This week, the National Association of Software & Services Companies, or NASSCOM, launched a report titled “The Future of Internet in India” in partnership with Akamai Technologies. The aim of the study was to understand the impact of the Internet on the way we live, learn, work, shop and connect; and focuses on the future trends that will change the landscape of India by 2020.
Some projections for 2020, according to “The Future of Internet in India”:
- 730 million Internet users in India
- 75% of new Internet user growth from rural areas
- 70% of E-Commerce transactions via mobile phones
- 75% of new Internet users to consume data in local languages
- India to remain the fastest growing Internet market
- India will have an estimated 702 million smart phones in use
- Mobile phones will emerge as the preferred device for shopping, accounting for 70% of total online shopping.
The overall E-commerce market in India was valued $17 billion in FY 2016. Here are some predictions regarding E-commerce by 2020:
The fashion and lifestyle segment will emerge as the largest e-tailing category with a 35% contribution to e-Commerce gross merchandise value, or GMV, overtaking the consumer electronics segment which dominates the sales of Indian e-Commerce industry at present.
50% of travel transactions to be online as travel across India increases and more people book online, taking advantage of competitive pricing offered by online travel agents (OTAs) and aggregators. An increasing amount of user-generated content online (views on social media, reviews on websites, etc.) is driving aspirational travel, tipping the scales in favour of trips that were once only contemplated, never undertaken.
With the rapid adoption of smartphones and next generation networks, content consumption patterns and consumer engagement channels are rapidly evolving. Even in its nascent phase, the video-on-demand (VOD) market is highly competitive in India.
Financial technology, or fintech, is disrupting financial services and is likely to have far more widespread impact on society and the Indian economy, both directly and indirectly. The fintech software market within this was pegged at $1.2 billion (13-15%). The remaining 87% focus on services, primarily in payments (60% of the market, including ATM/Point of Sale) and core banking services.
Overall, according to the report, India’s fintech market is expected to grow 1.7x between 2015 and 2020. While cash-on-delivery may remain the preferred mode of payment for newer users, keep in mind that use of mobile banking and e-wallets is surging.
Adapting to the new environment
The report reiterated what Mary Meeker stated in her Internet Trends report, that India’s Internet consumption has exceeded that of the U.S. to become No. 2 globally. She put India’s connected population at 277 million, second only to China.
When Meeker presented her report in June this year, she noted that growth of global internet users is actually decelerating if you exclude India, where the opposite is happening. Growth in India is accelerating; up 40% y-o-y as against 33% last year.
Regarding online advertising, Meeker's report pointed to some interesting data regarding online and mobile advertising.
- Internet advertising has gone from $0 to $60 billion in just 20 years. Internet advertising revenue is dominated by Google followed by Facebook. Yet, there’s plenty of potential that is still unrealized. Advertisers and ad agencies are sticking with traditional media even as consumers have shifted their attention to the internet and mobile ecosystem.
- Meeker estimates the mobile ad market at $22 billion in the U.S., pointing to data: people spend 25% of their time on mobile devices compared to 36% watching television, 22% staring at the Internet on their desktops, 13% listening to radio, and 4% reading print. Yet, spending on mobile ads only accounts for 12% of the total advertising pie.
- The social networks people are spending the most time in: Facebook, Instagram and Snapchat.
- Online ad efficacy has a long way to go. Google has proven that advertising on the internet works but many online ads, specially video ads, are ineffective with 81% of users muting the ads and 93% consider using ad-blocking software.
