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India Market Status – correction of preconceptions

Hello all,

I thought I would start to go deep on certain markets in Asia and what is the state of eCommerce in those. India first.

Conclusion

India is different and is a huge opportunity. To be captured, none of the localisation effort should be overlooked.

First correction of preconception: India’s economy is small but growing fast

Of course, one of the main interesting market as it s massively growing is India. It is said that India is now the 4th economy in the world since 2010. Bigger than Germany, UK, France and Russia. I think this is a first perception change that is needed. India (and other BRIC countries for that matter) are NOT developing countries anymore. Sure there are so big that they are all countries with multiple pace of developments and not everyone is lucky to enjoy the growth but as the average of the country, these are MASSIVE economies and will now grow stronger and bigger over time.

Source: Wikipedia quoting IMF, WorldBank and CIA Factbook

Second correction of preconception: eCommerce in India is non-existent

Depending on sources, eCommerce is to be between $3.5B and  $10B in India in 2011. There is more than 112M online users (which would be the 3rd online population by number) and 10M e-shoppers

More importantly, the growth rates are astounding; between 50% and 90% CAGR depending on sources. The domestic market is the biggest part of the growth and count for 75% of it for now.

Third correction of preconception: It is all import/export. Nothing is domestic. And there is no important players.

The market is still massively Travel lead. As per my own eCommerce Market Maturity Strategy, India’s Travel category has already and massively moved online, Retail (consumer electronics and Apparel) are coming next but haven’t yet taken off. It is said that 20% of the spend is retail.

Now if we have a look at who is driving those main categories, Transport and mainly Railways (domestic almost 100%) accounts for the biggest share and accounts for 40% of eCommerce alone. The rest is taken by Airlines (local Airlines like AirIndia, JetAirways and other low costs) and local OTA (Online Travel Agent) like Yatra/Yaatra, makemytrip are taking the majority of the shares.

Under the Apparel category, we haven’t seen the emergence of local big players yet and most of it is buying to “mature markets” like the US and UK. This is yet to come but will definitely come soon.

On Consumer Electronics and Books, Amazon is said to ship one fully loaded 747 plane a week of their products to India and is considering entering the market directly next year. A lot of local copycats exists like Flipkart and they are getting impressive traction.

Logo of Flipkart.com

Image via Wikipedia

Fourth and last correction or preconception: Indians can be served with Western standards of service quality in English and be offered with Credit Card payments only

Think 3 main things if you want to serve the India market:

1) Indians all expect an outstanding Customer Service Level, usually Local and free Customer Service numbers that speak their local language is generally offered by serious local players.

2) English is spoken by “only” 100M Indians. The overlap between these 100M and the current online population is massive but if you consider that the Mobile population is HUGE and have passed 500M mobile phones, the India government is even trying to incentivise usage, we will not be able to count on English for too long and serving languages in India can be somewhat a nightmare with 22 recognised official languages and many other thousands spoken in rural areas so we have to be ready to show a certain level of commitment.

ଓଡ଼ିଆ: ଭାରତ ମାନଚିତ୍ର English: Map of India in O...

Image via Wikipedia

3) Payment is different in India, Credit Card penetration is still very low, Bank and Debit Cards penetration is bigger but still not mainstream. People get offered Cash On Delivery ways to pay for online purchase in the main cities and the society is still very cashed based so we will need to accommodate new and different payment methods. A lot of operators would  also want a piece of the pie and all try to run Mobile Money programs there.

Sincerely,

David Pardo

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A new Payment blog

It is said a revolution is at hand in Payments and around how eCommerce and mCommerce will happen in the near future. I ll be talking about that. Mostly.

Disclaimer: all opinions here are my own and my own only and not the ones of which companies I worked or am working for.