Do you remember the days when purchasing mobile top-ups for your prepaid phone or getting a gift card for Christmas involved endless queueing at the store? It’s hard to believe how far we’ve come and how technology has made these processes so much easier and more convenient.
As highlighted in earlier chapters, the rise of digital payments ushered in a new era of unparalleled convenience and helped spark new ways for businesses to reach their customers.
This groundbreaking technological shift naturally supported the digital provision of goods and services. Consumers could buy digital goods like mobile top-ups and game tokens on their electronic devices with just a few taps. It also meant that consumers could pay for digital services like household bills and movie tickets online.
At 2C2P, we help many businesses integrate digital goods and services into their business model. This is a natural extension of the payment services we offer, with the common objective of bringing convenience to consumers and allowing businesses to grow using technology.
Our digital goods and services solutions open new possibilities for businesses, helping them to expand their product and service offerings with minimal hassle. For large enterprises, this can be done via advanced system integration; for small businesses, a simple mobile plug-in will do. By following these easy steps, businesses can focus on providing a better consumer experience.
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What are digital goods and services?
Digital goods refer to a broad category of products that do not have a physical, tangible form. We see them as a stored-value form of alternative currency, including mobile top-ups, electronic gift cards, digital vouchers, and loyalty points.
Digital services, on the other hand, involve the provision or delivery of content and information between a provider and a customer, for instance, online bills or ticket purchases. Most of these digital goods and services can be purchased and used directly on a smartphone. In fact, for many consumers in mobile-first markets, phones are their sole touchpoint.
In Southeast Asia, where many people (especially in rural areas) remain unbanked and rely on cash, the digital goods market plays a significant role – it allows them to participate in the digital economy without needing a credit or debit card.
There are typically two processes to digital goods: issuing and distribution. Issuing involves the creation or digitisation of physical inventory to produce digital goods. Then, distribution allows global digital goods to be spread across different ecosystems, whether through physical or alternative digital means. For instance, physical post offices and major retailers can distribute global digital goods, while smaller mom-and-pop shops can do the same. Additionally, digital platforms such as mobile wallets and mobile banking apps can distribute digital goods through their respective ecosystems.
What are the benefits of digital goods and services?
The ease of creating and selling digital goods encouraged companies to enlarge their inventory and offer greater convenience for their customers.
Think mobile data top-ups. Instead of waiting in line to buy a physical scratch card from a retail staff member, consumers can now easily purchase their top-ups online.
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The same goes for services like household bills. Consumers no longer need to plan their schedules around postal and bank branch opening hours to pay their utility bills; all they need is to log in to a website – such as online banking portals – or mobile app, enter their account details, and make the payment.
The ubiquity of digital goods and services has streamlined the customer journey: a process that took hours can now be
accomplished in a minute or less. For example, the manufacturing of physical gift cards and paper vouchers typically involves extensive supply chains and administrative and inventory management processes. However, with digital gift cards and vouchers, the process is simplified, taking place digitally via electronic devices. This drastically reduces business costs and allows resources to be used for better and speedier customer experiences.
For many businesses, digital goods and services have become a vital source of revenue and enabled them to use their business resources, such as storefronts, cash flow and manpower, more efficiently.
Let’s take a neighbourhood mom-and-pop shop as an example. In addition to selling physical goods, store owners could also offer digital goods and services such as prepaid mobile top-ups, digital gift vouchers, and bill payments, allowing owners to increase their product offerings with the same amount of resources and physical space.
To top it off, having a larger product offering can help store owners increase their engagement with their customers, which would lead to greater customer loyalty as they would be incentivised to patronise the store more often. The same logic can also apply to digital businesses like e-wallets or online banking applications.
Digital goods and services have also catalysed a paradigm shift in business models for several industries. For example, in the past, computer, console and mobile games traditionally made money only through one-time sales.
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Nowadays, game developers sell in-game credits and game products to deliver a more personalised experience for their players, with great success.
For example, the mobile gaming industry, which derives a large portion of its income from in-game digital goods, generated US$89.6 billion in revenue in 2021.
Players are kept engaged with new in-game digital goods like limited-time avatars and mini-tournaments, leading to highly personalised gaming experiences. This prolongs the players’ game tenure, thus allowing developers to focus on enhancing features for higher and recurring revenue instead of one-time sales.
When did 2C2P venture into digital goods and services?
Back in 2013, we realised over discussions with merchants in Myanmar that digital goods could help them to better serve and grow their customer base.
At that point, the country, like other developing nations in Southeast Asia, had many mom-and-pop stores scattered throughout rural areas, often not serviced by large retail chains. These little stores served as one-stop shops for consumers to get groceries and access services such as mobile phone credit top-ups.
Consumers primarily used physical scratch cards to top up their mobile phone credits and paid for them using cash. There were a couple of problems with this arrangement. These stores were spread out nationwide and had significant logistical inefficiencies, so suppliers (such as billers and mobile operators) faced a distribution challenge.
Because digital goods and services were still a nascent product category, consumers were naturally sceptical at first, especially when mobile penetration rates were still low. In 2015, we started providing over-the-counter (OTC) mobile wallets to retailers, enabling customers to access digital goods at the shops.
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Education was a key phase of the onboarding journey; we took time to meet with the retail store owners to explain the value proposition of OTC mobile wallets and digital goods and address any queries or technical challenges they had.
Patience was also critical. We worked with one of the biggest retail chains in Myanmar to integrate digital goods into their point-of-sale (POS) systems. At first, they were hesitant to roll them out, but after two to three years, digital goods became their highest-selling items.
The market opportunity for digital goods in Southeast Asia is massive. We have partnered with thousands of local small and medium-sized enterprises (SMEs) to distribute digital goods across Thailand, Myanmar, and the Philippines, with plans to grow into Vietnam and Indonesia.
In addition, we are helping digital goods issuers make further inroads into Southeast Asia by connecting them with more distribution channels, allowing more consumers to purchase their digital goods easily.
The future of digital goods and services
Across the region, our technology is helping retailers plug a gap in their infrastructure. As a major digital ecosystem player, witnessing this transformation unfold over the last few years has been a fantastic journey. We will
continue to find new ways to strengthen the value of digital goods and services – creating more synergy between suppliers, distributors and consumers.
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Cracking the Payments Code is an e-book published by Singapore-based digital payments company 2C2P. This chapter is republished with permission. Download the e-book here.
Image Credit: RunwayML
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