The Internet Usage Trends in India
Internet usage trends in India and how it contributes to one of the fastest growing e-commerce markets in the world evaluated at $38.5 billion. India is at the crossroads of an e-commerce revolution with the country’s online shopping and retail market-making strides which has the global players sit up and take notice. The recent Walmart acquisition of Flipkart for $16 billion (which gave Walmart a 77% ownership) goes on to show the serious interest the homegrown e-commerce players have garnered from the big names in the industry.
However, this is not a recent development. Earlier in the year, Paytm Mall which gained its unicorn status after raising close to 3000 crores, closed in on its third installment of four tranches from Japanese SoftBank and Chinese Alibaba (and Alipay). This investment which brings Alibaba’s (along with Alipay) ownership to 50.8% and SoftBank’s stake to 11.9%, is a signal about the healthy and growing e-commerce scene of the country which is currently evaluated at close to $38.5 billion.
The Indian e-commerce scene is projected to hit the $100 billion mark by 2020. According to Adrian Lee, Research Director at Gartner, Inc., about 15% of the country’s population will be switching from offline retail to online shopping before the end of FY 2018. To put that in perspective, it is a sharp increase of 200 million users in an already populated audience base.
This begs the question of what is making the e-commerce sector grow at such a tremendous pace? The answer is multifaceted, with the first reason being the enormous funds (of which there is no dearth) pumped into the market, which is later spent on marketing budget used for promoting the business.
The second reason is the massive proliferation of mobile data and internet not only into the major metropolitans but also the tier-II and tier-III cities. In fact, according to a report by coupons and deals company, GrabOn, the current mobile phone users of the country stands at a staggering 4 billion, with 600 million more added to the number annually.
Out of this figure, 400+ million are smartphone users with access to internet and mobile data. The same report provides a clearer picture of the internet usage trend in India with data points like a number of searches made in an hour and so on. The report suggests in an hour 17 million Google searches happen in India and close to 38 million photos are shared on Whatsapp while more than 200 thousand transactions happen on Paytm.
This year on year rise in the number of internet users is made possible by the infusion of low and medium price range smartphones along with reduced tariff rates on mobile data. The Reliance Jio data plans and mobile phones have brought a super affordable smartphone complete with data to the average Indian. This in turn positively impacts the e-commerce market by providing it leads which can later be converted into buyers.
As more and more Indians, especially from the rural areas (where the majority of the population lives), start using smartphones, they gradually change their primary mode of shopping from offline to online as it saves time and effort as well as provides huge discounts, not to mention around the year sale events from various marketplace portals.
It would be wrong to assume that only the e-commerce market gains from the increased internet/mobile user database, in fact, other verticals like online cab hailing, online food ordering, digital payment, online flight and train booking benefit from the same. Post the demonetization and currency ban of 2016, there was a surge in the number of users for digital payment gateways particularly Paytm with the ubiquitous slogan ‘Paytm Karo’.
The cashless transactions grew from strength to strength as indicated by RBI reports, which recorded a 13.5% increase from Rs.109.82 trillion in August to Rs. 124.69 trillion in September 2017. Kiran Vasireddy, COO, Paytm mentioned that they have registered 3.5 times increase in digital payments the last year alone and said the efforts will continue to enable more users to experience the comfort and ease of digital payments.
The future of e-commerce scene in India looks ever so bright with more and more global giants looking to invest in domestic online retail enterprises, along with e-commerce startups flourishing in style. India’s user base with disposable income, combined with a relatively fresh database of internet subscribers (which was untapped a few years ago), place the industry at a unique position from where the only way is above and beyond.