study of e-commerce market for smartphones in india
TRANSCRIPT
e-commerce in India is growing at a CAGR of 53%
• Online retail revenue in India is expected to grow from US$1.6B in 2012 to US$8.8B in 2016
• Mobile phones are in the Top 3 of products/services purchased online
• Consumers who use internet to make buying decisions spend more than less-connected peers. For instance, digitally influenced mobile phone buyers, buy products that are, on average, 46% more expensive than others.*
*Source: BCG study, Apr 2013
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Online retail market size (US$ Bn)
1 .62.4
3.7
5.7
8.8
2012 2013 2014 2015 2016
Source: Forrester study. Revenues for intermediate years are projected based on overall CAGR
In India, a high percentage of Online, as well as Offline, buyers publish their opinions online
Source: GlobalWebIndex Q2 2012
E-Commerce Engagement: LOCAL SPLIT Post Purchase Influence at a local Level(% of Indian internet users)
91% of multi-platform publish opinion online
75% of online buyers publish opinion online
79% of “offline fulfilment””publish opinion online
20% of rejecters publish opinion online
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Multi-platform: Phone & Tablet. Online: PC only
A Global comparison of Influence vs. Online Purchase shows that India is positioned quite well with respect to its peers
Markets mapped by % purchase online via a PC / Mobile / Tablet V % influence post purchase Source: GlobalWebIndex, GWI.7 Q2 2012. E-Commerce Segmentation
HOW TO READ: 65% OF USERS IN POLAND ARE ONLINE BUYERS (PC / MOBILE / TABLET) , EQUATING TO 12M. 77% OF INTERNET USERS IN THE MARKET HAVE PUBLISHED ONLINE ABOUT A PUCHASE IN THE PAST MONTH.
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Although the India Mobile Phone market is still dominated by Feature phones, fast transition to Smartphones has started
Source: IDC Worldwide Mobile Phone Tracker, March 2013
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India is expected to have the highest growth rate in Smartphone shipments
Source: IDC Worldwide Mobile Phone Tracker, March 2013Page 6
There are challenges to e-commerce in India, but these can be mitigated by the right strategies
Source: survey results cited in Abhinav Journal report Volume II Oct 2013Forrester blog says returns between 5 and 25%. % depends on category and is higher for COD (Cash on Delivery).FDI: Foreign Direct Investment
• Product returns between 5 and 25%*• High where CoD* is offered• Product delivery challenges
• Consumer concerns • 37% cite delivery issues (late, quality)• 30% cite inability to touch/feel • 8% cite website complexity
• Payment gateway issues• High failure rate (20-40%)• Number of hops a key reason
• Regulatory issues• FDI* companies cannot do direct B2C
online
• Have no CoD option in website and offer EMI options
• Alternatively, charge customer additional cash handling charges for CoD
• Partner with reliable logistics providers to address delivery concerns and reduce returns
• Suggest stores or café chains to try out products
• User experience focus in website design
• Understand technical capabilities of gateway partners
• New companies offering fewer hops leading to 15% increase in success
Challenges Mitigation
• Work with trusted partners to set up and run e-commerce operations
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Low broadband speed is compounded by poor physical infrastructure (e.g. roads, ports) and complicated customs and inter-state tax rules
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Indian government’s policy in the area of e-commerce is not clear and implementation is slow
• The e-commerce sector is yet to open up fully in India, and no comprehensive set of laws exist for this sector
• Retail trading (B2C) e-commerce not permitted for companies with Foreign Direct Investment (FDI)*
• Compliance required with several other laws like Contract law, IT Act etc
• FDI is permitted for brick and mortar Retail business
• FDI is permitted up to 100% in B2B e-commerce activities
Source: DIPP (Dept of Industrial Policy & Promotion), India
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e-commerce prospects for Smartphones in the $160-565 (INR10-35K) price range looks very promising
Overall purchase break up by price
Online purchase break up by price
17.4% of all respondents purchased online (multi-brand online or company e-store)
Source: IBM survey with 150 respondents1 USD = 62 INR assumed
23.6%
21.4%
20.2%
28.6%
25.7%28.6%
16.2%4%
14.2% 17.9%
$565+$400-$565$290-$400$160-$290<$160
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We conducted a survey of web influence on smartphone purchase in India
Which brand of smartphone do you Own?
What is the price you pa id for your smartphone?
Samsung
HTC
40%
6%
Apple14.5%
Sony9.4%
How did you purcha se the phone?
35K +
25K – 35K
18K – 25K
10K – 18K
< 10K
Multi-brand physicalRetail store
Multi-brand online retail
Company’s physical brand store
Company e-store
48%
14.4%
5%
Source: IBM survey
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A very high proportion of people surveyed went online to research product and price
Be fore buying the phone , did you research the product online for product a nd price information?
If you used the web for product re search, wha t sources did you re ly on?
0.0%
50.0%
100.0%
91.4%
Co Website/e-store
61%
3rd party website/blog
88%
Social Other
25%
The company website/store is a trusted source of product info
52% of respondents felt the online experience was very important in influencing phone purchase
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Source: IBM survey
Among those who used the company website, primary reasons for revisits are product info, deals and customer service
If you used a company website or e -store (like samsungindiaestore .com or Lenovo's thedostore .com),
what would be your primary reason for visiting the company website /e -store aga in?
Product info and price
Deals and discounts
Customer service
61%
19%
8%
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Source: IBM survey
The company website is one of the key “Go-To” options for customers requiring support
If you required customer service , whe re would you go? (se le ct a ll tha t apply)
0.0%
50.0%
100.0%
Co physical store
Co website Co call center
3rd party retailer
3rd party service center
Online forums
62%
51%
64%
13%18%
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Source: IBM survey
But of the people visiting the company website for support, more than half felt the site was useful “sometimes” or “not at all”
Yes 38%
No 17%
Sometimes 45%
If you used co. website for support, did it help in resolving your problem?
If you have used the company website support, which aspects of the website did you find he lpful
Troubleshooting guides
37%Firmware/ Software 25%
Forums
18%
Ticket Logging
15%
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Source: IBM survey
The survey also found that a high proportion of respondents were inclined to consider buying their next smartphone online
Yes 76%
No 24%
Will you consider buying your next smartphone online?
Which brand of smartphone do you think you will buy next?
Samsung
24%
Apple
33%
Micromax
8%
HTC
4%
Sony
7%
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Source: IBM survey