Post on 22-Jan-2018
The Digital Opportunity
AECAL Asian E-Commerce Alliance GmbHProf. Peter Kabel
Digital Opportunity India
The Digital Customer
Indian GDP is growing strong and outpacing other Asian major markets
China
Indonesia
China
Asia
India
Korea
Japan
7.77.3
5.8
FORECASTS
5.2
4.4
2.8
1.51.0
3.8
5.65.86.4
#1 US $ 17.63B
Population GDP Rank
India #2 1.24B
#4 US $ 7.27B
EU #3 0.51B
#1 1.34B
#2 US $ 17.61B
US #4 0.32B
#3 US $ 17.46B
Indonesia #5 0.25B
#10 US $ 2.55B
Brazil #6 0.20B
#8 US $ 3.10B
• India with its huge population (3,8x US, 2,4x EU and 0,9x China) and strongly growing GDP (approx. 40% of GDP China, US or EU)• Population is young, growing fast and consumer oriented! From the BRIC promise only India remains as realistic opportunity
2013 2014 2015Source: IMF
Size and economical strength Economic growth
While Western countries and China are evolving into a moremature stage of E-Commerce India is at a starting point
0%
1990 1993 1996 1999 2002 2005 2008 2011 2014 2017E 2020E
20%
40%
60%
Popu
latio
n Pe
netr
aion
(%)
Internet User Penetration Curve, USA / China / India, 1990-2020E
Source: World Bank, Hillhouse Capital forecast for India beyond 2014
Catalyst CompaniesNetscape
Yahoo! Amazon.com
eBay
USA China India
Catalyst CompaniesTencent Alibaba JD.com
Catalyst CompaniesSnapdeal
Amazon.in Flipcart
Facebook WhatsApp
80%
100%
India will be a real internet giant very soon
3
10
2
243,000,000
243,000,000
243,000,000
Internet UsersRank
14%
14%
14%
1 Year Growth
+ 1.22%
+ 1.22%
+ 1.22%
1 Year Populaiton
Change
19.19%
19.19%
19.19%
Penetration (% of Pop. with
Internet)
17.50%
17.50%
17.50%
Country‘s share of Worlds
Population
8.33%
8.33%
8.33%
Country‘s share of Worlds
Internet Users
India is #3 in Internet users already …
… but only #10 in Internet penetration …
… and catching up extremly fast! The strong growth of US, EU and China in the past 10 years is expected to happen in India now!
Internet users in India 2014
Source: internetlivestats.com, KPMG, AECAL analysis
India is a mobile and social media game – traditional desktopcomputer to be leap frogged
70%Mobile Subscription Penetration
28%Mobile Penetration
Mobile in India 2014
19%Internet Penetration
31% Urban
69%Rural"1,255,777,000
Total Population
♂349,000,000 Mobile Users (#2 worldwide)
$243,199,000 Internet Users
13 %Smartphone Penetration%159,000,000
Smartphone Users
13%Social Media Penetration&160,000,000
Active Social Media Users
886,300,000 Active Mobile Subscriptions
Source: KPMG
Only the 4 biggest cities alone have more smartphone users than whole Germany
Mumbai
12
8.1
4.7
4.5 29.3
4.4
3.82.8
2.7
Delhi
Hyderabad
Chennai
Germany
Kolkata
Bangalore
AhmedabadPune + 45 cities with
over 1 million inhabitants
Source: IAMAI
Smartphone users (in Million)
Smartphones, non-metro, female and rural India will drive future growth to over 500 million internet users by end of 2017
2013 2018
• 60% under 25 • 54% over 25Older
Rural
Gender balances
Mobile
Vernacluar
• 29% rural • 40-50% rural
• 2.6 men online for every woman online • 1.9 men for every woman among 18-24 years old
• 60-70% of users
• 45% of users use vernacular content
• 70-80% of users
• 62% print media market vernacular in 2013 • 70-90% Indians do not speak English, less than 1% speak as primary language
Source: BCG
Smartphone users are continously connected and spend their time in social networks
Global
Global
42%
18%18%
31%
12%
11%
23%
23%26%
15%
35% 18%
26%
18%21%
22%
28%
46%39% 36%
47%54%
25% 22%15%
31%
42%
51% 58%
40%
7%13% 17% 18%
6%17%
7% 9% 6% 7%
US US
Germany
Germany
ChinaChina
IndiaIndia
Frequency of connection (% of respondents)
Ranking of activities based on time spend online (% of respondents)
Source: A.T. Kearney analysis
All day long Every hour (> 10 times a day) 2-4 times a day Once a day or less
Social networking Shopping Online Entertainment Transactional services
Spending will play a major role in very near future
Digital and eCommerce is and will even more become a large economical factor!
