Growing Internet Business in India

Two factors have played a major role in the growth of internet. First is the social media & second is Mobile technology. Social media has provided the purpose for users to use internet & Mobile technology has made it possible due to its low cost. Compared to other businesses, Internet based business is a low cost investment business hence any small business can get direct access to a very large market in a short duration of time. Just to have an idea about growing internet users, we can have a glance at the number of internet users in 1995 & 2012. There were around 16 million internet users in 1995 & in 2012, the number has grown up to around 2,280 million.

The number of internet users & the rate by which they are growing each year are significantly high. India has world’s youngest internet population. 75% of the internet users in India are below 35 and are earning more compared to their parents.

According to ComScore (which is one of the leading research organizations), in Nov 2011, 27.2 million online users in India visited online shopping websites. This is 18% growth compared to previous year. Around 60% of the internet users have visited online shopping websites in Nov 2011. 7.6 million Users visited coupon websites which is a 629% increase compared to previous year. Consumer Electronics was then next with 7.1 million visitors growing 12 percent from the previous year.

The increase in number of visitors visiting coupon websites indicate that buyers are looking at cheapest buying options. But, at the same time it is important to remember that Indian buyers do not ignore quality.

The table below shows the growth in number of internet visitors per category,

The future of Indian online selling sites is bright as it is expected that the number of internet users in India will grow five times & may reach to 376 million by 2015.

Number of people transacting online is expected to touch 39 million by 2015. According to the study by a financial services firm ‘Avendus’, Indian e-commerce market is expected to grow from USD 6.3 billion in 2011 to USD 24 billion by 2015. Online travel booking is expected to reach Rs 54,800 crore by 2015.

A new report by Boston Consulting Group in March 2012 says that, Indian internet economy is worth 3.2 trillion which is 4.1% of GDP (Gross Domestic Product) and is expected to grow to 10.8 trillion by 2016. By 2016, there will be 3 billion internet users globally. Report also says that companies in India using internet for marketing, sales and interactions with customers and suppliers saw 19% growth in revenues over past three years, compared to 13% for others who made low or no use of the Internet.

Initially, the e-commerce market in India was dominated by urban users but now the situation is changing. E-commerce entrepreneurs and experts think that small towns and rural parts in India will play a big role in growing this industry. As per experts, by the end of 2012, more than 60% of online shoppers will be from tier 2, tier 3 cities & rural areas. This would be possible due to evolution of Mobile internet technology & cost efficient tablet computers. Organized retail in India is limited to tier 1 cities hence customers in small towns and rural areas do not have access to them but, online retailers are filling this gap. Online retailers can reach in small towns and rural areas as infrastructure/transportation cost is low. One more point to remember is that there are many small towns in India which are very rich. People are interested in using latest consumer goods available in the market but can’t use them as organized retail is not penetrated well in India. Internet & e-commerce will make this possible.