Pay later apps are making waves in the Indian market, with Simpl standing as one of the major dominators. But what makes Simpl so special? What’s their business model? Let’s find out
If we were to put it in one sentence, Simpl is an app people can use to buy products online without worrying about paying for them on the spot, as the app allows you to pay the bill later. You can pay your bills during periodic cycles, and this takes away the pressure you’d likely face from companies and agents were you to use a credit card or a bank loan. There wouldn’t be an article if this was all Simpl had to offer, though. The company is proving to be a boon for e-commerce companies, solving problems like Cash On Delivery settlement issues and increased credit charges (more on this in a bit). So today, we takes a look at why startups like Simpl are making headlines quite often, and what their business model really is. But first, let’s answer one key question: How did Simpl make its way into millions of people’s homes?
A Simpl Start
Co-founders Chaitra Chidanand, an MBA graduate from Stanford, and Nityanand Sharma, a Bear Stearns employee, realized in 2015 that credit cards were charging a very hefty interest rate, and decided there had to be another way for people to purchase goods without it affecting their bank account that much. The result was Simpl, and it almost immediately took the market by storm. It was simple for both customers and merchants to use.
The merchant would simply add this as another payment option to their products, so whenever you want to buy a product online you can use Simpl, instead of going for a credit card. In a very short period, this attracted big names like Fasoos and Flipkart, and before you knew it, the Simpl raised 25.5 million USD.
How Does Simpl Work?
While Simpl is a pay later app like ZestMoney , it is also much more than just another pay later app in India. The Simpl business model doesn’t just provide you an option to pay later, but it combines all of your bills into one expense tracker, so you can manage your finances easily. With one click, you can get rid of all your bills, and we’ll see how that works now.
Once you set up your account in Simpl, shopping for products is a piece of cake. The app has links that redirect to all your favourite shopping sites – BigBasket, Zomato, Flipkart, you name it. The app doesn’t just stop there – it consolidates all your bills into two bills (one at the start of the month and the other one following fifteen days later). This saves you from the hassle of keeping track of all your expenses, and where your bills are due, by putting them all into one fine list.
Note: You can also find Simpl as payment options in popular sites like BookMyShow and Nykaa(We’ve covered How Nykaa works?) We’ll be doing a detailed study about their business models and other business models like Simpl as well in the near future, so keep watching this space for further information.
Valuation and Statistics
According to Crunchbase, Simpl is sitting at $26.7 million USD in funding, from over five investors. Simpl’s website shows all of their various partners, which include the likes of Zomato, Dunzo, and BigBasket. Green Visor Capital is currently the sole Lead Investor in Simpl, and since the last funding was raised in 2018, we think another series funding might be coming in the near future.
We think that being of a sound financial background, both Chaitra and Nityanand understand the dangers of too much money flowing into a startup (yes, there is a thing called overfunding). After all, for a fintech startup, you would expect the company to handle its own money wisely before others can trust it. Although Simpl does have 27 million USD in its bank right now, it knows the importance of expansion, and fundraising might just be around the corner. Let’s take a look at how the startup manages this money, and how Simpl makes money out of its business model, and then decide whether it’s being spent wisely or not.
Simpl Business Model
When you’re striving to build a good customer experience with your simple yet effective user interface and seamless transaction processes, you need to keep money coming in to maintain that customer base and experience, and like most fintech startups, how Simpl makes money is through the really effective revenue strategy called commissions.
Through all the partners that support Simpl, the company earns a certain percentage commission for sales made through the Simpl app. What differentiates Simpl from other fintech startups out there, however, is that Simpl charges zero interest for the user’s bills. This is a common practice for a startup to initially get more users involved by lifting interest charges, and bringing in a huge amount of offers. Simpl seems to be following the same route. Whether this will work or not, depends heavily on the user coming back for seconds. And judging by the 950,000 active users, seems like that strategy is working.
Simpl, and fintech startups in India in general, are facing a rather cinematic change of tides recently. With the number of online users increasing by the minute, payments are undoubtedly going to become completely digital in the coming years. Leading forward this change will be apps like Simpl – well versatile in the industry and holding on to a large market share from the very beginning. But startups, like the tides, are often unpredictable. You never now when the next big wave is coming, taking the world over by storm. And we at GrowthInsights agree – the best time to pay attention to these little waves is now.