Bangalore, August 11, 2018: There is potential to unlock over US $50 billion in online commerce in India by driving awareness, usage and transactions among the current and next set of internet users and shoppers. This will be driven by more than 500 million Indians who will constitute the next wave of online consumers, according to a report, ‘Unlocking Digital for Bharat: $50 Billion Opportunity’, released by Bain & Company, Google and Omidyar Network.
The report shows that show data usage on mobile is at par with developed markets (8 GB/month/subscriber). With an average of 40 million new internet users added per year to online transactions, the report highlights that only 40 percent of India’s 390 million internet users transact online. To bring more people online and drive growth of users to unlock their economic potential, the report highlights the barriers which need to be overcome and identifies key themes relevant to the next half billion internet users and online shoppers.
Based on a survey of 3400 customers, the report reveals three key characteristics which affects India’s digital ambition
Skewed user base and not equitable across socio-economic classes: Of the 390M users, 80 percent are from affluent socioeconomic segments (NCCS A/B/C); and penetration amongst lower income segments (NCCS D/E) is only 13 percent.
Small transaction base: Only 40 percent of the internet users today carry out digital transactions. The remaining 60 percent do their research online but complete the transaction offline.
Large drop-out rate: As many as 54 million users today have not carried out a transaction after the first trial purchase.
According to the report, it takes three to four months for a typical internet user to make the first online transaction, which makes it very critical for companies to retain customers through content. The trust in the channel(s) increases as users spend more time on the internet. Among users, who have been on the internet for two or more years, 61 percent transact online. However, it also notes that a large number of users (54 million) stop after the first online purchase due to issues with user experience.
Arpan Sheth, partner, Bain & Company and one of the authors of the report, said, “Digital India is at a very interesting point – a large internet user base with significant variations across demographics, and only a small portion actually transacting online. While online spends are still low given lower per capita incomes, there is huge potential to unlock value by addressing user concerns at various stages of the digital curve; however, the path won’t be easy for businesses and they will have to innovate and be patient to monetize this user base and generate value.”
The report identifies four key themes to drive awareness, usage and transactions among the current and next set of internet users and online shoppers.