Just a Ping Away

The information superhigh-way was never this smooth for the urban Indian
population. Mutliple players, flexible tariff plans, and good speed in most
areas of the metros, and top tier-2 and 3 cities put together have breathed new
life into the countrys broadband growth. This growth has manifested into an
unregimented usage of the Internet by even the average income Indian. From being
used merely as a mode of communication and an information tool, the Internet has
evolved to cater to the most personal and, in many cases, essential needs of
individuals like shopping, networking, sharing thoughts, booking tickets, and
even finding soul mates. So as a brother orders Rakhi gifts for his sister
through e-shopping or the girl next door sets out to find her ideal match
through a matrimony site, today there is a marked change in the Internet usage,
specifically in the growth of the e-biz market in India, as reflected in the
numbers.

When we talk about the growth of the e-biz market in India, the Internet
usage pattern is an important consideration. According to a report by research
firm JuxtConsult, total Internet users in India stand at 49 mn, with 40 mn
constituting urban users and the rest rural. The report indicates a healthy
growth by over 33% in all urban users over the last year, while there is a
substantial growth by close to 19% in the regular urban users. Out of these
the number of daily users stands at 25 mn.

Revenue-wise too the growth of B2C e-commerce industry in India has been in
line with IAMAIs e-commerce report in 2006-07 that computed it to be around Rs
9,210 crore for the year 2007-08. The overall e-commerce market is growing at
30% y-o-y.

Out of this, the online travel industry is the largest contributor to the B2C
e-commerce industry, accounting for almost 70% of the total e-commerce market.
e-Tailing or online shopping is next, followed by other categories under online
classifieds including job, matrimonial, and real estate portals, and digital
downloads like mobile ringtones, etc.

Interestingly, the growth has been both in the class and mass of online users
in India. The JuxtConsult report points out that 77% of all online users belong
to the 19 to 35 age-group category, while 70% of the total users belong to the
SEC A, B, and C towns. Also English is the most preferred language of reading
for only 28% of Internet users, indicating the huge potential for vernacular
language content.

Online Travel

Around the World in Seconds

With low cost, no frills airlines crowding the Indian sky, the airlines
market boomed like never before and so did the Indian online travel market.
Venture capitals, aggressive online marketing campaigns, and even several
international players considering a foray into the market have made the online
travel market more exciting.

Under the e-biz market, the Indian online travel is the fastest growing. Some
of the biggest travel sites include Yatra, MakeMyTrip, ClearTrip, TravelGuru,
TravelMartIndia, Flightraja, among others. Most travel portals obtain revenue
from service fee levied on the customer, and the backend commission that they
get from airlines and hotels. A marginal amount also comes from online
advertising.

As far as Internet advertising is concerned, a FICCI and PWC report pegs it
at Rs 160 crore and is projected to grow to Rs 950 crore by 2011.

Incase of booking a flight online, the profit margin for portals range
anywhere between 3-5% on the base fare. The margins coming from online
advertising, though, are very low at merely 2-4% for a majority of sites.

Industry analysts point out that there is an increasing trend toward booking
hotels for international trips. The first wave was toward small value bookings
which covered domestic travel. With the increase in the travel network, booking
for international trips have also increased.

However, booking hotels through travel portals still needs to be fine tuned
as there are issues impeding further growth. The issues usually are incase of
booking budget hotels. While some players are trying to address such issues, for
example, Yatra has uploaded videos that customers can view before booking
hotels, things need to change further

Online travel is expected to be a $2 bn industry. Interestingly, more than
17% of all flight tickets booked in India are done via the Internet.

Travel portal, MakeMyTrip, had recorded sales of Rs 1,000 crore for the
financial year ending March 2008. However, due to increasing competition not
only from newer players in the space but also from airlines websites, margins
have been eroding, and may online travel sites have started exploring other
avenues like railway ticketing, tour packages, and even bus tickets.

Yatra is looking at offline retail outlets for selling its travel services to
grow its revenue. They have a planned outlay of Rs 20 mn over the next 12 months
for the offline retail initiative. They have also roped in Sify as a partner by
which Yatra services can be availed from over 7,000 Sify cyber cafes across the
country. ClearTrip too is looking at adding international ticketing to its
service offering. The company has raised $12 mn so far and is also yet to break
even.

e-Shopping

Shop Till Your Bandwidth Drops

As per an Assocham survey, India ranks third in e-shopping. While online
shopping is not new to India, over the last few years the market for online
shopping has increased considerably. It is specifically gaining popularity in
metros like Delhi and Mumbai, as the volume is likely to exceed by 150% during
the year. It already touched Rs 2,200 crore in FY 07.

Also, the mall boom has not affected the growth of e-shopping. Changing
lifestyles, convenience of shopping, and a large number of sellers and buyers
becoming net savvy have been primarily pushing up e-transactions in metros such
as Delhi, Mumbai, and other cities like Bangalore, Chennai, and Kolkata.

