I nternet .I n .I ndia M i l l e n n i u m E d i t i o n

eTechnology Group @ IMRB Internet.In.India 2000

IInternetnternet.I.Inn.I.Indndiaia M i l l e n n i u m E d i t i o n

What do we know about

the online consumer ?


The Indian market - a multi-hued patch

National Demographics

– 74% population rural - across 6,00,000 villages

– 26% urban - 3768 towns

Urban Demographics

– 8% of urban towns account for 65% of urban population

– half the population of top 300 towns in top 23

Home market

– 53 million HH

– 16 million in SECA+B

– 5.8 million SEC A+B in top 16 cities


The glamorous home market PCs & internet still low down in penetration

– Television : 100%

– Refrigerator : 81%

– Cable : 80%

– Telephone : 70%

– Scooter/Mobike ; 54%

– Washing M/C : 42%

– Audio System : 21%

– Computers : 14%

– Cell phone : 9%

– A/C : 8%

– Internet : 7%

– Microwave oven : 4%


Rapid growth in penetration last one year

Cable : 77% to 80%

Telephone : 50% to 70%

Audi Systems : 9% to 21%

Cell phones : 2% to 9%

Credit Cards : 11% to 14%

Computers : 7.8% to 14%

Internet : 2.2% to 7%


Business market

Target - telephone owning businesses

– 1.24 million in top 16 cities

Higher penetration of IT

– PCs : 52%

– Server : 15%

– Printer : 50%

– Internet : 28%

Significant growth over last one year

– PCs : 48% to 52%

– Internet : 20% to 28%


Internet : Connections vs. subscribers

Homes– 490,000 subscribers

– 580,000 connections

– average 1.2

Businesses– 414,000 subscribers

– 580,000 connections

– average 1.4

Overall – 904,000 subscribers

– 1,160,000 connections

– average 1.28


All India PC base & Internet Connections

PC Market Internet Market

Busi-ness41%

Home59%

Busi-ness84%

Home16%

1.6 million owners of PCs...

…own 6.3 million units

Busi -ness46%

Home54%

Busi-ness50%

Home50%

0.9 million subscriber...

…have 1.2 million connections


Next 2 Metros

12%

Top 2 Metros

50%

Other 1 Mill+cities

13%

Rest of India7%

Other 4 Metros

18%

Internet connections by town class


Defining the individual users

Claimed user

– anyone who claimed to have used

Active user

– accessed in last 3 months

– at least 0.5 hrs per week/2 hrs a month

– for purpose other than just e-mail


Past trends in Internet connection

Source: VSNL Annual reports & IMRB Analysis

End of year PC owners PCsowned

Internetsubs-criber

Internetconnections

Averageconnectio

n/entity

% PCowners with

Internetconnection

Ratio ofBusiness

Ratio ofbusiness

connection

March 1997 543,584 2,245,098 25,000 25,000 1.00 5% 92% 92% March 1998 767,760 3,044,156 150,000 150,000 1.00 20% 83% 83% March 1999 1,017,622 4,071,346 350,000 360,000 1.03 34% 64% 65% March 2000 1,380,018 5,476,637 651,000 800,000 1.23 47% 51% 56% August 2000* 1,647,784 6,268,304 904,000 1,160,000 1.28 55% 46% 50%


Claimed User Universe3.16 million

Accessed Internet in the last 3 months

1.43 million

Active users1.38 million

44% of Claimed users

Total Urban population ~ 250 million

Claim to know computers~16 million (6.3%)

Claimed to have used Internet~5 million (2%)

Actively use the Internet~2.2 million (0.9%)

Top 16 cities Urban India


Profile of Active User It is the youth

– 34% 18-23 yrs

– 35% 24-35 yrs

Predominantly Male

– 75%

Single

– 64%

Educated

– 45% Graduate/PG - General

– 21% PG Professional

Students & executives

– 40% students

– 21% officer/executive

SEC A dominates

– 60%


What the Internet is used for?

Information36%

Ecommerce1%

Email40%

Chat15%

Entertainment8%

Total hour spent ~5.3 hrs/week


Internet subscriber forecast

1,184

2,185

4,031

7,258

1,650

3,000

5,200

8,500

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

2000-01 2001-02 2002-03 2003-04

Year

Uni

ts (

'000

s)

Subscribers

Connections


Internet subscriber market segment forecast

Internet subscribers- share of home & business

17%

36%49%

61%72%

80% 86%

83%

64%51%

39%28%

20% 14%

0%

20%

40%

60%

80%

100%

1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04

Year

Un

its

('00

0s)

Business

Home


Internet user base forecast

3.25.6

10.1

17.8

7.1

12.5

22.4

39.6

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

45.0

2000-01 2001-02 2002-03 2003-04

Year

Active user

Claimed user

Persons (in millions)


Vortals...

