Net Commerce Report India March 11

8/6/2019 Net Commerce Report India March 11

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CONTENTS

Executive Summary .................................................................................................................... 3

Methodology .............................................................................................................................. 5

Glossary of Terms Used ............................................................................................................. 6

Introduction ................................................................................................................................ 7

Market Size of Product Categories ........................................................................................... 11

Online Travel ......................................................................................................................... 11

E-tailing ................................................................................................................................. 12

Financial Services .................................................................................................................. 13

Digital / Mobile downloads .................................................................................................... 14

Other Online Services ............................................................................................................ 15

Indian Online Shoppers ............................................................................................................ 16

Mode of payment .................................................................................................................. 18

Reasons for not shopping online ............................................................................................... 19

Promising Future ...................................................................................................................... 21


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EXECUTIVE SUMMARY

Net commerce on India has evolved over the past decade in terms of magnitude. Total net

commerce market of India is estimated to be INR 19,688 crores in year 2009 and is expected to

grow to INR 31,598 crores by year 2010. It has come a long way since 2007 when the marketsize was just INR 8,146 Crores. The detailed usage pattern, however, has remained quite

uniform and skewed over the years. Certain services continue to dominate the overall market

while other still lag behind.

Net Commerce Market Size from 2007 to 2011

(Figures in Crores. Percentages indicate share of the overall market size)

Year Dec 2007 Dec 2008 Dec 2009 Dec 2010+ Dec 2011+

Total Market Size 8,146 14,030 19,688 31,598 46,520

Online Travel

Industry 6,250 (77%) 10,500 (75%) 14,953 (76%) 25,258 (80%) 37,890 (81%)

Online Non-Travel

Industry 1,896 (23%) 3,530 (25%) 4,735 (24%) 6,340 (20%) 8,630 (19%)

- eTailing 978 1,120 1,550 2,050 2,700

- Digital Downloads or

Paid Content

Subscription 238 290 435 680 1100

- Financial Services * 1,200 1,540 2,000 2,680

- Other Online Services

(incl. Online

Classifieds) 680 920 1,210 1,610 2,150

*: Financial Services were not calculated in the years prior to 2008. +: Estimated Figures

As of 2009, among Internet users, online travel leads the pack with 76% share in Net

Commerce (INR 14,953 crores) while eTailing takes second position with 7.82% share (INR

1,550 crores). In eTailing, computers and computer peripherals account for INR 560.52 crores

while cameras, mobiles and MP3 players contribute INR 389 crores. Other major contributors

to net commerce include online classifieds (jobs, online matrimonial, cars, real estate and

others), buying movie tickets, food delivery and gaming subscription is estimated to be INR

1,210 crores. Financial service transactions over the Internet comprise nearly 7.8% of the

market size (i.e. 1,540 crores).

Online users in India have exhibited willingness to make purchases over the Internet; this isquite evident from the growing net commerce industry. In the last few years, the interactions

have been skewed towards specific categories such as travel or certain products in eTailing.

This behavior has evolved recently and is expected to blanket different kinds of products and

services purchased over the Internet and mobile networks. Given the increasing awareness and

acknowledgement, the overall industry is slated to experience a high growth in the next couple

of years. While online travel will continue to comprise a major proportion of the overall market,


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e-Tailing and digital downloads could experience a high growth. Mobile/Digital downloads are

expected to grow given the high proliferation of mobile devices in the country among different

users as well as introduction of interactive content over the Internet. E-Tailing which has

experienced growth in few select products till now; is another area for growth. Recently, a lot

of ecommerce initiatives have started to garner decent attraction from Internet users (albeit inlimited categories such as books and digital products). There has also been an increase in

funding for such initiatives. Further, famous retail chains are also opening up to embrace the

medium to ensure there are sales over the Internet. If this momentum continues, ecommerce

is expected to be an important activity among regular Internet users.