2012 2016
US $ 650B US $ 1,110BSpending by the
urban population
Spending by the urban population
with internet access
Spending by the digitally influenced
population
Digitally influenced spending
Value of online purchases
US $ 225B US $ 650B
US $ 115B US $ 450B
US $ 30B US $ 150B
US $ 8B US $ 50B
Source: BCG
Customer spending
1.7x
2.9x
3.9x
5.0x
6.3x
Underdeveloped retail structure will lead to a complete leap frog of traditional retail structures as we know them in the West
US
85% 81%
30%20%
8%
15% 19%
70%80%
92%
Taiw
an
Indonesia
ChinaIndia
Unorganised Organised
Organised retail penetration
Source: KPMG
Interpretations• no disruption required as no structure exists• eCommerce has ability to grow much faster than franchise retail• eCommerce cost efficient vs. traditional western retail
Big global eCommerce players have identified this potential and perceive India as their primary growth source
Recent activities
• Amazon announces additional US $ 2B Investment in India (July 30th, 2014)• US $ 190M investment in 21st fulfillment center in India
• US $ 3.15B in 12 Financing rounds• US $ 700M in July 2015 at last financing round: US $ 15B valuation1
• Receives its 6th round of financing with and investment worth US $627M in Oct 2014 and additional US $ 500M in Auf 2015
• Alibaba enters Indian market with Paytm
• Rocket Internet’s Jabong raises US $ 100M round (Feb 2014)
1) Benchmarks Metro Group valuation US $ 8,8B, Zalando valuation US $ 7,6 B (as of 12/10/2015)
Big global investors perceive India as one of their growth andinnovation sources
Recent activities
• >100 investments thereof 37 in technology and 34 in consumer• US $ 740M Indian fund (latest US $ 210M added in April 2015)
• Only location outside US/UK is India• 60 investments in India• New US $ 305M Indian fund in March 2015
• 27 investments in India (one exit)• New US $ 200M Indian fund in Feb 2015• 1/3 of outside US investments go to Israel and India
• US $ 627M in Snapdeal and US $ 210M in Ola (Taxis)• US $ 1B (!) investment into Indias eCommerce, telecom and aviation industry
Source: http://yourstory.com/2015/03/accel-partners-india-iv-fund-startups/
http://timesofindia.indiatimes.com/business/india-business/Sequoia-tops-up-India-fund-with-210m/articleshow/46857736.cms
http://articles.economictimes.indiatimes.com/2015-02-20/news/59339673_1_venture-partners-pension-funds-vc
Major E-Commerce KPIs show accelerating and viral effectsthat support overall E-Commerce growth
2012
Internet users in India
140M 213M400M
2013 2016E 2012
Conversion from visitors to buyers
3%
2.7%2.9%
2013 2016E
2012
Number of orders per month
4M 5M
12M
2013 2016E 2012
Average order value
US $ 18US $ 31
US $ 60
2013 2016E 2012
Annualized online shopping GMV
US $ 816M
US $ 1,983M
US $ 8,519M
2013 2016E
2012
Orders per buyer per month
1.59 1.55
1.70
2013 2016E
• Disposal income grows by. 6.5% p.a. and ratio shifts towards discretionary consumption• More people are shopping• Shoppers are buying more often• Shopping karts have higher values! eCommerce in India is about to explode
Source: AECAL
Digital Opportunity India
The Digital Customer
Kaleidoscope India.
Kaleidoscope India. There is not one India, but many.
Kaleidoscope India. There is not one India, but many. Society lives in different times side by side – from hyper modernity to mid ages. Unifying seemingly incompatible beleifs and behaviors.
Kaleidoscope India. There is not one India, but many. Society lives in different times side by side – from hyper modernity to mid ages. Unifying seemingly incompatible beleifs and behaviors. Many shades of rich and poor. Metro Areas, Tier II, Tier III and rural.
Kaleidoscope India. There is not one India, but many. Society lives in different times side by side – from hyper modernity to mid ages. Unifying seemingly incompatible beleifs and behaviors. Many shades of rich and poor. Metro Areas, Tier II, Tier III and rural. Different age cohorts with different backgrounds and different digital abilities.
India will never be the same.
