Is Internet economy imploding in India? It seems after years of promise, hype and investment, even die hard internet optimists are giving up.
Just sample following:
Tutorvista, which started as an online education provider for India is dabbling in hard core brick and mortar education business in India. It runs schools, trains teachers, and also sells ICT solutions to school in India. TutorVista founder Ganesh says online-only education model will not work in India because of poor internet penetration.
Kyazoonga is an online ticket booking site for movies, sports and other events. Kyazoonga shot to limelight when it offered tickets for IPL matches in the first edition of IPL. In a recent article in Economic Times, one of the co-founders of kyazoonga says, "We realised that selling online only would not work as plastic penetration in India is low."
Most of us would know Rajesh Jain. One of few men in India to have made his money from internet, Rs 499 Crore, all in cash. Having turned an internet evangelist (whatever that means) since then he has been promoting the cause of internet in India. Unfortunately he seems to be fizzling out too. In a series of posts on his , he has outlined the state of internet in India.
He makes some quite familiar points as to why internet economy is in a pathetic state in India, and what needs to be done to make it feel better. State of affairs can be gauged from a statistic quoted in one of his plots - this is known to most on internet industry insiders, but may be a shocker for others. Internet ad revenues are pegged at Rs 500- 600 Cr, of which more than 75% is cornered by three players - Google, Rediff and Yahoo. That leaves less than 150 Crore for all other players put together!
Sate of e-commerce does not look any pretty either. India's total eCommerce transactions are estimated to be Rs 9000 Cr. Of this 38% comes from IRCTC website alone! If you take out contribution of other travel sites, online share trading and b2b commerce one wonders how many people are buying online in India.
Net-net, if you are an internet only business in India, life is going to be tough. Many pieces of jigsaw need to fall in place before you can reap benefits of your efforts.
A lot of us are heavy users of internet in India, and can't imagine a life without it. But it seems internet is going to take many more years in India to realise its potential. Those who stay put may aspire to reap benefits like Rajesh Jain did. Alas, there will be many more who will have to shut the shop before that.
Just sample following:
Tutorvista, which started as an online education provider for India is dabbling in hard core brick and mortar education business in India. It runs schools, trains teachers, and also sells ICT solutions to school in India. TutorVista founder Ganesh says online-only education model will not work in India because of poor internet penetration.
Kyazoonga is an online ticket booking site for movies, sports and other events. Kyazoonga shot to limelight when it offered tickets for IPL matches in the first edition of IPL. In a recent article in Economic Times, one of the co-founders of kyazoonga says, "We realised that selling online only would not work as plastic penetration in India is low."
Most of us would know Rajesh Jain. One of few men in India to have made his money from internet, Rs 499 Crore, all in cash. Having turned an internet evangelist (whatever that means) since then he has been promoting the cause of internet in India. Unfortunately he seems to be fizzling out too. In a series of posts on his , he has outlined the state of internet in India.
He makes some quite familiar points as to why internet economy is in a pathetic state in India, and what needs to be done to make it feel better. State of affairs can be gauged from a statistic quoted in one of his plots - this is known to most on internet industry insiders, but may be a shocker for others. Internet ad revenues are pegged at Rs 500- 600 Cr, of which more than 75% is cornered by three players - Google, Rediff and Yahoo. That leaves less than 150 Crore for all other players put together!
Sate of e-commerce does not look any pretty either. India's total eCommerce transactions are estimated to be Rs 9000 Cr. Of this 38% comes from IRCTC website alone! If you take out contribution of other travel sites, online share trading and b2b commerce one wonders how many people are buying online in India.
Net-net, if you are an internet only business in India, life is going to be tough. Many pieces of jigsaw need to fall in place before you can reap benefits of your efforts.
A lot of us are heavy users of internet in India, and can't imagine a life without it. But it seems internet is going to take many more years in India to realise its potential. Those who stay put may aspire to reap benefits like Rajesh Jain did. Alas, there will be many more who will have to shut the shop before that.
Well said..I am trying to make internet my bread n buter..it wil interesting to c if i survive or perish..
ReplyDeleteInteresting post Sanyog. Yes, i think an online only busy is going to be tough to pull off. Instead of that fact demotivating us, we need to get creative - look at Comat/Nemmadi or Your own 160by2 as fine examples to emulate.
ReplyDeleteThanks Sukumar. We are holding the fort. This post sounds pessimistic but I earnestly believe internet economy will eventually prosper in India. Its just taking longer than what most of us expected.
ReplyDeletePeenuts,
All the best. I hope you survive it :)
Good analysis, sir jee.. My 2 cents:
ReplyDelete1) kyazoonga is a failed biz model, y dnt we talk abt bookmyshow.com. IMHO,they have done reasonably well or I may say way better than kyazoonga for same credit card penetration. (No clue if bukmyshow is profit making entity)
2) TutorVista: Charging Rs.125/session. Y wundt I ask a guy next door or in my locality to cm n teach my children. My relatives get gud tutors @ Rs1000/mnth for 12 sessions. Point is leave apart penetration & personal touch factor, the rates are also incompetent.
3) E-commerce... for most of the products getting sold online on indiatimes/rediff, i get better rates if I go to market and buy + trust factor + quality assurance
Smwhere, the exp. I've collated are:
as far as buying cd, books etc (low price items + decision making is crystal+ feel of std. prod. isnt required) ppl are okie to buy online..
Thanks..
Ha ha... Sukumar is here too!!! Now, why didn't I expect that! :))
ReplyDeleteSaurabh~~~ makes good points.
Given all the core issues like infra penetration, credit card usage, online security etc, the value proposition of any internet undertaking in India has to be crystal clear, esp compared to the convenient physical alternatives just outside the gates of the societies we live in (in India).
Agree with Saurabh. True, bookmyshow is definitely a better bet than kyazoonga. Last weekend I booked my movie tickets through bookmyshow! :)
ReplyDeleteBuch, I like ur ..gates of the societies.. phrase. There are so many ppl undercutting each other to provide products and services at your doorstep in India, that internet sites have to come up with a 'real' differentiator to induce buyers.
To be honest, I found it much easier to file my IT returns through a tax consultant than numerous sites that have cropped up to help you do so online!