…consolidate interest groups!


It’s all to do with demographics...

Usage reflects demographic characteristics of users on the web!

Category Vortals ever used (%active users)Education EGurucool (16%), Batchmates & Vidyalaya (7-8%)Sports Cricinfo (28%), Cricketnext, Khel & WWF (11%)Career Jobsahead (24%) & Naukri (21%)Ecards Yahoo, Bluemountain & 123India (13-16%)Business Yahoo (18%) & Rediff (4%)Music Saregama (11%), Hindimusic, Musicurry, Nazara (8%)Technology ITSpace (15%), Yahoo (11%)News TimesofIndia (16%) & Indiatimes (11%)Youth Hungama (20%), Contest2win (10%)Home Shopping Rediff (12%)


Prognosis...

Sites focussed on Youngsters will survive: Will see consolidation (2-3 per category)

Women sites: Will continue to be bogged down by lower no. of women on the net

Personal Finance, Auction & Travel sites: Smaller % within demographics with interest - need to focus & monetise these eyeballs. Need to embrace WAP/GPRS market

Auction sites: Face problems associated with Ecommerce sites

Scope for regional sites exist


Potential Consumer Value (PCV) High Low

P

ote

nti

al

Tra

nsa

cti

on

Val

ue

(P

TV

)

Lo

w

H

igh

Value Matrix for Vortals...

Four decision options depending on where the category falls

Organise

&

Service

Get critcial & Increase transaction value per customer

HyperlinkAlign & aggregate



Home Shopping PersonalFinance

AuctionsEducation Automobiles

Sports Music Travel

P

ote

nti

al

Tra

nsa

cti

o

n V

alu

e (

PT

V)

Lo

w

H

igh

Youth/ Fun E-cards

Matrimonial Art/Culture Women

Jobs/careers

Movies

Computer games

Technology

News

AstrologyEntertainment

Contests/promotions

Where the categories fall...

Jobs/career & education are the main categories in short run



P

ote

nti

al

Tra

nsa

cti

on

Val

ue

(P

TV

)

Lo

w

H

igh

Future migration potential...

Vortals need to study the movement & change tactics as they move along

Movies

Women

Music

Personal Finance

Home shopping

Travel

Women

Movies

Music

Personal Finance

Travel

Home shopping


Ecommerce...

…the road to salvation!


Not Looked for information (Non-LFIs)

Base: Active users in top 16 cities

Looked for information (LFIs)

Shoppers

Current scenario...

About 65,000 buyers in year ending Aug’00

Valued at Rs.25-28 crores

3%

24%

73%


Products looked for info & bought...

Bought:

– Books/Music ~40-45% of buyers

– Computer Hw/sw ~30% of buyers

– Tickets/electronics ~17-19% of buyers

– Garments/fitness eqpt ~10-12%

3%

3%

3%

4%

4%

4%

4%

6%

8%

12%

12%

Tour Plan / Hotel

Gifts/Novelty Items

Garments

NewCar/Motorcycle

Home Appliances

Sports Goods

Train / Air Tickets

Home Electronics

ComputerHardware/Software

MusicCassettes/CDs

Books

% a

cti

ve

us

ers

loo

ked

fo

r in

fo:


Barriers to growth...

Three key reasons stated by customers:

“Not sure of quality”

“Cannot bargain/negotiate”

“Security/Credit card misuse”

Poor branding (here, brick-and-mortar have an advantage)

Poor service & logistics


Overcoming these barriers...

Emphasise on key benefits:

“Convenience”

“Compare products/seek information”

“Interesting offers”

“Security in transaction

Need to improve user experience to grow the market - Know product & plan accordingly

Educate Inform Compare Transact


Future market for B2C ecommerce...

Potential for 400,000 shoppers with possible revenue of Rs. 300 crores in the next one year

Ranking by % BuyersMusic Cassettes/CDs 21%Books 21%Computer Hw/Sw 16%Train/Air Tickets 13%Home Electronics 12%Home Appliances 9%Garments 8%Tour Plan/Hotel 8%

Ranking by % revenueNew vehicles 36%Computer Hw/sw 16%Home appliances 9%Home electronics 8%Used vehicles 7%Tours Plan/Hotel 5%Loans/Finance 5%Train/Air Ticket 3%

Realisation will depend on market activity by players


Main conclusions...


Need to work keeping customer demographics...

Horizontal Portals need to use “benefits hierarchy” to lump customers & use that to monetise:

– advt & direct marketing revenue, and

– sell customers value added services

Vortals & ecommerce sites need to increase focus on selling “Bits” to net customers first…

– Jobs, Education, directory services etc.

– Work on improving user experience & trust


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