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GLOSSARY OF TERMS USED

Active User: An individual who has used the Internet at least once in the last 1 month.

Claimed Internet User: An individual who has used the Internet at any point in time in the

past. This gives us a clear indication as to how many Indians have experienced Internet at least

once in their lifetime.

Internet Non-Owner: An individual who belong to a household which does not own Internet

connection.

Internet Non-User: An individual who has not accessed Internet at any point in time.

PC Literate: An individual who knows how to use a PC. While this term does not signify the

extent of PC usage, it means that a computer literate is able to work on a PC without

assistance.

LFI:Internet users who Look for Information (LFI) for a product or a service they want to buy.

Online Shoppers: Internet users who look for information and eventually buy a product or a

service over the Internet.


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INTRODUCTION

In India, Internet has primarily been used for enabling communications between individuals

through various modes such as emailing, messaging or even social networking. However, a

digital interactive media is only so much successful if it fails to pervade every single activity an

individual indulges into in their daily life. In India, initiatives over the Internet have still not

been able to make users buy products and transact monies.

The I-Cube 2009 study clearly reflects on the limited penetration of eCommerce among

Internet users. In the survey conducted in top 15 cities in the country among 17.5 Active

Internet Users, who access Internet at least once in a month, there are 13.6 Mn users who look

for information regarding products. Of these, there are merely 7.4 Mn (40%) have bought any

product over the Internet.

eCommerce Penetration among Active Internet Users


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The figure, below, illustrates the growth in the market size since 2007.

Net Commerce Market Size from 2007 to 2011

(Figures in Crores. Percentages indicate share of the overall market size)

Year Dec 2007 Dec 2008 Dec 2009 Dec 2010+ Dec 2011+

Total Market Size 8,146 14,030 19,688 31,598 46,520Online Travel

Industry 6,250 (77%) 10,500 (75%) 14,953 (76%) 25,258 (80%) 37,890 (81%)

Online Non-Travel

Industry 1,896 (23%) 3,530 (25%) 4,735 (24%) 6,340 (20%) 8,630 (19%)

- eTailing 978 1,120 1,550 2,050 2,700

- Digital Downloads or

Paid Content

Subscription 238 290 435 680 1100

- Financial Services * 1,200 1,540 2,000 2,680

- Other Online Services

(incl. Online

Classifieds) 680 920 1,210 1,610 2,150

*: Financial Services were not calculated in the years prior to 2008. +: Estimated Figures

Net commerce industry has grown from INR 8,146 crores in the year 2007 to INR 19,688 crores

in 2009. This growth is primarily driven by online travel industry which contributes 76% to total

net commerce industry in India today. Next year the market is expected to grow and reach INR

31,598 crores. This strong growth is expected to continue due to the support of service

providers and regulators it has started to garner and is expected to reach INR 46,520 crores by

the year 2011.


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Growth of Net Commerce over the Years (Figures in INR Crores)

Of the market size of

INR 19,688 crores;

online travel, which

includes booking rail

and air tickets, hotel

accommodations and

tour packages

comprised 76% of the

whole pie. E-Tailing

which includes

purchases of durable

products such as

electronic items,

home and kitchen appliances as well as personal items apparels and jewellery constituted 8%

of the overall share. Conducting transactions to different types of financial services such as

insurance payments and renewals, as well as transactions through trading accounts amounted

to 8% of the overall share. Downloading mobile and digital content comprised 2% of the

overall share. Whereas other online services such as classifieds (jobs, matrimonial, cars real

8,146

14,030

19,688

31,598

46,520

Dec 2007 Dec 2008 Dec 2009 Dec 2010* Dec 2011*

40%

72%

60%

47%

E-Tailing

8%

Online Travel

76%

Digital

Downloads

2%Financial

Services

8%

Other Online

Services

6%

Components of Net Commerce Market- 2009 (INR

19,688 Crores)


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estate and others), online food delivery as well as buying movie tickets and DVD rentals

comprise 6% of the overall market.


