What is the Business Model for Google Tez?

The business model for Google Tez is surprisingly simple yet highly effective. Instead of spending millions on traditional advertising, Google is leveraging the power of word-of-mouth marketing to reach a vast audience quickly and at a much lower cost.

By providing users with free cashback, Google is creating a network of marketing agents. Users are incentivized to install the app and refer others, earning a small cashback in the process. This not only increases user acquisition but also ensures that the app becomes popular through organic means.

Why Free Cashback?

Google's strategy is based on a classic business principle: build a high-quality product, dominate the market, and then monetize it effectively without compromising on the user experience.

Google's Approach:

Google Tez follows a similar pattern to other successful Google products like Google Search and Android. Initially, the focus is on making the app as user-friendly and attractive as possible. As the user base grows, the company gradually transitions from providing incentives to charging minimal fees for transactions.

Lessons from Google’s Business Model

When Google launched its search engine, it was not the first in the market, but it quickly became the best. Initially, competitors like Yahoo and AOL were placing ads on their homepages. Google, however, kept its page clean and focused on making its search engine the best. Only after dominating the search market did they start monetizing it without affecting the user experience.

The Android Story:

When Android first entered the mobile operating system market, competitors like Symbian were already established and dominant. Google's strategy was to give away Android for free, encouraging both new and established companies to adopt it. Today, Android is the dominant mobile platform, and Google is monetizing it through various means without surrendering user trust.

Google Tez in the Indian Market:

In India, other players like PayTM, Freecharge, and Mobikwik had a significant head start and already had large user bases. To capture a substantial portion of the market, Google had to offer similar incentives to these companies did — namely, cashback. Historically, PayTM achieved significant success by offering generous cashback offers to attract both new and existing users. Google is following a similar path with Tez, leveraging its massive financial resources to acquire a large user base.

Conclusion:

Conclusion: Google is not in the business of giving away free cashback indefinitely. Once Tez becomes a dominant player in the market, Google will start monetizing the app through small transaction fees. The strategy may seem altruistic, but it is ultimately part of a sophisticated business plan aimed at long-term profitability. So, while users enjoy the benefits of free cashback, they should also be aware that Google is building a solid foundation for future revenue streams.