India’s Ecommerce Explosion: Another Sleeping Giant Awakens

India’s Ecommerce Explosion: Another Sleeping Giant Awakens

India is turning into the fastest-growing ecommerce market in the world and by the end of this year, Indians are expected to outnumber Americans online.

That’s despite the fact that only around 20% of the entire population presently have access to the internet. What characteristics do this new online population have, and what are the likely consequences for this huge market coming online?

Male and mobile

Much of the growth in India’s online population is being driven by the huge expansion in mobile ownership, especially cheap smartphones running Android. Although only around 16% of the population currently has a smartphone, India represents the fastest-growing market for mobile phone devices in the world and many brands are trying to muscle into this competitive but lucrative market.

You won’t find many iPhone owners in India – the cost is generally prohibitive. Instead its low-cost handsets by Chinese brands such as Xiaomi and Lenovo Group, and local brands Micromax, Lava and Karbonn Mobile that are generally winning out here.

Unlike in China, Apple and Google haven’t managed to rise to the top of this market, although Google is trying to aggressively penetrate the market with its AndroidOne phones.

This new online population is overwhelmingly male and mostly in their late teens or early twenties. Indians are more sociable online than the global average, with social media taking up a large proportion of online activity. Many of these users see Facebook as the starting point of the web, or even the whole destination. News, music and video are less popular than the global average, but gaming and education are popular.

Low bandwidth, however, remains a challenge. Handsets designed for these conditions are sensitive to this but the fact remains that internet access remains slow and too expensive for most households.

Bank account ownership remains low, and there are relatively low levels of online shopping. In addition, a consumer preference for cash on delivery payment methods is holding back ecommerce.

However it is expected that these issues will be overcome and the emerging middle classes are expected to become more active in spending online.

India’s online languages

India is a country where many languages are spoken besides the official languages of Hindi and English. Not everyone speaks these two official languages, and those that do often don’t speak them natively. The raises questions of how other languages will be catered for online when it comes to serving India’s market.

It’s thought that majority of English speakers in India could already be online but there isn’t as much content for India’s estimated 400 million Hindi speakers. The next wave of internet users is expected to come from speakers of languages besides English and Hindi, possibly in many cases these will also be from less urban areas.

Google is starting to cater for a wider range of languages with a Hindi language content generator, open source Hindi fonts and keyboard smartphone features catering to about half a dozen languages spoken in India.

Making the content findable remains a challenge because of a lack of Unicode compliance and there’s not a great deal of innovation from local startups catering to Indian languages. And despite Google’s ambitions with the Hindi language it isn’t clear what if anything is planned for other major languages such as Marathi, Tamil and Gujarati.

There’s a strong case for catering to a wider range of languages than India’s two official ones. Marathi alone has over 70 million speakers. Whilst there are only two official languages at national level, states are free to choose their own languages at regional level. As a consequence, there are a further 22 state-level official languages, although several of these have small speaker bases of only around two million people.

Global brands that have tried using local languages generally experience much better engagement, particularly on social media. Companies posting on Facebook using Tamil or Marathi have experienced much better engagement than similar English posts.

After a Mountain Dew campaign using Tamil experienced good feedback, PepsiCo India is now exploring ways to engage in a wider number of Indian languages.

It seems that language could also be a major factor in the growth in internet use. A study by Mindshift Interactive found local language sites were growing at 56% each year, while English sites were only growing at 11%. It’s also the case that costs per click are currently lower for local language advertising, which is surely an incentive for online advertisers to move towards these languages.

Socio-economic changes

So what are the likely consequences of India coming online? It’s thought by around 2018 half a billion Indians could be online, with huge consequences for the economy, business landscape, governance and society. A 10% rise in internet penetration is estimated to be able to increase GDP by 1.08%. A five-fold expansion in ecommerce is widely expected, and it’s also likely that mobile internet access will impact on education and healthcare.

It’s anticipated that internet access could act as a serious catalyst for entrepreneurship and wealth creation, with an expansion in the number of start-ups.

India’s new internet economy could eventually be expected to create over 60 million jobs, far more than will be lost to the new internet economy. Rising internet access is also expected to increase household incomes by nearly a third.

If that seems rather optimistic, consider that in the West the internet is thought to have led to an average rise in GDP per capita of $500 over the past 15 years: whilst it took the industrial revolution half a century to achieve the same gains. Other studies have suggested that internet access has other effects such as decreasing child mortality.

As it has in the West, there’s a likelihood that offline retailers could be impacted with bricks and mortar stores losing out and forced to reduce prices. As India is often characterised by independently owned smaller stores, this is likely to be at their cost.

Larger chains and brands that can adapt to online retailing may be in a stronger position, changing the face of the high street. E-logistics companies will also be advantaged. However, logistical costs in India are often up to twice as high as in developed economies, which puts brakes on spending and the expansion of ecommerce.

What’s clear is that India will be impacted in many ways by its population coming online. There’s still a large number of Indians without access to the internet but things are changing extremely quickly in this fast-growing landscape.

Written by Yusuf Bhana
Yusuf Bhana
Yusuf is Head of Digital at TranslateMedia. He has an interest in how technology can help businesses achieve their marketing objectives. He's been working in digital marketing and web development since 2001 across a wide range of industries and clients.

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