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MARKET SIZE OF PRODUCT CATEGORIES

ONLINE TRAVEL

Online travel industry has grown from INR 6,250 crores in year 2007 to INR 14,953 in the year

2009. The restrained growth in 2009 was due to the overall slowdown in the industry. Due to

conveniences of paying online as well as the facilitation from the regulators the growth is

expected to grow at a much higher rate in the next few years.

At present, out of total INR 14,953 Crores Online Travel market, domestic air travel contributes

63% i.e. INR 9,482 crores followed by Railway tickets contributing 28% (INR 4,184 crores)

others such as international air travel (INR 548 crores), Hotel bookings (INR 308 crores), Bus

tickets (INR 294 crores), Tour packages (INR 86 crores) & travel insurance (INR 52 crores)

contribute balance 9% to the total online travel market.

Component Share of Online Travel (Total: INR 14,953 Crores 2009)

Component Percentage (%) Market Size (INR in Crores)

Domestic Air Tickets 63 9,482Railway Tickets 28 4,184

International Air Tickets 4 548

Hotel Bookings 2 308

Bus Tickets 2 294

Tour Packages/Travel Insurance 1 138

6,250

10,500

14,953

25,258

37,890


Online Travel Industry (In Crores)

42%68%

69%

50%


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FINANCIAL SERVICES

Financial services market is estimated to be INR 1,540 crores and is expected to grow to INR

2,000 crores in the year 2010. Prior to 2008, there were no accurate estimates of the online

financial services. The online financial services include Insurance and related services (INR 585

crores), online transactions for financial services (INR 527 crores) and other fund-based

transactions (INR 426 crores) such as paying utility bills.

Component Share of Online Financial Services (Total: INR 1,540 Crores 2009)


Insurance and related services 38 586

Fund-based Transactions (such as paying utility

bills)

34 527

Online transactions for financial Services 28 426

1,200

1,540

2,000

2,680

Dec 2008 Dec 2009 Dec 2010* Dec 2011*

Financial Services (In Crores)

30%

28%

34%


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DIGITAL / MOBILE DOWNLOADS

Digital downloads as a category has increased from INR 238 crores in 2007 to INR 435 crores in

year 2009. Given the proliferation of mobile devices and the services available over the

Internet, the growth rate is expected to be higher in the next years.

Majority of mobile downloads is attributed to ringtone, wallpapers or pictures download (INR

148 crores) and mobile recharges as well as bill payment (INR 148 crores) Software & utilityapplications for mobile account for 18% of Digital downloads (INR 78 crores), paid music/video

downloads contribute 7% (INR 30 crores) while balance 6% is contributed by mobile games

downloads.

Component Share of Mobile / Digital Download Services (Total: INR 435 Crores 2009)


Ringtone / Wallpapers / Pictures download 34 148

Mobile recharge for pre-paid connections or

paying post-paid mobile bills

34

148

Softwares and utility applications for mobiles 18 78

Paid Music/MP3/Video downloads and Other

Content

7

30

Mobile games download 6 26

238290

435

680

1100


Digital Downloads (In Crores)

50%

22%

56%

62%


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OTHER ONLINE SERVICES

Online classifieds includes services such as online dating, matrimonial and jobs. It is estimated

that online classifieds together is INR 1,210 crores. In the classifieds, online jobs constitute

major share of INR 484 crores. Online matrimonial/dating services form a share of 15% i.e. 182

crores.

Component Share of Other Online Services (Total: INR 1,210 Crores

2009)Component Percentage (%) Market Size (INR in Crores)

Online Jobs 40 484

Movie / Cinema Hall Tickets and CD/DVD

Rentals

35 424

Online Matrimonial/Dating 15 182

Other B2C classifieds (Cars, Real Estate) 9 109

Online Food Delivery 0.5 7

Online Gaming Subscription 0.3 4

680

920

1,210

1,610

2,150


Other Online Services (In Crores)

32%

35%

33%

34%


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INDIAN ONLINE SHOPPERS

Barring few services such as online ticketing, broadly speaking, Indian consumers aren't

shopping online. Large numbers of surfers use Internet to look for information about the

product or service they want to buy followed by physical visit to shop for buying.