Close to 28% of shoppers are in the 18-25 age group, while 48% fall in the
age group of 26-35, 15% in the 36-45 age group, and 9% in 45-60 age group. While
one would expect shopping to be a space dominated by women, surprisingly, 88% of
online shoppers in India were males. Electronic gadgets, apparels, railways, air
and movie tickets were some of the most shopped items, while products likely to
gain popularity include jewelry, books, gift items, music, movies, and hotel
bookings.

According to the JuxtConsult survey, 80% of all regular online Indians shop
online. They either search or buy online. While there are 8 mn active online
buyers, 23% have actually bought online in the last six months. Out of these 92%
of all online buyers (23% of Internet users) have bought a travel product
online, and 51% have bought a non-travel product online.

Under travel as well close to 80% bought train tickets, while 52% bought air
tickets in the last six months. Books, clothes, and CD/DVDs are the most bought
non-travel products online, and mobiles and computer products most searched. For
most e-shopping portals, a big chunk of transactions are contributed from repeat
customers. For instance, for Rediff, almost 50% of shoppers are repeat buyers.

e-Bay, Rediff, Sify, Indiatimes, FutureeBazaar, and IndiaPlaza are some of
the most preferred e-shopping destinations by Indians. Credit card is the most
common method of payment for online purchases. It is also the highest percentage
for any country in Asia Pacific for payments made for online purchases. Debit
cards (29%), bank transfers (24%), and cash on delivery (13%) are some other
methods of payment that are popular among Indians.

It is interesting to note here that though volumes of transactions are
maximum in case of online travel and shopping, the margins they operate on is
very small, as a chunk of the transaction money goes to airlines in case of
travel sites, and sellers of products in case of online shopping.

However, problems in online shopping like a bad or lack of online complaint
readdresal system, mode of payment restricted only through credit card users,
and unreliable product description need to be addressed in order to encourage
online shopping.

Matrimonial Sites

Made for Each OtherVirtually

There are plenty of players in the online matrimony sites among which the
bigger ones include Bharatmatrimonial and Shaadi. These differ primarily on the
basis of how they let you shortlist probable life partners and clientele.

Interestingly, plenty of niche matrimonial websites have sprung up on the
lines of Shaadi and Bharatmatrimony. Lots of new players have forayed into the
space with unique concepts including Idontwantdowry.com, Desimatch.com,
Secondshaadi.com, and Positivesaathi.com for HIV positive patients.

JuxtConsults report points out that Shaadi.com is the most user-friendly
website from India. In terms of the number of visits, its ranking in all
India categories is the eight in the world. One of its unique feature is that
the site gives you your money back if you do not get a positive contact within
one month.

Bharatmatrimony.com is another popular matrimonial portal which claims to
have the maximum number of educated profiles, and 39% of Bharatmatrimony users
are from the metros. The site has a mention in the Limca Book of Records for the
number of documented marriages online.

There are other sites such as Jeevansathi, a venture started by the founders
of Naukri, and Simplymarry by the Times Group. Simplymarry targets the metro
youth, as 80% of their profiles are from such cities.

There are more sites like LifepartnerIndia.com, and MatrimonialsIndia.com.
Almost all of them offer similar features and some also have live help via chat,
free initial contact, SMS alerts on your mobile, etc. All have a mixture of free
and paid options. The bigger sites offer services in different Indian languages
from Assamese, to Bengali, to Malayalam.

Bharatmatrimony offers a free feature called Matrimony Stamp, wherein the
name, age, residence, education, and occupation is checked. A paid service
called VeriProfile is offered by ONICRA (a credit rating organization), where
you can ask for other profiles to be verifed.

Jobs and Real Estate

Back to Basics

Job portals are another lucrative area in the e-biz space. Intensive
marketing campaigns by various job portals and unique features have helped
expand the scope of these sites. The market had been operating and doing well
based only on referrals and recommendations for a long time. Now who doesnt
remember the famous Naukri.com Hari Sadu advertisement? Naukri by far is a big
player in this space. The portal registered revenue of Rs 239 crore in FY 08.
The three major parts that contribute to the revenue billings includes, job
listing, employer branding, and database. Some big clients include IBM, TCS,
Cognizant, HCL, among others. Timesjob.com is another portal doing good
business.

Lately, the real estate online space has also started to boom.
Magicbricks.com and 99acres.com are some of the more popular ones.

While the numbers for the e-commerce market still indicate that it is at a
nascent stage, broadband surely is expected to further push more people into
e-commerce. Right now, though, it has affected people in the metros the most,
broadband penetration in smaller cities is expected to increase manifold,
bringing in more business from e-commerce. Further, it is expected that as more
organized retailers start to enter the e-commerce market, it will drive the
credibility of the businesses.

Added to this, introduction of payment through mobile, consumers confidence
to shop online has become stronger. This is backed by the satisfactory
experience of transacting online as websites and portals become more
user-friendly and convenient.

Urvashi Kaul

urvashik@cybermedia.co.in