India will never be the same. Enjoying the merrits of anonymity.
India will never be the same. Enjoying the merrits of anonymity. Understanding oneself as part of a group. Gain voice. Keep contact and reach out.
India will never be the same. Enjoying the merrits of anonymity. Understanding oneself as part of a group. Gain voice. Keep contact and reach out. Leveling differences and intransparencies.
India will never be the same. Enjoying the merrits of anonymity. Understanding oneself as part of a group. Gain voice. Keep contact and reach out. Leveling differences and intransparencies. Think of: Banking, Health services, Rural services, Information and decision making on every level,
India will never be the same. Enjoying the merrits of anonymity. Understanding oneself as part of a group. Gain voice. Keep contact and reach out. Leveling differences and intransparencies. Think of: Banking, Health services, Rural services, Information and decision making on every level, E-Commerce and the unleash of entrepreneural power.
> 55 years 55-35 years
Tier
I
34-23 years
Tier
II-I
VRu
ral
22-15 years
1950 1960 1970 1980 1990 2000
Source: Qualitative research / BCG
User Segmentation
> 55 years 55-35 years
Tier
I
34-23 years
Tier
II-I
VRu
ral
22-15 years
1950 1960 1970 1980 1990 2000
Source: Qualitative research / BCG
User Segmentation
Active Aspirer2013
28M
Name Age City Occupation Varun 22 Delhi Student
Owns Device(s) Samsung smartphone, Dell Alienware Laptop
Spends 8-10 hours online
Just bought running shoes through Amazon and recharged is phone via paytm, where he received a cashback.
Varun is a final year student of Delhi University. He lives with his small famliy in southern Delhi. His dad is a banker and mom is a teacher. He gets limited pocket money. For him, being cool and trendy maters but at the lowes cost possible. He always hunts for discounts.
Online Activity Playing games, reading news, music/video streaming, shoping - gadgets apparel, video games, movie tickets booking, chatting, dating, browsing, deals/discounts, online courses, jobs/internships
Mostly uses boradband connection at home/university. Uses mobile internet when he is not in WIFI-zone with a prepaid data plan.
Active Aspirer 2013 28M 2018 55M
Name Age City Occupation Anusha 20 Jamshedpur Student
Owns Device(s) Xiaomi smartphone, HP Laptop
Spends 7-8 hours online
Just bought a red top online through Jabong and received a bonus for another buy.
Anusha is a second year college student. She lives away from her family in the college hostel. She uses internet mainly for social media, shopping, deals hunting and knowledge. She aspires to look trendy and fashionable.
Online Activity Browsing information, Music/videos streaming, Shopping (gadgets apparel, lin-gerie, books), Chatting, Social media, Browsing Deals/Discounts, Online Courses, Jobs/Internships
Mostly uses broadband connection at college and has access to a shared WIFI at her hostel. She has a data mobile plan but has to manage cost carefully.
Active Aspirer 2013 28M 2018 55M
Name Age City Occupation Arjun 14 Kochi 9th grade Student
Owns Device(s) Xiaomi Phablet, HP Laptop from older brother
Spends 7-8 hours online
No funds for buying right now ;-(
Although he comes from a well of family, he doesn‘t have a lot of money now. He tries out lots of different types of apps for games, sports, media and for net-working. He is keen to learn tips and tricks and shares those on his various social media accounts.
Online Activity Chatting, Music/videos streaming, Chatting, Social media, Browsing Deals/Dis-counts,
Mostly uses broadband connection at home or at friends. He knows every WIFI between home and his school. On the go he has to be quite cautious because limited data plan.
Selfie Kid
> 55 years 55-35 years
Tier
I
34-23 years
Tier
II-I
VRu
ral
22-15 years
1950 1960 1970 1980 1990 2000
Source: Qualitative research / BCG
User Segmentation
Novel Networkers 2013 7M
Entertainment Enthusiasts 2013 23M
Social Shoppers 2013 4M
Professional Pros 2013 7M
Active Aspirer2013
28M
Name Age City Occupation Neha 25 Chitoor School teacher
Owns Device(s) Lenovo A6000 smartphone, hp Laptop
Spends 5-6 hours online
Just bought lingerie online on Clovia and a special medical cream for her mother.
Neha is a school teacher of a private school based in Chitoor (AP). She lives with her parents. Neha uses internet to keep in touch with her friends. She is a fashion junkie and keeps an eye on latest fashion trends. She usually shops for brands not available in her town and is actively researching with reviews before buying.
