WSJ: Selling Potatoes By Phone

Below I will re-post a full (almost) article as it was reported by the Wall Street Journal here.

Why did I decide to re-post it here? Just because, I am the Editor! Well, more precisely — because it is interesting. Wait. No: because it gives us ideas about what to do in poor countries which love VAS more than rich countries. Why do they love VAS? Because poor countries use mobile phones not just to call but to enjoy every little thing on them. And there are indeed a lot of hidden treasures even in the simplest mobile phones. Mobile phones can supply crucial data and they do substitute computers and Internet. The question in this context is “How to build a profitable business model?”

Most of people around us and in the world in general are poor. Therefore mobile services that they can afford to consume (unlike Internet and computers) are the only high-tech and communication means for them.

In the business sense, a lot of small users can add up to substantial revenues. On the other hand, mobile technology can substantially improve their lives. Sounds like we have a fit.

In Remote Bangladesh Founder of CellBazaar Sees Mobile Technology As a Force for Change
September 8, 2008

CellBazaar, which offers a virtual marketplace for the 20 million mobile-phone subscribers of Bangladesh’s GrameenPhone Ltd., might not sound like a big deal in much of the Wi-Fi-enabled, laptop-toting world. But to farmers and fishmongers in Bangladesh with almost no access to computer terminals — and often without the electricity to power them — the service is a much-needed portal to additional income in the densely populated agricultural nation.

Kamal Quadir, founder and chief executive of CellBazaar Inc., gave up the prospect of a financial career in the U.S. after graduating from the Massachusetts Institute of Technology’s Sloan School of Management to realize his dream of using mobile phones, and to a far lesser extent the Web, to bring the electronic marketplace to the farthest reaches of his native Bangladesh.

Three years after Mr. Quadir presented his 30-page conceptual paper, which topped MIT’s annual Ideas Award and subsequently attracted seed-funding from American investors, CellBazaar has a firm partnership with GrameenPhone, a telecommunications-services provider that was founded by his older brother Iqbal and is now majority owned by Norwegian telecom giant Telenor ASA. GrameenPhone is preparing for a public listing.

Although 75% of Bangladesh’s population has no access to electricity and Internet penetration is only 0.03%, CellBazaar has more than one million users. A quarter of them use the service on a regular basis, with about 550 new items posted each day. Almost all of that is by mobile phone, though CellBazaar also offers an online platform. But what Mr. Quadir, 36 years old, finds gratifying are the stories behind the numbers — such as a post from a farmer in a remote area of Bangladesh offering to sell a bag of potatoes.

“It’s just amazing to know that people who wouldn’t usually use such technology now know how to and can,” Mr. Quadir said. To overcome illiteracy, CellBazaar has a voice-message option whereby posts are read out in Bangla, the national language.

The Massachusetts-incorporated company has 22 employees in Bangladesh and three in Boston handling everything from technology development to customer-service and marketing. Mr. Quadir wants to expand CellBazaar to developing markets in East Africa and South Asia where Internet penetration isn’t widespread.

Tor Ching Li spoke with Mr. Quadir in Singapore.

WSJ: What advice would you give someone starting out in your field?Mr. Quadir: That mobile technology can be a force for change in developing countries. If we start seeing it more as a minicomputer in our pocket rather than a talking device, we can imagine hundreds of viable business opportunities through mobile technologies. Thus, my advice would be to keep in mind that mobile technology has gone beyond simply taking pictures and sending them to loved ones. It is now capable of providing major services such as banking and health care, which could impact society on a larger scale.

WSJ: What is the most important piece of technology you use personally?

Mr. Quadir: The iPhone. My belief is that iPhone-type technology will make a huge impact on developing countries in coming years. Mobile-phone penetration has overtaken computers in developing economies. The stronger this ubiquitous tool, the more computing power that people will have there. The iPhone allows the mind to direct intuitively with pictorial commands, which is why such technology will be a breakthrough in an environment challenged by literacy and technology barriers.

WSJ: Is there a difference between the telecom industry in Asia and the rest of the world?

Mr. Quadir: There are two basic tiers of consumer behavior. The first tier engages in just-for-fun, staying-in-touch conversations with friends, family and colleagues. This group is very lucrative for operators as they talk for extended periods.

The second tier comprises the utility group, which is extremely price sensitive and uses the phone in short bursts only for work. They call to get the basic information and hang up, often using [text messaging] as a cheaper route.

One of the big challenges for operators is how to increase the usage of mobile phones among the second-tier customers. Accepting that they are short-burst users, how do you increase their volume of calls so that this consumer is also on the phone for a large portion of the day? A company like CellBazaar is critical in such strategies, because it generates thousands of new calls from consumers trying to bargain with a buyer or learn more about the sale item.

WSJ: What trend do you see in the telecom industry?

Mr. Quadir: In poor countries where purchasing power is very low, telephone operators need to focus on how to boost that purchasing power. Telephone operators can do so by seeing their consumers as producers. The more the consumers produce, the more they can purchase the telephone services. One way in which they can produce more is by buying and selling more efficiently. By embracing CellBazaar, operators create a beautiful win-win synergy with their subscribers. The operators make money in tandem with the subscribers.

WSJ: What was the most satisfying decision you’ve made as a manager?

Mr. Quadir: Although the early adopters of CellBazaar or similar services are usually urban populations with easy access to technology, I focused on bringing this technology to lower-income groups and to people living in rural areas. Isolated, uninformed and struggling traders and farmers often have little option but to sell their goods cheaply to wholesalers. Many spend their minimal profits traveling great distances to markets. So, besides the social intention, it makes good business sense to target the larger user base. A recent research report found that 59% of the postings made on CellBazaar are from rural areas.