- Boosting revenue multiples:-When dotcoms are valued on revenue multiple basis, then there is no reason why Infibeam should not book Rs 20,000 despite the transactions cancelling out each other
- Shrinkage:-As any coupon seller knows, not all gift cards/coupons are used. Even taking a 30% shrinkage, that is money directly to the bottomline. And to encourage that shrinkage, Infibeam has
- Limited the usage to 1 voucher/transaction=>If an item costing>Rs 1000 is purchased, then the user ends up paying cash for the difference.
- Relatively low limit(Rs 1000) for the voucher
- Time limit of 6 months to use 10 vouchers. That implies an order once every 18 days!
- Limited book selection of academic/other low profit books like NCERT etc!
- long term customer value:-Anyone who places 10 orders of books/ebooks is likely to come back for more. This would expand the market and 10orders would increase their faith in Infibeam.
Another issue is that are 10 orders enough to make the Indian into a book buyer? Few Indians read, fewer are willing to pay. And the surfeit of pulp fiction costing less than Rs 100 has devalued the category. Would more expensive books cause Indians to pirate them online? On file sharing sites, one can download illegally the latest version of books even costing $5 or less. I think that after exhausting the vouchers, it is optimistic to expect an Indian reader to purchase ebooks rather than download them from filesharing websites.
Anyways, I shall follow this matter with interest, and update you all if I purchase that reader