The internet is perhaps the most ambitious project ever undertaken by humans in history. Developed first as a covert project by the American military, the internet broke out into the mainstream world at breakneck speed. The consumers saw many faces of the internet – from the dial up connections of the 90s, whose startup sound still makes many of us nostalgic, to the mobile data and wifi age that we presently live in, the internet has become a ubiquitous part of our lives. It is worth noting that the speed at which this technology has developed, and the sheer depth at which the internet has penetrated our lives, has been unprecedented.
No other technology, however revolutionary, be it the invention of the wheel, or the development of the printing press, or the assembly line mode of operation that was introduced at the turn of the nineteenth century, has ever managed to assume such an important role in the way that the modern world thinks, assembles and structures knowledge and acts upon it.
A simple example of this is in fact online retail. It is hard to believe, considering the present situation of online retail, that this mode of business is hardly 20 years old. With the democratization of the internet by Tim Berners Lee with the first World Wide Web server in 1990, and its subsequent commercialization in 1991, fledgling online retail companies like NetMarket and Internet Shopping Network opened shop in 1994. A year later, Amazon and eBay, both began their journey, and online retail as we know it today started shaping up.
While the internet truly is a medium of communication that has become integral in our lives, it is important to be aware of generalizations and look carefully at what we mean by ‘our lives’. At the moment, nearly 40% of the world is connected to the internet, which means that there are more number of people who are unconnected. These people generally reside in the poorer parts of the world, with limited access to modern technological resources.
Even for the people who have access, the internet is scarcely the democratic self it was once envisioned to be. Countries like China and to a larger extent, North Korea, heavily police their internet to make sure that they have control over the information that is disseminated to the world. Perhaps the ultimate irony of this age is that terrorist organizations like the ISIS have their very own twitter accounts.
It is therefore important that we take a look at what exactly we are doing, who are we interacting with, and who are we reaching out to, when we establish a business on the internet. Let us look at some information about the internet usage in India and see what we can find out.
Internet Usage in India and How it Affects Online Retail
1. What Percentage of the Population has Access to the Internet?
The internet is built, like most structures, on the basis of accessibility. First and foremost, one must not forget that at this point in time, in India, the internet is a commodity. While many Scandinavian countries provide internet as a basic resource to their citizens, in most other parts of the world, you have to afford the internet to access it. Not to mention the fact that a certain level of computer literacy is a requirement when it comes to the internet.
Finally, the internet is as much a physical network as it is virtual. This means that thousands of miles of optical fibres installed under the oceans connect the Indian subcontinent with the other parts of the world, and that the same network of fibres connects various servers within India. For a country like ours which is not completely electrified as of now, the internet remains a distant dream for its many parts. According to the World Bank, 18% of the Indian population is connected to the internet as of 2014. For the sake of comparison, we note that this number is 13.8% and 9.6% for neighbours Pakistan and Bangladesh respectively.
As we can see, it is still a far cry from the internet penetration percentages in America (84.37%) and Europe (69%). This means that India is not even in the top 100 countries in the world when it comes to internet penetration.
Still, it is worth noting that some statistical agencies like the International Telecommunications Union, World Bank and the United Nations Populations Division estimate the penetration of internet in India to nearly double in 2016, reaching around 34%.
2. How Many People Is That?
Just a simple restructuring of the question we raised in the first point suddenly changes the perspective with which we look at the data. When we start looking at the number of people these percentages signify, a new picture emerges –
India has the second highest number of users on the internet in the world, nearly twice as much as the US, which is the closest competitor. The only country with more number of users on the internet is China. Let us not forget the fact that India is only starting to take internet penetration seriously. It is not surprising then to realize that India and China make up the biggest and potentially the most lucrative untapped market when it comes to internet based businesses. This also explains the sheer volume of turnover that companies like Alibaba and Flipkart witness in China and India respectively.
3. Where in India are All the Internet Users?
We can divide the internet users in India geographically into tier I, tier II and tier III regions. The tier I regions include the metro cities in India, which make up for 34% of the total user base. According to data from 2014, Mumbai boasted the highest number of internet users in the country, followed by New Delhi and Kolkata respectively.
Tier II cities include Surat, Vadodara, Lucknow, Jaipur, Nagpur, etc. It can be clearly seen that the tier II cities is where the internet penetration is growing at the fastest rate, and coupled with the fact that they have limited logistical resources as compared to the metros, make them perhaps the most important potential markets when it comes to online retail.
4. What About Mobile Users?
One of the main reasons for the penetration of internet in the tier II cities is smartphones. Gone are the days when you could only access the internet through a bulky computer ( even the sleekest laptops seem bulky nowadays) or by going to cyber cafes. Accessibility to cheap smartphone technology means that you can connect to the internet using your phone and a prepaid connection. This fact is very vital, because in developing economies like India, it is mobile internet that is really making a difference in numbers.
Out of the around 462 million users on the internet in India, an estimated 371 million use mobile internet. This should be enough to make the case for m-commerce and the importance to include mobile websites and apps in your business strategy as an online retailer.
To know more about the internet and its impact on online business, get in touch with Browntape. We are India’s leading e-commerce solutions experts, and we are always happy to help!
