India Internet - status check

Written by: Madhur

On Jul 17th, 2007

comScore recently came out with a report on the Indian Internet industry. Here are some of my observations and thoughts:

Search engines - One of the popular category of sites. This category pretty much reflects the global trends in terms of the popularity of search engines. (Google, Yahoo, Microsoft, Ask). The interesting thing to note here is that there is no Indian company in the list. Given the variety of different cultures and languages in India, one might think local players might have an edge if they really tried. Currently though, most of the Internet population is English, but this is certainly going to change as the penetration increases. If Chinese search engine Baidu is anything to go by, there is certainly room for a local player in India too. And hey, its not like no one is trying. But frankly, other than Guruji, no one seems to be anywhere close to the standards of the big global players. We have talked about Guruji here and here, let’s see how they progress in the coming years.

Portal/Services - A popular category from the Web 1.0 era. The sites in this category either have day-to-day utility or entertainment value. Lot of early local players here from the 90’s, yet only a few established ones. Google, Yahoo, MSN are again the big players, although the good news here is that there are at least a handful local players in the sector.
news/entertainment/communication - rediff, timesnetwork and sify - decent content but poor user experience (broken links, popup ads, flashy ads)
classifieds - This is one category which has achieved the best success rate as far as the local players are concerned. One of the reasons is the demographics that is online in India and the fact that these players jumped on to the opportunity quite early in the game and more importantly stuck it out at the time of dotcome burst. Naukri, Shaadi, Bharatmatrimony, etc. are a few examples. A few promising sites in this space - mapmyindia (maps and directions), onyomo (local yellow page listings)

Social networking / web2.0 - A rapidly growing category. Very few decent Indian sites. Mostly dominated by the likes of Orkut, Facebook, Youtube etc. Again this is a category where one would think a local player can gain an edge as they would presumably understand the sensibilities of the youth better. Like I mentioned above, once English ceases to remain the predominant language on the web, more possibilities will open up. A few promising startups in this space - Minglebox, burrp.

Ecommerce - My personal favorite but not a popular category in India yet. We really need to catch up here if Internet has to sustain. The reason is simple - the most popular business model on the Internet is advertisments and for ads you need companies who are ready to advertise in the first place. Yes offline companies do want to advertise online, but there is only so much they will do. Real spending will come only from ecommerce players as they can directly affect the sales/branding using this form of advertising. We are seeing growth in this category. Check out some good articles on this space at Darpan Munjal’s blog. Travel is definitely a hot sector which already has a bunch of players (makemytrip, yatra, travelguru, cleartrip etc.) followed by entertainment (seventymm). The next big sector is retail which is currently dominated by Ebay India, but definitely expect to see some action here. IndiaPlaza.in and Futurebazaar are upcoming players. Remains to be seen who will emerge out as the Amazon of India (how about Amazon India itself?)

While on this topic, you might want to check out an interesting discussion here about why Indian companies are lagging behind global players (as opposed to Chinese, Korean, European markets). You can read the complete article for details, but the summary is that dominance of English language and poor user experience of Indian sites are the two main reasons.

Conclusion
India Internet has come a long way just in the last 3-4 years, but I think we are still in early stages. It might still take some time to reach the maturity level of more developed markets. To me, it looks more like the pre-bubble period (’97-98) of the US market. A lot of investment is happening, user base is increasing, new companies are coming up - things seem to be moving in the right direction. What are your thoughts?

Sphere: Related Content

Entry Filed under: Venture capital, ecommerce, news, online retail, online travel, search, web2.0

7 Responses

  1. 1. Gaurav Kotak said on July 17th, 2007 at 2:10 pm

    Unless local languages become prevalent I don’t see local companies making much progress in search and social network, simply because global sites by virtue of being global provide more value.

    Agree completely with comments on eCommerce. Indians (especially young) like spend money (consumption rate of 60%+ as compared to China 30%+). The organization and consolidation in the offline retail sectors will bolster eCommerce since large players like Reliance, Walmart-Bhartia are more likely to invest in eCommerce infrastructure.

    I also wonder who the next Amazon would be. This will be an EXTREMELY lucrative business. The complexity is in setting up the supply chain. While Amazon is an obvious choice i think the large courier services already have a lot of that established (or will need to for their core business)

    There is also a need for better content and transactional sites.

  2. 2. Jason Vu said on July 17th, 2007 at 4:34 pm

    It seems India is slow in Web 2.0 adoption in comparison with China.

  3. 3. India Internet Status at Blogbharti said on July 23rd, 2007 at 8:31 am

    [...] Madhur analyzes the current status of Internet in India and comes to the following conclusion India Internet has come a long way just in the last 3-4 years, but I think we are still in early stages. It might still take some time to reach the maturity level of more developed markets. To me, it looks more like the pre-bubble period (’97-98) of the US market. A lot of investment is happening, user base is increasing, new companies are coming up - things seem to be moving in the right direction. What are your thoughts? Linked by Krish. Join Blogbharti facebook group. [...]

  4. 4. iLeher » “We are sitting at the verge of a perfect storm” - Darpan Munjal on ecommerce in India Catching the Internet Wave in India said on August 5th, 2007 at 4:01 pm

    [...] Ecommerce has been one of the recurring themes here at iLeher. On this topic we have have covered various stats, strategies, and new ventures. The reason why its so interesting to study this area is its at nascent stages, its upcoming and most importantly its rise will create new avenues for generating revenue for Internet companies across the board - including logistics, advertising, transaction processing, referrals and lead generation. I am personally very excited to watch new companies and businesses coming up in this space and observe how this market shapes up. Web 2.0, community sites are all great (and good to see Indian companies are getting noticed), but ecommerce is what will directly impact lives of general people. An example is how it has changed the rules of the game in travel industry. [...]

  5. 5. Sirius said on August 21st, 2007 at 12:07 pm

    Indian real estate is highly unregulated, unorganised market with huge potential. The information flow is concentrated to brokers and agents which acts as their only tool to extract money from buyers and sellers.

    The most important factor as we all know in real estate is Location, Imagine what happens if the location information is made freely available to public. Its happening in other parts of the world and india will not be untouched. http://www.Mapofi.com is one such initiative which is breaking ground and actually have taken steps to provide a way to where the future lies. Its interesting to know that Buyers and sellers save 50% on their commission when they transact through Mapofi. Without compromising Real Estate Agents share.

    Indian real estate market has one of the lowest rate of commission structure (2%) as compared to its european and American counterparts. Still the lack of regulation makes it a bitter experience for the sellers and buyers with increasing number of insecure real estate brokers. There is an urgent need to make this market more regulated and rules drawn clearly and transparently.

    Its Time for an inevitable change to make property transaction a Delightful Experience for everyone.

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