Online Activity Browsing information, Shopping (gadgets apparel, lingerie, books), Chatting, Dating, Social media, Browsing Deals/Discounts, Online Courses, Streaming Music
Mostly uses the home connection to access the internet. Uses mobile internet when she is outside with a pre paid plan.
Novel Networker 2013 7M 2018 30M
Name Age City Occupation Sikhander 28 Jabalpur Sales manager
Owns Device(s) Micromax smartphone, Acer laptop
Spends 8-9 hours online
Just bought bus tickets online through Redbus and unlocked pay-level in Implosion his favorite game app.
Sikhander is a sales manager at Mahindra Tractors. He lives in the small town of Jabalpur. He is getting married in 3 month. He is a ardent fan of Indian music and cricket. Most of his time on internet is for chatting, social media and watching vi-deos. He likes shopping online but most of the ecommerce companies don‘t ship to his place
Online Activity Information browsing, reading news, music/video streaming, social media, chat-ting, playing games
Uses the office broadband conncection to access the internet. Uses mobile internet when he is on the go on a prepaid plan where he consumes more then 2Gb/month and gets some reimbursement from his employer.
Entertainment Enthusiast 2013 23M 2018 95M
Name Age City Occupation Shalini 31 Bangalore Stay-at-home-mother
Owns Device(s) Samsung S2, Lenvolo Laptop from her former employer.
Spends 7-8 hours online
Just bought a Saree online and a pink handbag on Myntra
Shalinni is a stay-at-home mother of a 1-year old kid. She is an experienced IT professional and is currently on a motherhood break. For her, convenience and quality matters the most. Also, she is the kind of person who loves sharing her updates with her social media firends.
Online Activity Shopping (gadgets, apparel, lingerie, baby products, grocery), Information browsing, reading news, chatting, social media, , online courses, freelance pro-jects, music/videos streaming,
Mostly uses the home boradband connection to access the internet. uses mobile internet when she is outside home with postpaid plan from her husband.
Social Shopper 2013 4M 2018 10M
Name Age City Occupation Rohit 28 Chennai IT Professional
Owns Device(s) IPhone 5s, Apple Powerbook (company), Sony Vaio laptop (from college days)
Spends 4-5 hours online beside work
Just bought a present for his girldfriend on snapdeal and booked a flight trip to Ladakh.
Rohit did his bachelors from BITS Pilani and MBA from IIM Ahmedabad and lives together with two of his colleagues. He thinks about a digital destination to each and every tasks of his life and loves travelling and recently did a trip to Ladakh with his girlfriend, whom he found on the internet.
Online Activity Information browsing, reading news, music/video streaming, shopping (gadgets, apparel, books, movie ticktes), social media, chatting, playing games, travel tickets, banking, taxi services (he loves Olacab)
Mostly uses the home/office broadband connection to access the internet. Uses mobile internet when he is on the go but tries to stay below the 1GB/month limit his prepaid plan is allowing him.
Professional Pros 2013 7M 2018 15M
> 55 years 55-35 years
Tier
I
34-23 years
Tier
II-I
VRu
ral
22-15 years
1950 1960 1970 1980 1990 2000
Source: Qualitative research / BCG
User Segmentation
Late Learners 2013 15M
Novel Networkers 2013 7M
Entertainment Enthusiasts 2013 23M
Social Shoppers 2013 4M
Professional Pros 2013 7M
Active Aspirer2013
28M
Name Age City Occupation Ajit 54 Pune Business Owner
Owns Device(s) Nexus smartphone, HCL desktop at office.
Spends 2-3 hours online
Just bought replacement knife set online through Indiamart
Ajit is a businessman who lives with his wife in Pune. He has a small processed food business. Internet helps him to stay updated regarding the market trends and prices and for banking. He does not shop online much, but he appreciates the market transparency coming with the internet. He uses internet to book travel tickets and read news. And just recently he discovered Whatsapp to exchange with his family.
Online Activity Information browsing, reading news, exchanging with family (chatting), travel tickets booking, procurement for his business.
Mostly uses the office connection to access the internet. Uses mobile internet with pre paid plan, which his son is recharging for him at the booth in the street.
