Latest report by IAMAI suggests consumer ecommerce will grow by around 30% this year. The high base effect of online travel is coming into play (almost accounting for 65-70% of the market). Not sure of the methodology (last three categories of Classifieds, Paid content and Digital downloads have somewhat uniform 50% growth rate) but a 30% revenue growth rate at such a small size is certainly not exciting.
While the report suggests key barriers to growth of online travel are payment mechanism, low internet penetration, etc, other people I speak to tell me that online air ticketing is already more than 50% of the overall airline ticketing market. I am not sure if the barrier due to payments etc is any larger for hotels etc. While the airline ticketing market will by and large start deriving off the overall industry growth (the channel shift growth will be low), other product categories and user experience around that could be the key drivers to pulling the growth numbers up.
These numbers do not seem to include the online advertising market, which should be another 400-500 crores this year.
- Promoters or Entrepreneurs – A choice for Private Equity players - August 3, 2019
- Startup Marathon Mindset - March 25, 2019
- What’s your Customer Culture? - March 4, 2019
Indian e-commerce is tied indirectly to the pricing models Indian ISPs use.
Indian consumer behavior is directly influenced by how much something costs., not a big surprise, there. However Indian e-commerce will not take off unless the first bold ISP offers DSL lines for unlimited use for the same fixed low price. People in India log in and log off and that’s because every minute online costs money. If you don;t need to worry about the costs of remaining logged in, then e-commerce will go through the roof!
That seems to be the key thing that is holding back indian e-commerce.
There’s something that rankles….
Many smart frequent travelers that I know, look up the cheapest fare available thro the travel sites and book online by logging directly into the Airline’s portal itself – they say it’s safer that way since in case if the flight is rescheduled or canceled, it’s easier to claim a refund or request alternative arrangement since they have their counters at the Airports – in effect they get a throat to choke.
If you book thro travel portals that provide blanket service across airlines, they play the blame game (It’s not our fault, it’s the airline’s fault etc.)
That yields no revenues to the travel site – in fact it’s reduced to a social and charitable service. How should one interpret these numbers (not equal to revenues) then ?
Just had a quick read, and some thoughts:
5,500 crores is a huge number! I wanted to check out what does it stand for, they quote something like “transaction value”. And if this is the total value of tickets sold over travel websites,this is definitely not the ecommerce opportunity, it is the aviation opportunity. The ecommerce opportunity is the commissions that you make on selling these tickets
Railways is not an ecommerce opportunity. Nobody is going to buy railway tickets from a third party, they will keep using irctc.(that takes out 700 crores).
Again etailing is very different from retailing and the whole transaction value cannot be taken as an opportunity, especially in the case of auctions.
Digital downloads – Again I don’t think the total value can be taken as an ecommerce opportunity.
IAMAI had recently conducted some conference at Taj Land’s end, and I was watching the proceedings on NDTV. If I remember right someone said that the online advertising spend was around 200 crores last year. If someone could get the right number, that would be great.
I think the number 9200 crores is really huge, it would be more in the tune of 1500-2000 crores.
Cheers
Karthik
P.S. Some queries about the report:
Active Internet Users are defined as those who have accessed Internet at least once in the last one month. Is this the standard definition? Frankly that doesn’t sound like a good definition! Any number on how many users access internet everyday?
They have a nice table “Categorization of Internet Users” on Pg 14 which looks interesting. But there are no details about the sample that they have used to arrive at it.
Alok,
Travel always has been clear no.1 in the ecommerce market in India and world wide. During the dotcom burst post9/11 online travel accounted for about 50% of the total ecommerce revenues worldwide. With the emergence of innovative payment mechanisms as well as the retail Industry in India will further act as a driver for online travel in India ( Reliance has already planning for launching travel & ticketing services across it’s retail stores). Soon we may see more and more online travel portals establishing offline point of sales either own it’s own or by partnering with retail malls where customers can book tickets or hotels.
Coming to other segments, verticals like Jobs , e-shopping , Matrimony , financial services may be of huge growth potential. As the above mentioned services are of some use to the normal online consumer. Again for paid contents
Now where does the current social networking & web2.0 portals will fit in?..will they be looking at the online advertising market for revenues or will they also look for a share into the e-commerce space ( Like a community based referral system like ndtvjobs or reffester).
Anyway the news is good for the traditional portals who had survived the dotcom crash with a long term vision. But for the emerging SN & web2.0 portals let’s wait and see how they are going to grab their bytes out of this 9200 crore market.
Interesting about online ticketing – though if you consider that most airlines now take bookings online from travel agents as well, the end-consumer seeing no difference, that would probably indicate why more than 50% of ticketing is online.
(it costs a lot to have one of them hi-fundu cross-airline cross-hotel booking software – i forget their names – which have these arcane codes that one has to remember like AX^&PNTS#(( or something to find out if the system is logged in and such)
Also sorry to be quite pessimistic but here’s some stats from TRAI for Quarter ended June 2007:
– total internet subscribers DECLINE 0.5% in the quarter, compared to the last quarter, down to 9.2 million now
– total broadband connections is up 3.55% q-o-q to 2.41 million
– Average minutes of usage for dialup was 195 minutes per subscriber per month
– There are 38 million users accessing internet through mobile handsets. I don’t know if this is the number of internet enabled handsets or people actually using their mobile to connect/browse.
– Total bandwidth owned is about 32G each way (up/down). Isn’t this too low for an entire country? A single ISP would have more than that in europe/US.
This has gotten me totally down – how do these numbers work out for ANYONE in the internet space in India? Don’t we need like massive growth going on RIGHT NOW in the number of connections, specially broadband, to suit our goal to hit the 100 million market? (the critical mass we need, perhaps).
If you are where I am, i.e. serving content to a niche set of these subscribers – the whole business plan looks like pocket change with such numbers. We have an alternate plan that does not involve external funding now, because we have to!
(Someone please help and correct me if my analysis is totally off the rocker)
Hat tip: ContentSutra