Is Jio a hardware company? 🤔
The battle to win the average revenue per customer.
Welcome to the 195th edition of the GrowthX Newsletter. Every Tuesday & Thursday I write a piece on startups & business growth. Today’s piece is going to 94,400+ operators & leaders from startups like Google, Stripe, Swiggy, Razorpay, CRED & more
Remember postpaid mobile plans?
Yes, the ones BSNL popularized in the early 2000s. Jio is pushing hard to get them back with a ₹4,999 car device.
Some back-story on this postpaid thing. Of the 44 Cr Jio users, ~2% are postpaid customers. A lot less than Airtel's 6% postpaid customers of it’s 37 Cr customers. One thing for sure - Jio is winning the war against Airtel in the number of customers, but still catching up in the ARPU - the average revenue it generates per user. And Jio is impatient.🏃🏻
But, why is Jio trying to solve ARPU?
You can't have a large return on capital by just selling sim cards & being a telecom operator. As a spectrum holder (3G/4G/5G), your cost to serve the next customer is negligible. It has economies of scale. For Jio, the infrastructure is set & all it has to do is find more use cases for voice calling & data consumption.
Some of its earlier moves include 👇🏻
→ Partnering with OTT (Netflix/ Prime Video)
→ Selling bundle plans with TV manufacturers
→ Jio Fiber & Jio Air (high-speed wired internet)
Telecom players have one core insight💡
Postpaid users spend 44% more than the average user. Plus, postpaid users bring their immediate family to those post-paid plans - over 65% of postpaid users are on a family plan. This means if Jio wants to increase average revenue per customer, it has to do a few things right.
✅ First - sell a postpaid plan.
✅ Second - upsell a family package.
✅ Third - lock in the customer with an annual discount deal.
And that's exactly what it did with mobile & wifi plans. But wifi expansion has its limitations with residential buildings. And not every family will get a wifi connection if all of them are on a good family data plan (Jio mobile plans offer 2.5GB data on 4G/5G per device per day).
Enter Jio's new product - JioMotive.
JioMotive is a smart device that allows you to add a device to your car’s On-Board Diagnostics (OBD) port and get features like Geo-fencing the car, real-time tracking, car health tracking & even WiFi inside the car.
The best part? It’s a plug-and-play device & can be installed on most cars sold after 2010. Takes up to 5 mins to set up. Isn't that just smart? And the price tag is ~₹4,999 in one-time hardware costs + ₹600 annual plan - voila 600 ARPU product.
What’s next for Jio?
Jio is building a data consumption flywheel and adding hardware layers to it with cheaper smartphones, Jio Fiber & Jio Motive. The list will expand. Interesting how the Jio team thinks through use cases & frequency of those use cases.
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