Internet penetration continues to rise to around 59% and as the number rises and consumer behavior and purchasing patterns continue to change online, India represents a trillion dollar digital opportunity that will lead consumption in the next decade, according to a Bessemer report. Venture partners.
The country has seen a meteoric rise in e-commerce businesses, online payments through the Unified Payments Infrastructure (UPI), and the maturing of supply chain and logistics technologies, the report added.
According to the report by 2030, the number of users will increase from 125 million to 500 million, and the average digital spend per person will increase from $750 to $2,000. Currently, about 125 million Indians, or less than 10 percent of the total population and less than 20 percent of the Internet population, transact online.
The study establishes that two main aspects of the region set the stage for greater traction among Internet markets: fragmentation and the challenges of offline operations.
Additionally, marketplaces have evolved from horizontal listing: hookup platforms where sellers list their products and services and consumers find providers of different goods and services online, such as JustDial.
With the evolution of online payments and logistics, led by the proliferation of technologies such as UPI, eWayBill, and GST, marketplaces shifted to a transactional model (marketplaces could now own not only discovery, but also transaction closing). and payment).
Looking ahead, the report noted that the two main drivers of evolution in building Internet businesses for Indian consumers are new consumer segments and distribution channels.
“We believe that new Internet markets and brands will be created to serve these new consumer segments, which have more recently gone online. Early signs of this new cohort are already taking shape, as seen across Nykaa and Good Glamm Group, with offerings created to cater to women, arguably India’s largest new consumer segment,” the researchers stated.
Additionally, today’s markets are skipping text, navigation and catalog based commerce and jumping right into social media, video and influencer based commerce. “Businesses serving these new sets of consumers will need to be native across social, video, and influencer channels from day one,” the report added.
The report said there were five principles of internet markets in the country: India is a supply constrained market: develop technology to incorporate, standardise, manage, scale and retain supply; The full stack model achieves end-to-end ownership across the entire ecosystem, resulting in a superior customer experience at lower cost, higher retention, and higher gross margins. Owning the distribution builds a moat: Leverage mobile, social, video, and content to build sustainable moats before growing third-party distribution; When marketing, the cost of customer acquisition (CAC) is always going up: The best companies also find repeatable growth through a mix of social channels, UGC, video TV, and offline; Flat Cohorts Unlock Long-Term Value: A 1 percent increase in Flat Cohort retention leads to a 3x increase in long-term value.