Acquisition project | Simpl

Simpl

Simpl is a fintech company that primarily operates in the consumer technology space. It is present on 26000+ merchants with a user base of more than 70 lakhs. Simpl provides the following solutions in different spaces,

1. BNPL(Pay later),
2. EMI payments (Pay in 3),
3. COD (Simpl Pay After Delivery)
4. Checkout solution (Simpl Checkout).

Pay later

Pay Later is a one tap checkout solution that enables users to pay via Simpl on various D2C apps like Zomato, Swiggy, etc and pay the amount back without any interest (Buy Now Pay Later). The bill is generated fortnightly which can be paid by users on the Simpl app or via the payment link shared over SMS.

Onboarding flow

The user onboarding is done via 2 ways

1. Mobile app: The user has to download the app and fill up the mandatory details. Simpl then makes a softpull call to the bureau (CRIF) and also uses the device parameters to compute the credit limit to be assigned for BNPL. The max limit assigned in this case is 4k.
2. Merchant app: The second way of onboarding is via merchant apps. Depending upon the merchant integration, the user data is sent to Simpl where the credit limit is a function of device parameters and activities across other partner merchants (other than the merchant where the user is being onboarded). The max limit assigned in this case is 1.5k.

Based on the web search across google, twitter, youtube and reddit, we found that most users on twitter are either complaining about tech issues or praising and recommending it to be used on other platforms. A lot of users are young students and professionals seeking credit for daily transactions of D2C platforms with minimal to no interest and processing fees.

While users on Reddit majorly spoke about why users use Simpl which is majorly centred around access to credit for NTC or no credit users and ease of payment.

Ideal Customer Profile

We interacted with 5 current users of Simpl Pay Later to understand the current user base.

We asked them the following questions,

1. How did you get to know about Simpl?
   Most were either referred by a friend or got know about simpl via the merchants app
2. How often do you use Simpl?
   Most people use it 2-3 times a month
3. Which apps do you use most frequently?
   Instagram, Linkedin, Whatsapp, Zomato, Swiggy, Rapido, Uber
4. What makes you use Simpl over other BNPL apps?
   Discounts and offers for payment via Simpl on merchants app and ease of checkout (No OTP, authentication required)
5. What made you sign up for Simpl?
   Discounts, offers and felt reliable since it was recommended by everyone.

A lot of user are young seeking credit for small purchases with minimal to no interest rate.

The given insights raises some questions on the value proposition, because it ends up attracting credit seeking individuals rather than convenience seeking ones.

This is important because Simpl doesn't charge any interest or processing fees (late payment charges are applicable but no impact on credit bureau data of users), they charge a nominal percentage on the total value of all the orders executed via Simpl on the merchant app, hence to earn profits on the transactions, Simpl need to ensure that users pay back their due on time. The new user delinquency(default rate) is around 30% which means they need to acquire good quality users for profitability. The value proposition needs to include access to credit and include users younger than 26 years of age with an intent to payback.

Influencers: Exiting Customers, Partner merchants

Blockers: Lack of trust for new users (Fear of sharing PAN and Aadhar details for app onboarding)

Market

Simpl enables users to pay seamlessly on D2C apps and let users pay using Simpl's Pay later credit instead of their own money. The target customers are from tier 1 cities, who frequently use D2C apps to order or avail services frequently.

Smart phone users:  600,000,000 source

Tier 1 city users: 150,000,000 source

TAM: 150 million​

Assuming 60% use it daily for online orders and services

Serviceable market: 90 million

Other apps that provide Pay Later services are LazyPay, Freecharge, Zest and Paytm Postpaid and its heavily competitive given the limited players dominating the market, we can assume 20% to be the obtainable market, the users tend to use paylater given there are offers, hence they can swing from one service to another, so barring the loyal users for other apps we can assume most of the market serviceable market is addressable

Serviceable obtainable market: 70 million​

Product Market

Although the company says seamless transaction experience as the value proposition, a lot of users who search for Simpl are looking for a BNPL solution. The other competitors in the market are LazyPay, Freecharge and Paytm Postpaid. Most of them offer a similar value proposition as listed on their websites (attached below) apart from Paytm Postpaid that provides a higher limit and an impact on credit score.

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LazyPay
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Freecharge

Paytm Postpaid

Core Value Proposition

The Core value proposition for Simpl is seamless payment experience with minimal hassle as per the company, but in addition it should also include access to credit without any interest or processing fees.

JTBD

Since, the primary point of contact with Simpl is either the checkout page or the Simpl app, the major channels for acquisition shall be Product integration (improvement to lower CAC) and Referral program (acquire new good quality users), since most users discover Simpl via the merchants apps and word of mouth.