According to I Cube 2009, 13.6 Mn Internet users looked for information (LFI) for purchasing

product or services online. Of these, 7.47 Mn purchased product or services online. This

indicates that almost each alternate Internet users who looks for information on products and

services on Internet, ends up buying them online.

Online Shopping Behaviours among Internet Users

(Base: 17.5 Mn Active Internet Users in 15 Cities Surveyed in I-Cube 2009)

LFI indicates users who access internet to search for products or services. They may or may not

buy them online.

Online shopper indicates users who access internet to purchase product or services. These are

internet users who transacted online and purchased product or services over internet.

Only LFI indicates those users who access Internet to look for information on product or

services, however, didnt purchase it over internet.

Among Only LFI, 61% access internet to look for information on Online Travel (such as tickets

and hotel bookings); of these 42% end up buying travel services through offline route.

LookedFor Info.(LFI)

13.6 Mn

OnlineShopper 7.4 Mn

Only LFI

6.13 Mn


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Cameras and mobile is the second most looked for information category. 60% of Only LFIs

accessed Internet to look for information on cameras and mobiles while 17% of them bought

the product through conventional shops.

Among Online Shoppers, 89% accessed internet to look for information on Online travel

services and 80% actually purchased product or services belonging to online travel using

internet.

Cameras and Mobiles was looked for information by 62% of online shoppers, however only

12% actually bought it over Internet. This indicates that even online shoppers access internet

to know more about products like Cameras and mobiles but only handful of them actually use

internet to purchase the same.

Mobile downloads and personal items were purchased by 22% and 20% of online shoppers

respectively.

61% 60%

49%45%

41%37%

32% 31%

22%16%

10%

42%

17%10%

18%11%

8%5% 4% 3% 3%

Non Online Shoppers (Only LFI)(Base: 13.6 Mn Active Internet Users who Look For Information)

LFI Bought Offline


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MODE OF PAYMENT

Online shoppers use Debit cards/Internet banking as mode of payment for shopping online.

Credit cards follow closely at second position. Paying against delivery comes at third position

whereas demand draft and mobile payment is almost negligible.

61%

50%

24%

10%4% 3%

37%35%

18%8%

1% 1%

Debit

Card/Internet

Banking

Credit Card Place order online

and pay offline

later

Prepaid cash

cards

Demand Draft Mobile Payment

Mode of Payments

(Base: 7.5 Mn Active Internet Users who have made online

purchases)Ever Used

Most Used


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When person is transacting over Internet, they are not sure who is sitting across the table. They

are worried about delivery of goods. It includes issues such as delay in or non delivery of

goods.

Non delivery of goods: Apart from shopping experience and convenience, one of the major

factors for net commerce not taking off in India as expected is due to the on-time dispatch of

goods. Delivery delays invariably have left people wondering if their money was lost in the

transaction and are averse to conducting future online transactions. Merchants start order

processing and shipping only after the receipt of money through Credit Card or online banking

payment.

SHOPPING EXPERIENCE

Buying a product or service is many times associated with shopping experience. It includes

Shopping experience includes fun, entertainment and the satisfaction derived from shoppingof product or service. While transacting online, most users lack this experience and it has

resulted in people refraining from shopping online.

Lack of touch & feel: Touch & feel of product being purchased lacks while shopping online.

Online shopping is best suitable for products and services that do not require touch & feel

experience by buyer. Probably thats one of the reasons for books & ticketing being more

successful than apparels while shopping online.


