65 Million Internet Users To Propel India’s E-Commerce Success Story

JuxtConsult’s latest research puts the number of active Internet users in India at 65 million (or 6.5 crore), up 28% from 2010. 6.1 crore were regular users, and urban users aggregated 4.6 crore. Also, four out of five net users log on to the web every day. 58% of respondents access the Net at home, and mobile phones account for only 25% of the internet user base. E-commerce is gaining ground with 80 per cent of internet users searching or buying online. This has resulted in a 5 crore consumer base and 1.7 crore of these or 29 per cent of all internet users also ‘buy’ online, the report said.

The study was conducted during April-June 2011 and covered 32,876 households in 104 cities and 15,889 households in 766 villages.

Who Stands to Benefit?

We would say everyone involved in E-Commerce for a start, and empirical evidence keeps showing up every day. We wrote about GSMA previously, and the association of mobile phone operators in the country believe a 10-per cent growth in mobile broadband will add Rs3,50,600 crore ($80 billion) to India’s GDP by 2015.

Every passing week, a new company seeks to go public with an IPO or two. Some of them are localized search engines like Just Dial, who want to raise Rs 360 crore. For the year ended March, Just Dial reported a profit after tax of Rs 28.6 crore, up from last year’s Rs 18.4 crore.

Foreign giants like eBay are throwing their hat in as well. They have acquired Magento – the makers of open source e-commerce platforms. Magento is a reputed e-commerce technology developer and eBay can use them to jump straight into the fray.

What about Online Security?

The government is actually taking the lead in this field, after a total of 117 websites of various government agencies were hacked from January to June this year. They have recognized that we cannot be lax in monitoring one of the biggest cash cows in the world. From asking to monitor Facebook and Twitter feeds to badgering BlackBerry every passing week, the wheels have been put in motion.

Is this Boom for Real?

There are two ways of looking at this; one is tagging on to the growing clamour for investing in India’s technology story based on the numbers stated above. The other is digging a bit deep to actually check how many of these users are actually buying online, and what is the amount of money they are capable of spending.

Case-in-point is Flipkart, who are being valued by PE firms at a staggering Rs 4500 crore, despite being a fairly recent start-up and posting losses thus far. In 2009-10, Flipkart reported a loss of 90 lakh on sales of 11.6 crore. Will unreasonable valuations drag us towards our very own dotcom bubble?

But we are growing!

The trick here is to separate the good from the decidedly average, and not get carried away by population statistics. Mobile broadband reports estimate India’s internet-ready population at 150 million, while JuxtConsult’s survey reveals mobile phones account for only 25% of active Internet users. That said, the potential is there for everyone to see but Investors, Promoters, Analysts & Experts should be patient, paint a fair story and maintain India’s reputation. And there’s the small matter of dealing with a notoriously price-sensitive population, which will post the biggest challenge thus far.

Are you Buying into India’s e-Commerce story? Talk to us!

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