Late Learner 2013 15M 2018 20M
> 55 years 55-35 years
Tier
I
34-23 years
Tier
II-I
VRu
ral
22-15 years
1950 1960 1970 1980 1990 2000
Data Discoverers 2013 49M
Source: Qualitative research / BCG
User Segmentation
Late Learners 2013 15M
Novel Networkers 2013 7M
Entertainment Enthusiasts 2013 23M
Social Shoppers 2013 4M
Professional Pros 2013 7M
Active Aspirer2013
28M
> 55 years 55-35 years
Tier
I
34-23 years
Tier
II-I
VRu
ral
22-15 years
1950 1960 1970 1980 1990 2000
Data Discoverers 2013 49M 2018 280M
Source: Qualitative research / BCG
User Segmentation
Late Learners 2013 15M 2018 20M
Novel Networkers 2013 7M 2018 30M
Entertainment Enthusiasts 2013 23M 2018 95M
Social Shoppers 2013 4M 2018 10M
Professional Pros 2013 7M 2018 15M
Active Aspirer2013
28M 2018
55M
Name Age City Occupation Ifran Ali 26 Rural UP Garment business owner
Owns Device(s) Micromax smartphone, Dell Desktop at office
Spends 3-4 hours online
Just bought train tickets online through IRCTC
While he travels to collect his garment, he buys tickets online, uses Google maps to find addresses. He uses facebook and Whatsapp permanently and shares a lot of content on those platforms. He exchanges messages in his local language. Pre-sently he is not buying things online, because of lack of delivery in his area. But he does a lot of business via Whatsapp with suppliers, who share the latest produtcs as images with him.
Online Activity Information browsing, Reading news, Music/Videos streaming if bandwith allows, chatting, playing games.
He uses the office connection to access the internet. At home bandwith is very poor. When on travel he enoyes higher bandwidth of mobile networks on a pre-paid data plan. Because of frequent power cuts his mobile phone became the main device for him.
Data Discoverer 2013 49M 2018 280M
Fundamental change
Common belief Reality
• Most users are from metropolitan areas.• Most users are 18 to 25 years old and affluent.
• 34% of internet users are from smaller urban areas (tier 2, tier 3 and tier 4 cities), and 25% are from rurals areas.• 57% of urban users are older than 25 and will make up 70% of the urban internet population.
Who is online?
How do users access the Internet?
Why are Indian users online?
What drives online traffic?
What impact does the
Internet have?
• Mobile Internet activity is small and irrelevant. • 45% of urban consumers with access to the Internet use only mobile devices to connect.
• Most online users are discount driven.• Deals and discounts dominate online sales.
• Discounts drive 30% of online purchases, but convenience (37%) and variety (29%) are also critical.
• Social media create a positive buzz. Internet users spend most of their time on social media.
• The commercial impact of the Internet is over stated.• eCommerce is very limited.
• Search engines drive traffic more than 40% of the time.• The impact of social media is limited, driving just 25% of traffic.
• Among urban internet users, 40% engage in digital activity at some point in the purchase process, and 13% purchase online.
Source: BCG
AECAL was founded and established by a team withcomplementing skills and backgrounds
Prof. Peter Kabel, Managing DirectorMarketing and Sales
• Teaching Professor for Media Communications at Hamburg University of Applied Sciences• Serial Internet- and Media Entrepreneur (Kabel New Media, Trendbüro, Büro Hamburg, Tone Consultants)• Experienced Investor in European and Indian Startups (i.a. Ixigo)• Active in India for 15 years• Professional background in Consulting, Design and Marketing
Get in touch: peter.kabel@aecal.de +49 1714715606
Dominik Gyllensvärd, Managing DirectorFinance and Operations • Consultant with focus on Digital Transformation with project engagement in over 20 countries• Active investor in various digital and E-Commerce ventures• Accenture (strategy consultant)• Frontlineshop (CFO)• dgroup/ diligenZ management consulting
Get in touch: dominik.gyllensvaerd@aecal.de +49 1735278789
> 55 years 55-35 years
Tier
I
34-23 years
Tier
II-I
VRu
ral
22-15 years
1950 1960 1970 1980 1990 2000
Data Discoverers 2013 49M 2018 280M
Source: Qualitative research / BCG
User Segmentation
Late Learners 2013 15M 2018 20M
Novel Networkers 2013 7M 2018 30M
Entertainment Enthusiasts 2013 23M 2018 95M
Social Shoppers 2013 4M 2018 10M
Professional Pros 2013 7M 2018 15M
Active Aspirer2013
28M 2018
55M
Why India is hot, hot, hot?
AECAL Asian E-Commerce Alliance GmbHProf. Peter Kabel und Dominik Gyllensvärd