Internet users in India reached to 277 million, making it the only country in 2015 with a growth rate of 40%. India became the world’s second largest country in terms of Internet users, ahead of US and behind China, even if retail online sales have been much less dynamic recently, despite a huge potential.
Worldwide, Internet users base grew 9% in the year 2015, reaching 3 billion or 42% of the world population. The overall growth is considered slow but the Indian one remains a locomotive.
Internet users in India are booming but on the other side retail online sales remained less dynamic than expected. Some e-retailers are still finding it difficult to make money from the ads, content and sales of products and services. Making it a concern for some startup executives and investors.
According to the report by the research and consultancy firm RedSeer Consulting, for the first time in many years, online sales even dropped between two consecutive reports: “Online retail sales in April were at a lower level than December of the preceding year, gross e-commerce sales were annualized $15 billion including discounts”.
Rutvik Doshi, director, inventus (India) Advisors, a venture capital firm believes, “there is no doubt that e-commerce is going to grow very fast, but at this point it looks unlike to grow at the pace investors expected last year”.
He was reported saying that ecommerce growth will certainly determine the growth of the other Internet related ventures like online advertising etc. “First you have e-commerce and the online advertising and then other online businesses. Over all I think the internet economy will grow fast, just not the speed at which people were expecting earlier.”,adding that “it seems like investors and analysts have overestimated the growth of e-commerce”.
Internet business in India is still facing challenges as the country is not yet able to provide the needed Internet infrastructure, like for instance a rapid deployment of 4G services.
A huge potential in 4G services
The potential remains huge but a little patience might be needed in the short run. On the basis of 4G services in India UBS, a financial service firm, released a report last April saying that online retail would grow to $48-60 billion by 2020 from $4.47 in 2014-15.
Also, to pickup monetization, it is important to have active users. To keep the flux of e-commerce in India it is not just about the number of Internet users but making money from them. That can be achieved only by giving these users consistent Internet access with cheaper and faster Internet services.