The demographic trends in Indian internet usage and the ways in which Indian e-commerce is developing suggest that it is on the cusp of an explosion that could, in the next three years, turn it into one of the largest markets in the world. India has already become a test market for e-commerce because it exhibits unusual patterns that could be replicated elsewhere. India’s netizens are young, highly social, unafraid to shop online and comfortable with mobile access. India has around 100-120 million or so regular internet users. According to Comscore, an online research firm, this is by far the youngest net population in the world, with over 75 per cent of users under 35 years of age. It is also growing fast, and is likely to cross the 300-million mark by 2014-15, while remaining an extremely young demographic, with over half the users being under 25 years. In terms of monetisation, the Indian e-commerce market is reckoned to be worth Rs 34,650 crore in 2011-12, with around Rs 29,700 crore of that being travel-related (hotel bookings and tickets). By 2014-15, given trend growth rates, the overall Indian e-commerce footprint could be Rs 1,98,000 crore. An unusually large proportion of that market will be cash-on-delivery or COD, due to the fact that credit card penetration is low. COD also reduces fraud. Uniquely, about 70 per cent of Indian non-travel e-commerce is COD. Consumer electronics, financial products, entertainment and apparel are currently the most popular non-travel spend categories.
The Indian market is clearly heavily mobile in orientation and that access mode will grow exponentially. As of now, there are 30 million fixed broadband accounts versus 50 million mobile broadband users (using laptops with USB dongles) and another 15 million on 3G mobiles. Some 5 million users never use a computer, surfing only on mobiles. Mobile handsets and tablets generate close to 10 per cent of India’s web traffic in terms of data use, and much more in terms of time. Smartphone penetration is rising at over 50 per cent per annum while tablet usage is expected to jump as telecom service providers roll out 3G and 4G plans bundled with cheap tablets. Meanwhile, Indian net users show a very high degree of social network penetration. Almost 95 per cent use at least one social network — higher than the global average of 82 per cent. Most users perch on multiple social platforms. YouTube has over 23 million unique Indian users. This population by and large, sees email as a formal mode of communication and uses it only for “work”. Email use has declined by 22 per cent in the past year, mirroring worldwide trends.
Online advertising is worth around Rs 990 crore in 2011-12 and growing at 40 per cent. Marketers and advertisers must ensure that they retain young Indians’ attention, who may be “always online” but hitting the net in short bursts on small screens. And it isn’t just that spending is shifting online; research is, too, for this demographic profile. Opinions, good or bad, spread virally — and woe betide the company that can’t shift gears to match. The sheer scale of the Indian market, and its exaggeratedly youthful profile, promises that it will be an exciting environment. It could be a lead indicator for the rest of the world.