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PROMISING FUTURE

The online users in India have evolved and are actively seeking to include their digital

interactions into their daily activities making purchases and indulging in transactions being

one of them. Although the behaviour in online transactions has been a little skewed in the past

wherein travel comprised the majority of the market; this has changed since 2009. As per the

primary research, e-Tailing is one the primary growth driver and will remain so in the near

future. A major reason for such growth is the continuing niche and generalized websites that

are being introduced over the Internet. These websites serve certain segments that are willing

to transact monies for the products such as high-end Fashion and personalized products, due

to the convenience and range of products it offers. There have also been certain initiatives that

include mass market; for instance, certain aggregators and traders are offering their products

over the Internet to reach wider audience in the non-metro markets. As Internet seeps more

into the Tier-II and Tier-III cities there is bound to be increase in the number of online users that

would be willing to indulge in online purchases.

Financial services over the Internet is another area that holds promising growth. Although

there were no estimates prior to 2008, the online financial services amounts to a sizeable

proportion of the non-travel online interactions. Given the characteristic of the financial

services, it is very bound to experience a high growth. Instead of indulging in beaurocratic

methods of completing financial transactions, online modes of obtaining such services will

always be beneficial. There is no inherent need of transactors to be present in-person to get

financial services as there is no need for a touch-and-feel experience. Consequently, most of

the transactions involving financial services such as renewing insurance or paying utility billscan be completed over the Internet.

An important aspect in ensuring continuous growth of the net commerce industry is the

increasing awareness of exchanging money over the Internet by all the stakeholders as well as

the acknowledgement of such possibility by the regulators. As the online and mobile medium

grows, the regulators are in the process of formulating guidelines to make options available to

the users as there are substantive benefits in transacting money over the Internet. Not only

providing convenience, online transactions also reduce personnel and resource overheads that

organizations and the government have to bear. As the issue of security minimizes due to

stringent methods adopted by banks and financial institutions; large numbers of retailers and

online aggregators are providing services to Internet users for their varied purchases they

make on a daily basis.


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About IMRB International and IAMAI

e-Tech Group | IMRB International (a specialist unit of IMRB International) is a research basedconsultancy offering insights into IT, Internet, Telecom & emerging technology space.

Our continuous link with industry and a constant eye on the pulse of the consumer ensures that we can

decode the movements of technology markets & consumers. To our clients we offer an understanding ofthe present market environment and a roadmap for the future.

About Internet and Mobile Association of India (IAMAI)The Internet & Mobile Association of India (IAMAI) is a not-for-profit industry body registeredunder the Societies Act, 1896. Its mandate is to expand and enhance the online and mobilevalue added services sectors. It is dedicated to presenting a unified voice of the businesses itrepresents to the government, investors, consumers and other stakeholders. The associationaddresses the issues, concerns and challenges of the Internet and Mobile economy and takes aleading role in its development. The associations activities include promoting the inherentstrengths of the digital economy, evaluating and recommending standards and practices to theindustry, conducting research, creating platforms for its members, communicating on behalf ofthe industry and creating a favorable business environment for the industry. Founded in January

2004 by leading portals in India, IAMAI in the only specialized industry body in Indiarepresenting the interests of online and mobile value added services industry.

Contact Details

Dr. Subho Ray, President, IAMAI406, Ready Money Terrace, 167, Dr Annie Besant Road, Mumbai - 400 018Tel: +91-22-24954574 | Fax: +91-22-24935945 | http://www.iamai.in

Published By: Dr Subho Ray, President, on behalf of Internet and Mobile Association of India

406 Ready Money Terrace, 167, Dr Annie Besant Road, Worli.Mumbai 400018.

Contact Details

eTech Group | IMRB

IMRB International

A Wing, Mhatre Pen Building

Senapati Bapat Marg, Mumbai

Research Team for this Report

Balendu Shrivastava, Group Business Director

([email protected])

Tarun Abhichandani, Insights Director

Ashwin Godbole, Insights Director
http://www.imrbint.com/

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