Acquisition Strategy

Simpl Paylater is currently at the mature scaling phase and the major channels of acquisition for Simpl are via Product Integrations with merchants and Referrals. 90% of users are acquired via merchant integration and 10% via app onboarding. With product integrations leading the acquisition strategy by a significant margin, since most users discover Simpl based on the offers on the merchant apps and being a checkout/payment solution, product integration becomes a core part of their value proposition. The users are then onboarded on the app, who in turn can refer more users, so referral programs can also be another channel of acquisition.

Product Integrations

A major chunk of users acquired by Simpl are via Product integrations. The Simpl pay later option is present on the checkout page of the merchant apps.

Depending on the kind of integration Simpl has with the lender, Simpl gets an approval call with all the required parameters to either approve or reject a user and also assigning a limit (if approved).

The approval call is either triggered when you land on the checkout page or if the user selects the Simpl checkout option. Although the CTR is high in case of the second option, you get access to a larger pool of users in case of the first option. As a result, more data to better underwrite the users, this also solves the use case of filtering out low affordability credit seeking (Aukat Filter) and also fraud users.

The direct integration on the checkout page (use to be) is complicated. The technology stack on checkout integration can be simplified for easier and seamless tech integration. An added value proposition for merchants can be slab wise lower margins for different slabs of the total checkout volume instead of fixed percentage share, this will encourage them for a checkout page integration.

Currently, the Paylater option is listed lower on the checkout page, listing it among the preferred options can also boost top the funnel volume.

Simpl can run an experiment to integrate into subscription program for platforms with low ticket size and recurring payments that can be enabled via autopay (e.g. OTT platforms)

In conclusion, Simpl can enable checkout integration and higher placing of Pay later option higher on the checkout page for all the high volume and high revenue merchants to maximise the revenue (checkout page integration is only enabled for Zomato that brings the highest revenue and volume). This will help the optimise on cost (filtering bad customers and improve the tech stack) and help improve on the revenue.

Referral Programs

There are 2 cohorts of users that can be used for referrals, but we can’t enable the referral program for all the users. We’ll look at all the pointers for a referral program for paylater.

1. Brag worthy things: There are three things people majorly talk about, the first is the discounts, the second being seamless checkout and comparing limits, while the discounts can go down for regular customers, the seamless checkout story is brag worthy (Also, you may sound cheap in front of some people if you talk about discounts). Additionally, people find pride in comparing limits (Men and their obsession with size, bigger car, house and credit limits.)
2. Platform currency: The platform currency for Pay Later is the credit limit, it can only be used on partner merchants. Higher limits lead to high ticket size purchases.
3. Who to ask for referrals: A man/woman is known by the company he/she keeps, hence, the referral program should only be available to repeat users (Older than 3 bill cycles) who have shown an intent to regularly pay their dues on time.
4. Discovery of referral program: The referral program is currently located on the profile menu (named ‘More’ for some reason) on the app. For users with a good record, but no app download, we can send SMS, Mails and whatsapp messages along with a link to download the app as well (to track expenses and referral program).
5. Referees sharing the referral links: Although the profile section on app is a good place to refer and track, for high quality users, it should be displayed on the landing page of the app with occasional high discounts on referrals. Additionally, we can experiment with placing a link to refer upon successful completion of a transaction on the merchant page, the users can either click on it and be redirected to a page with referral details/app or continue shopping. It should be an experiment, since it appears at the very end and of the happy flow to understand if the additional step affects the User experience in any way and depending upon the learnings either rollout the feature in phases or cancel the program.
6. Tracking referrals: The referral should only be tracked via app (more data and better management for users), there should be a dedicated section on the app to track referrals for every user referred, with update on their status (Link opened, Successfully onboarded, shopping via Simpl, etc)
7. Landing page for non user: Upon clicking the link, the user should be redirected to the playstore/App store to download the app. This will let the user download the app and onboard.
8. Incentives for continuous referrals: Simpl currently provides upto 100 rupees cashback for all users for the first transaction the user being referred. They can create slab wise goals for the number of users who successfully complete a transaction on referrals.
9. 1. For 3 every user completing a transaction on referral, provide a limit of 1000 rupees to a certain limit. (People can compare limits to brag here).
   2. Upon 12 users completing a transaction on referral, avail huge discounts on frequently used apps.
   3. Upon 50 users completing a transaction on referral, lifetime waiver on billbox access fee (for bill payments across 350+ billers) and so on…

In conclusion, Simpl can maximise their market penetration in the BNPL market via the Product integration and referral program with lower cost as compared to ads and running frequent offers to attract users temporarily at higher cost.