth advertising. Freecharge has used social media platforms like YouTube as an advertising tool to attract internet users and loyal clients.

Conclusion

There you go! Now you know all about the business model of Freecharge. It is indeed one of the successful startups of India who had acquired the largest M&A deal in India's startup ecosystem. From the very beginning, Freecharge knew whom they were going to target. The millennials and the youth are the influential markets for the company because these are the people who spend half of the time on the phone. That’s why it became so much popular in a short period.

The Axis bank acquisition of Freecharge is hoped to be best for both companies.

FAQs

Who acquired Freecharge?

Axis bank has acquired Freecharge.

Is Freecharge Indian?

Yes, Freecharge is digital payment app in India, with headquarters in Mumbai.

How did Freecharge make money?

They earn money from two sources :

  • Commission from service providers.
  • Couponing process

Who are the direct competitors of Freecharge?

  • Paytm
  • MobiKwik
  • PhonePe

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