We found the theme of new commerce, mentioned in the Infosys FY10 annual report very interesting. It talks about how consumer behavior has changed due to the evolution of technology. Well, actually one did not really need a leading technology company to tell you that. This phenomenon is all around us. It’s based on our personal behavior. And our interactions in the market place.

We would rather pay for a single song which we like on iTunes (Apple’s online music retailing store) versus spending on an entire album. Anyway, we usually end up listening to just one or two songs which we like from the whole album. Vodafone users in India can send 15,000 SMSs a month for Rs 150. This works out to 1p/SMS and it can be sent to local as well as national numbers. If you have relatives all around the country, why would you spend Re 1/SMS to keep in touch. You would then be paying a 99% premium. The US$ 35 solar powered touch-screen laptop developed in India has also generated a lot of buzz. This laptop, if developed at these low costs will revolutionize education in India. Since it was announced it grabbed almost as many headlines as the revolutionary but costly Apple iPad.

Applications for smartphones can now be downloaded for a few dollars each. Small ticket size loans (micro-credit) are offered for a minimum of Rs 2000 by financers such as SKS Microfinance and other microfinance institutions. Soon these small loans will be as common in Indian villages as a Coke. Thus sellers now need to really adapt themselves in order to address these ‘micro-demands’ from customers. And for these kinds of offerings to be cost-effective for sellers, they need a huge technology component. It will help in reducing the costs of these services. Earlier sellers had to just make a product, and someone would buy it. Now, a producer needs to customise the product and make it cost effective as well. Else, the product will have no takers.

Imagine making only a US$ 1 payment on your credit card. Or a Rs 45 payment. Using a typical payment instrument such as a credit card for such purchases is difficult. The transaction fees you would be paying to Visa or MasterCard would be more than the value of your purchase. There is a huge opportunity to facilitate these kinds of micro payments. Technology needs to be enabled in order to support a huge volume of such kinds of low-value transactions.

These kinds of transactions usher in an ‘inclusive commerce’. This helps bring everyone into the buying circle. From earlier being a privilege of the rich, now anyone can afford a cellphone. Right from a roadside vegetable vendor to top executives, everyone uses a mobile device. The only difference being that the vendor will be using a prepaid option, with small recharge options (as low as Rs 10). The executive will be paying bills running into thousands of rupees every month.

The World Bank estimates that there are over 150 m poor households in India. This works out to over 800 m people living either below the poverty line (living on less than US$ 1.25 per day on purchasing power parity (PPP) basis). Or they are living in moderate poverty (on less than US$ 2 per day-PPP). This is living on somewhere between Rs 60 – Rs 100 per day. We definitely need new ways to improve the lot of these poor people. And inclusive commerce and cost reducing technology seems to be the best way forward.