Archive for October, 2014

Internet’s Bottom of the Pyramid
October 8, 2014

“The next hundred million possible users of the internet in India today work as shop assistants, or as hawkers, or as street vendors, and earn less than Rs 9,000 a month, according to the report, How India Earns Spends and Saves, from the National Council of Applied Economic Research. An affordable internet connection for them means one priced at less than Rs 100 a month, always-on and unlimited usage.”

It distracts you from the hype. Rediff.com CEO Ajit Balakrishnan’s column in Business Standard on Oct 7 is a narrative that takes Digital India beyond online shopping. A worrying side story is how the country’s largest e-commerce engines would struggle to get the next 100 or 200 million internet users spend online. And how tenacious are some of those chest thumping valuations built on parallels drawn with China.

That’s another argument.

The exciting thought is a whole new way to chase the Bottom of the Pyramid story. A new potential to unearth fortune at the bottom. Affordable internet access can propel big entrepreneurial journeys in India’s healthcare, education and agriculture. This is internet’s worthwhile promise, Balakrishnan notes.

Successful internet entrepreneurs have solved “pain points” in “must have” services and products. Imagine this in vast swathes of urbanizing population in one of the fastest growing markets. India’s digital economy, if powered by cheaper internet, will be mining the next 200 million, or possibly, the next 400 million people, for many billion-dollar enterprises.

As Balakrishnan argues, it’s time for peering digital and political economies to make internet cheaper.

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Indian e-commerce figures need fact check
October 7, 2014

E-commerce is the biggest Indian media obsession after Prime Minister Narendra Modi now. Both for celebratory reasons among the world’s largest urbanizing population.

Yesterday, the local e-commerce leader Flipkart’s #BigBillionDay sale kicked up an unlikely storm on social media. The 30-something co-founders of Flipkart, Sachin and Binny Bansal, saw their brand being ruthlessly trolled. What started on Twitter and Facebook soon became an avalanche of jokes on Whatsapp and text messages.

Stock outs, server crashes and order cancellations infuriated several consumers who warmed up to online retailing mostly due to the ‘Flipkart experience’. It appeared that the company had over pitched the #BigBillionDay story. The consumer backlash was troubling for a sector still in the pre-teens.

A day later, the mainstream media reaction was largely disconnected from the social media fury. It lapped up numbers published by Flipkart — 1 billion hits, $100M sales in 10 hours — without questioning.  About 20 lakh transactions mopped up Rs 600 crore, at an average Rs 3000 per purchase.

Rivals Snapdeal and Amazon showed up with equally incredible claims. Snapdeal co-founder Kunal Bahl was quoted as saying the e-tailer sold merchandise worth Rs 1 crore per minute.

How are these figures stacking up? Consider this: India has about 250 million internet users with about 10% of them being transacting customers. It must have been a mind-blowing frenzy on the #BigBillionDay. Still, these numbers need better scrutiny, or a better perspective at least.

Try juxtaposing 1 billion hits on Flipkart website with the size of white-collar work force in India, or start asking how many SKUs in electronics (so called high-value items) were sold.

Media needs to ask questions even in its worst moments of trance. It’s time to get real about the e-commerce industry. What’s the average purchase value? How does it tally with the Chinese consumers buying online?

There could be some redeeming answers here. Last November, Alibaba’s #Single’sDay sale in China raked in $6 billion one day. China has around 650 million internet users spending more than 10,000 yuan to shop online annually. A strong consensus suggests that China has a significantly higher ratio of transacting internet users, notorious for online shopping addiction.

It’s time that business media sought better data, and not opaque numbers — even if it meant snapping its honeymoon reporting. An obsession can become a nightmare — in business and in politics.

 

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