MUMBAI: 8 November 2016 was a day that took the world by storm. While the world was stunned with Donald Trump’s victory as the new US president, Indian prime minister Narendra Modi decided to give the country a shocker of its own- demonetisation.
An ordinary Tuesday evening saw all news channels and radio stations halt their programmes to listen to Modi, assuming it as another Mann Ki Baat. Instead, what followed was the shocking revelation that all the Rs 500 and Rs 1000 notes in the country will be invalid post midnight. As people scrambled to get rid of their notes and lined up for new ones, they were restricted to just Rs 10,000 a day and Rs 20,000 a week for the next 4 days (10-13 November).
A severe cash shortage in the hands of the public forced them to seek alternative modes of payment. Companies too weren’t spared. By the second week of demonitisation, cigarette sales had dropped by 30-40 per cent and cash on delivery (COD) orders fell by 30 per cent for e-commerce companies. Dabur India corrected its advertising spends for November by almost 50 per cent and many prominent brands decided to hold the rolling out of new campaigns for a few months. The festive October-December quarter, this year, ended up draining out over Rs 2000 crore.
Amidst this confusion and loss, if there was a clear winner, it was the class of startups offering online wallets and digital payments. Brands offering online payment ‘cashed’ out the most from the prime minister’s move. It was time for overlooked and unrecognised players like Paytm, Freecharge, Mobikwik, Swiggy, Zomato, Foodpanda and others to make optimum utilisation of the situation. These brands had found people’s Achilles heel and created campaigns, tweaking their communication, to show people that you don’t need to worry about less cash.
With this, digital payments became India’s new currency and debit card transactions surged to over 1 billion in January this year from 817 million last year.
Foodpanda India co-founder and CEO Saurabh Kochhar says that there were positive implications of demonetisation on its platform. “Before demonetisation, on a regular day, our platform would receive close to 70,000 orders. While that shot up by 40-50 per cent, around 92 per cent of payments were made online after demonetisation. As our order value ranges between Rs 400-500, consumers did not mind paying online,” he reveals.
As consumers were forced to get acquainted with digital payment modes, they got comfortable with the idea of paying for their orders online. Brands ensured their technology backend could support the surge in payments so that no glitches would leave people harassed or with bad experiences.
One of the biggest beneficiaries of demonetisation was online wallet app Paytm. Within only 12 days after the move was announced, Paytm witnessed over Rs 7 million transactions worth Rs 120 crore a day and Rs 5,000 crore worth of transactions in the month of January 2017.
Even though India was cutting down on spending, online travel grew between November 2016 and June 2017. Indians spent $246.6 million in overseas travel-related payments in November 2016, up 581 per cent as compared to $36.2 million spent in the same month in 2015. Arrivals from India to Australia since the demonetisation period (Nov 2016 – Aug 2017) grew at an average of 15 per cent.
A year on, are people still transacting online at the same pace or was it just the momentary fluster? Kochhar optimistically says, “As valid currency got into a normalised flow in the country, there was an increase in COD orders. However, we have seen more uptake in users paying online for their orders. It is more about the change in the mindset of the users and demonetisation pushed them in that direction for sure.”
While demonetisation opened people’s eyes to digital avenues, adex was briefly hampered. Overall brand revenues fell and there was a clear dip in sale, but all of that is now in the past. The advertising and marketing industry revved up but was assured that India’s suspicious view towards digital had surely been changed.
