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India: B2C e-commerce to more than double by 2021. A market to consider for 2017?

With a population of 1.25 billion, India is one of the most densely populated countries on the planet.  In 2015, internet penetration was at 26% but has been climbing at a dizzying rate year on year.  The same trend can be seen throughout the Asia Pacific region, as digital sales are expected to surpass the one billion mark for the first time in 2018. There’s little doubt that India is fertile ground for aspiring UK businesses looking to expand, but what can non-native businesses expect?

Around 240 million internet users in India are expected to buy goods and services online by 2019, the majority of them male. As many as 49% of consumers said they primarily made digital purchases with their smartphone in 2016.  Any businesses looking to expand their operations to India should take the rather unique makeup of the consumer market into account.

As recently as June 2016 India’s government eased foreign direct investment restrictions in several sectors in order to attract more business from overseas (corporation tax is currently at 42% for international businesses). It’s something which Apple Inc and many other brands have been waiting for, and could be the perfect time to make inroads into the market.

Google and Facebook rule a divided market

Google is the number one search engine in India. In fact, Google gets a higher share of search traffic in India than anywhere else in the world at 96.4%.  Most Indians spend 2.3 hours per day on social media, primarily on Facebook. The social giant has 142 million registered users in India, with 69 million accessing the platform every day from mobile devices.

It’s also worth noting that India is still a very divided economy, and in some parts of the country it’s common to only earn the equivalent of $1 for a day’s work. It’s therefore advisable for businesses not to think of the Indian market as a single entity, but rather a combination of very different markets.

Mobile wallet preferred method of digital payment

Over 71% of consumers in India say they prefer to shop online with a digital wallet.  This means that businesses will have to consider accepting payments from popular digital wallets such as Airtel Money, Citi MasterPass and Citrus Pay.  Digital wallets are so popular in India, that the transaction limit on them has recently been lifted to 20,000 rupees (or around £230).  The sudden government withdrawal of 500 and 1,000 rupee notes from circulation (November 2016) has encouraged a further increase in online transactions.  Many experts think that India will become a cashless country within the next decade – excellent news for e-commerce retailers.

Tough barrier to entry for some

Several UK retailers have expressed keen interest in India lately, not least because of its rapid increase in spending and commerce. Companies like Tesco and Marks & Spencer have demonstrated a desire to partner up with businesses in India in order to gain some brand awareness, but they’re struggling to adapt to a different market. In the UK we’re used to the idea of ‘weekly food shops’, whereas Indians tend to visit fresh grocery stalls every day and cook fresh food. The challenge for retailers is to understand the demand for products and services, and how they can use cultural trends and behaviours to make their offer attractive.

UK fashion retailers are finding ways to make e-commerce work

However, British fashion brands are well perceived in India. Next has seen a great deal of success in Delhi in particular, where lots of consumers shop both in-store and online. In the UK, shopping online at Next means opening an account with a Next store card, but in india the brand has adapted to the market by dropping this requirement.

Amazon retails exclusively online and has seen great success in India by capitalising on events like Diwali. October 2016 saw Amazon’s first ‘Great Indian Festival’ – a period of 4 days where discounts and sales were offered in the build up to Diwali.

“Diwali is a key celebration, with consumers spending approx $4 billion USD online on home refurbishment, new clothes and gifts. Leading e-commerce sites target the holiday with their annual sales which are the biggest of their kind.” – Fatema, Oban Local In-Market Expert (LIME), India.

Key takeaways before going to market:

  • Digital wallets are essential – Accept payments from the likes of Airtel Money and Citrus Pay.
  • Think mobile – Almost half of all purchases are made from mobile devices.
  • Diwali is huge – A great time to enter the market with deals and sales.

 

Contact us today to see how we can help your business explore new markets like India.