This Indian startup wants to give small and medium sized businesses all the e-commerce tools they need

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Payment gateways are easy enough to install on your website. Most often, web hosts will provide gateways as additional services. But what do you do when companies have never encountered the digital route?

Bangalore-based startup, Instamojo, is trying to solve that problem. It targets small and medium enterprises (SMEs) by selling what is primarily a payments platform. But unlike regular payments gateways or platforms, Instamojo doesn't have to explain the specifics of its service to them. All it tells these SMEs is that they'll get a link to share with prospective buyers, and get payments directly in their bank accounts. The platform will take a 2%+₹3 cut from each payment.

At its core, there's nothing innovative about Instamojo as far as its technology is concerned. But it's presentation is tailored to the target audience, making it simple enough for the non-tech savvy audience to adopt. Having started operations in 2013, Instamojo now has over 4,00,000 SMEs on board. Interestingly, while its sellers come from Tier I and II cities, the buyers are mostly from Tier I metros in the country.

How it works

Technically, Instamojo can be used by anyone. You sign up on the company's website, fill in pan card, GST and other details are you're good to go. A dashboard is presented to you, that tracks the money you receive. You can push this out to your bank account at any time.

The dashboard also has a "Create payment link" button. This is where you create the link, which can be shared through various channels. If you're doing this from a desktop PC, you can use Facebook, email and Twitter. You can share it via WhatsApp and SMS if you're using the Instamojo app on your phone.

Doing business

After starting with payments, Instamojo also offers a shop option for sellers now. This, again, is basic. It allows sellers to put photos of products they sell, offer discounts, choose sizes (when relevant) etc. It's not a full-fledged e-commerce solution like Shopify but allows just enough for sellers to go digital.

This though means that these same sellers may move to more established platforms if Instamojo helps them succeed. And Swain says he recognises that. Yet, he says moving money from Itanagar to Bombay is no easy task.

While he agrees that he's partly in competition with every payments platform in the country, including other payments gateways, he feels his primary competition is with cheques and bank transfers. SMEs in Tier II and III cities do not depend on digital modes very often, and they do not want to pay for services without knowing how they'll help.

Instamojo asks for payment only when a sale is made through its platform. Sign-ups are free, as is browsing around and sharing links. You pay money when you make money. After introducing the "shop" feature earlier, Swain is moving to lending next.

With this, Instamojo will extend loans to businesses, albeit in smallish amounts. Logistics is another service that's soon to start. Essentially, Instamojo now wants to become a full-service e-commerce solution for SMEs. And all this to achieve its target of getting a million SMEs on the platform by end of 2019. Tough ask.

Future

Yet, Swain is bullish. Like Google, Microsoft, Amazon and pretty much every technology company, he sees the SME space as an untapped market. While bigger companies could just as easily start the service Instamojo offers, Swain says he’s not worried. He says it’s about getting to a place where “you’re the one to beat if others decide to enter this space”.

For him, SMEs represent “middle India”, something between the unregistered businesses and big companies. He says the giants aren’t doing payments platforms or e-commerce solutions with these companies in mind. As a result, he sees the space wide open and says competition will only lead to faster growth. In fact, while he agrees that WhatsApp’s recent entry into payments, and the WhatsApp business platform, will probably take away some of his users, he also expects it to raise awareness. As a result, a full-service platform like Instamojo might start making more sense to SMEs.

Lastly, Instamojo also sees data as a possible opportunity. While it is not a consumer-facing company, it still has buyer data, which Swain says can be leveraged in future for better services.

Similarly, the current customer base of SMEs can be leveraged in future to create a sort of LinkedIn for this industry.
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