Internet Usage in India

written by hiveminds

on January 5, 2013

When we came up with this blog, one of our main aims was to create atleast 1 post on marketing and market insights every week, but with work and client and target demands the 1 post in a week has become 1 post in a blue moon.

To break the vicious cycle, I decided, when I came across this really interesting presentation (Updated Nov 2012), that I have to write about it and give the world some insight into the average Indian internet user.

Stats on India:

India has a population of 1.2 Billion

  • 934.1 Million (78%) have mobiles
  • 137 Million (11%) are internet users
  • 60.5 Million (5%) on social networks

31% of the population live in Urban areas and 69% in Rural areas. 56% are under the age of 30 and 30% are under the age of 15.

What this says about the future is that 10 years from now there will be 26% of the population (factoring growth at 1.33%) which would be between the age of 15-25 reducing our new available work force to just 1/4th of the population.

Internet usage in India:

Now lets talk about the internet users in the country. Number of internet users in India is growing by 150K every month or 1.8 Million new users every year. India is the fastest growing online market in the world with 75% of the users being below the age of 35. Unfortunately the sex ratio (like the population) is very skewed with only 39% of the users being women.

11% of the populace are currently online leaving a scope for the Internet Service Providers (ISPs) to expand by 89%. E-commerce yet has a very large untapped market. Which is what attracted investors and VCs to invest in e-commerce in India. The number of middle income houses here is larger than the population of USA.

YoY Broadband Growth in India

Source: TechCircle.VCCircle.com

With India showing a 101% growth rate in broadband adoption and with just 11% of Indians online, e-commerce adoption would continue to grow very fast and for many years. This is a win-win scenario for investors. Something which will continues grow exponentially for a long time.

The main question which remains is what are these new and old internet users in India doing online. The average urban Indian is looking for communication and social networking rather than browsing or purchasing while the average rural Indian uses the internet mostly for entertainment and communication.

This is largely due to the cultural mistrust of banks, credit cards and of buying things one can not touch and examine. Surprised? We all thought that we were finally getting past that mindset and people were opening up to purchasing online, but such is not the case. While more people do buy online than they used to, its still an insignificant number. The growth trend is starting to flatten and the online purchases beginning to cap.

Shift of broadband from wired to wireless in India

Source: TechCircle.VCCircle.com

While people have access to online shops and e-commerce nobody wants to buy anything online. A shift from wired broadband to wireless broadband means that people are now accessing the internet on mobile devices rather than a laptop or computer. This further proves that internet access in India is primarily being used for communication purposes rather than surfing or browsing.

Internet Usage Break up for India

Source: We are social PPT

So most Indians are looking more towards social networking, entertainment and communicating over the internet rather than purchasing and spending online.While apparel and online retail are the fastest growing sectors in India, the absolute numbers of searches and conversions are still very small and growing at a slow rate.

Cash On Delivery (COD) is the choice mode of payment for Indian customers as credit card adoption is low and online transaction security is still not trusted. COD becomes a problem for suppliers due to additional cost and management overhead of managing lost in transition and customer returns.

Online ad spend is still just 11% of offline ad spend and growing at 25% per year. With the industry being in a nascent stage and in a growth phase the online ad spend should grow much faster.Offline ads is what rules the online market right now, jabong.com, babyoye.com, myntra.com etc (Read more in detail about the affect of TV Ads at our previous post: Click here!) have once again resorted to TV Ads to spread their branding message and capture more consumers as the online ad spend is not contributing enough to sales. Which shouts the predicament that Indian e-commerce companies are facing: “Indians do NOT want to purchase on the internet”.

 


You can also view the PPT here: #://www.slideshare.net/wearesocialsg/we-are-socials-guide-to-social-digital-and-mobile-in-india-2nd-edition-nov-2012

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