Almost half of the regularly online urban Indians buy online
Three-fourth of all regular online Indians (76%) search for products and services online. This has shown a 60% growth in the base of ‘online shoppers’ in last 1 year, making it 19.1 million strong.
When it comes to the base of actual ‘online buyers’, 43% of all regular online urban Indians have bought online. This means a growth of 76% over the last year, making the online buyer base reach a healthy 10.8 million mark.
However, very few of them are ‘regular’ online buyers
Despite such tremendous growth in the number of online buyers overall, the base of really ‘active’ online buyers (those who buy online at least once a month) is almost stagnant at 2.2 million (same as last year).
In other word, the proportion of ‘active online buyers’ (who buy at least once a month) among the ‘active online users’ (who use the net at least once a month) is an abysmally low 9%.
Graph 1: Proportion of online shoppers and buyers
Table 1: Growth in online shopping and buying
| |
|
Year 2007 |
Year 2006 |
Penetration Increase |
| |
|
(millions) |
(%) |
(millions) |
(%) |
(millions) |
(%) |
| Active Internet Users |
(use internet at least once a month) |
25.2 |
100% |
22.0 |
100% |
3.2 |
0% |
| Online Shoppers |
(visit shopping sites to search or buy) |
19.1 |
76% |
11.9 |
54% |
7.3 |
22% |
| Online Buyers |
(buy from shopping sites) |
10.8 |
43% |
6.1 |
28% |
4.7 |
15% |
| Active Online Buyers |
(buy online at least once a month) |
2.2 |
9% |
2.2 |
10% |
0.0 |
-1% |
Clearly then, almost all the online buyers added to the pie in last one year are really ‘occasional’ buyers (those who buy less frequently than monthly).
The ‘trickling down’ of online buying among the lower socio-economic strata
Against 73% of online buyers coming from the SEC ‘A’ and ‘B’ last years, a noticeably fewer 67% come from these two SEC groups now.
However, the fact that online buying is penetrating among the smaller towns and lower SEC groups do not necessarily mean that the economic profile of the online buyers is lowering. Contrarily, instead of 22% of online buyers coming from the Rs.30,000 plus family income households in 2006, a significantly higher 32% of online buyers come from these households.
Growth in online buying is largely driven by the growth in ‘online travel booking’
A substantial 84% of the all online buyers have bought a travel product online (air and train tickets, hotels, tour packages, etc.). In comparison, only 56% of all online buyers have bought a non-travel product online (books, CDs, clothes, electronic gadgets, computer software, hardware, consumer durables, etc.).
No wonder then that the top 2 of the top 10 products bought on the net by online buyers are train tickets (53) and air tickets (45%), way ahead of the other products.
Table 2: Most popular products bought online (Top 10)
| Product |
% of Online Buyers 2007 |
% of Online Buyers 2006 |
Increase |
| Train Ticket |
53% |
34% |
20% |
| Air Ticket |
45% |
22% |
23% |
| Books & Magazines |
21% |
29% |
-8% |
| Clothes & Accessories |
21% |
28% |
-8% |
| CD/VCD/DVDs |
19% |
24% |
-5% |
| Toiletries/Perfumes |
17% |
|
17% |
| Electronic Gadgets |
15% |
|
15% |
| Gift Items/Flowers |
15% |
24% |
-10% |
| Hotel/Tours |
14% |
9% |
5% |
| Computer Software |
13% |
16% |
-3% |
Note – Blanks denote that these products were not included in the survey in 2006
Accordingly, while train and air tickets show some of the best search-to-buy conversion ratios, mobiles/PDA, automobiles, camera and kitchen appliances show some of the lowest ‘search-to-buy’ conversion ratios.
Table 3: Products with best online search-to-buy conversion ratios (Top 10)
| Product |
% of Internet Users Searching(2007) |
% of Internet Users Buying(2007) |
Search-to-Buy Conversion Ratio |
| Best Search-to-Buy Ratios (Top 5) |
| Train Ticket |
25 |
13 |
0.51 |
| Air Ticket |
28 |
11 |
0.39 |
| Movie Tickets |
9 |
3 |
0.36 |
| Antiques & Collectables |
3 |
1 |
0.34 |
| Clothes & Accessories |
16 |
5 |
0.31 |
| Worst Search-to-Buy Ratios (Bottom 5) |
| Shoes |
7 |
1 |
0.17 |
| Kitchen Appliances |
9 |
1 |
0.16 |
| Camera |
20 |
3 |
0.14 |
| Mobile/PDA |
23 |
3 |
0.12 |
| Automobile |
7 |
1 |
0.11 |
The online buyer displays increased trust in online shopping
The biggest ‘qualitative gain’ about online shopping is its improved perception on highly important and hardcore ‘market place’ factors like ‘wider choice and availability of products’ and ‘better prices and bargains’, and not just on the ‘convenience’ factors like saving of time and efforts, home delivery and flexibility of buying anytime.
Yet ‘product quality’ and ‘delivery’ concerns may be negating some of the gains made. With 42% of all online buyers complaining about the ‘product quality not being the same as specified on the website’, and 36% complaining about the ‘delayed delivery’ of the goods ordered, online shopping and travel websites may be undoing some of their own good work.
Though ‘misuse of a credit card’ is a non-issue among online buyers, ‘lack of a credit card’ is still a strongly perceived roadblock to growth of online buying
Online buyers do not really see ‘misuse of a credit card’ as a deterrent in buying online anymore. Only 10% of all online buyers really worry about that (as compared to 27% last year).
However, 42% of non-buying online shoppers cite ‘not having a credit card’ as a reason to not buying online. Therefore, there is a continual need for getting more and more net users to acquire a credit card and/or clearing their misperception on the possibilities of misuse of credit cards on the net.
Ebay continues to ‘lead’ the online shopping category
Ebay leads the online shopping category (excluding online travel websites) with 34% online shoppers still preferring to visit it the most. Rediff follows at the second spot with 25% online shoppers preferring to visit it.
However, both Ebay and Rediff have lost usage share on preferred basis in last one year, while the new entrant Futurebazaar along with Google have been the biggest gainers.
Table 4: Top 10 most preferred online shopping websites (other than travel)
| Website |
% Use on Preferred Basis(2007) |
Increase over 2006 |
| Ebay |
34% |
-4% |
| Rediff |
25% |
-4% |
| Google |
8% |
5% |
| Yahoo |
7% |
-0.5% |
| Indiatimes |
7% |
-4% |
| Futurebazaar |
6% |
6% |
| Sify |
2% |
0.6% |
| Shopping |
2% |
0.4% |
| Amazon |
1% |
-0.1% |
| Indiaplaza |
1% |
0.6% |
METHODOLOGY FOR INDIA ONLINE 2007
Land survey undertaken in April 2007. Sampled 10,000 households in 31 cities (of population sizes 20,000 plus) across all the four regions to estimate Internet user-ship and derive appropriate ‘weights’ to make online survey data representative of the entire online urban population.
A large-scale online survey conducted in May 2006. Sampled over 14,200 complete responses capturing net usage behavior and website preferences.
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