Friday, February 24, 2006

Will small towns be the growth engine for internet in India?

Internet seems to be on a move in the metros of India, but can it be the buzzword for small towns too?

Well if we look at the stats, it sure looks tough but quite possible. Today almost 70% of the total Internet users in India are coming in from the top 7 cities – Mumbai, Delhi, Bangalore, Hyderabad, Chennai, Kolkata & Pune. Only 30% access is happening from all other cities put together.

Much of this can be attributed to the agonizingly erratic connectivity and pitiable bandwidth. No wonder, more than 2/3rds of the 30% from other cities are hooked on to the internet from cyber cafes.

If we look at logically, then a person in Gorakhpur should be a more willing buyer on the Internet as he can have more choices and lot of products / brands that may not be available in the local markets. A reliable e-commerce site would be like a Gurgaon mall for him.

When Indiatimes launched a branded 1.5 ton A/c offer at Rs. 12,000 around year and a half back, I know at least 5 people in Kanpur, my home town who bought air conditioners from Indiatimes shopping!

This can be a reason why e-commerce portals are already seeing almost 50% of their sales coming from the B & C class towns. eBay CEO Meg Whitman on her recent visit to India along with India Country Head - Gautam Thakar remarked about this as well

Categories like online travel & education also have a huge potential in these towns as there isn’t enough information / support on the ground providing information and options.

However, for people to plug into Internet in the smaller so called B & C class towns of India lot of work and focus is required from various stakeholders:

  • ISPs / Telecos to give good connectivity at reasonable rates (I hope we have some low cost mass access technology like Indian Wi-max coming in soon)

  • Hardware companies to provide low cost computers at easy installment schemes. (A 500 rupees per month scheme where you get a computer and internet access!)

  • Publishers to provide compelling & local content in local / regional languages

I place my bets strongly on the small and mofussil towns of India being THE growth engine of Internet over the next 2-3 years.


garima said...

if this happens,it'll surely be the best thing to happen to current Indian online scenario.
but i guess until the country and players like u mobilize the resources, and the infrastructure to provide small towns both the means and the reason to access the net, its a far cry from reality!

Achal Mehra said...

Yes , it goes well with the long tail theory. A high percentage of sales on net is of niche products which will find it very difficult to sell in remote areas through traditional distribution chains . the stcokists wont stock such products. So they will lend themselves very easily to net based distribution models .

Antigone said...

When you talk of mofussil India and e-commerce, what you are battling most -- much more than connectivity et al -- is the mindset. Internet connectivity can only grow into small-town India. It is waiting to happen and is happening. The small Gujarat town of Bhuj, which was devastated by the earthquake, is a case in point. In June 2001, six months after most parts of town had been flattened, I would have to wait in queue for a place in a cyber cafe. And cyber cafes fairly dotted the town. And these were largely locals waiting to access mail, browse, chat etc. That was almost 5 years ago.

But I am not absolutely convinced they will begin to buy on the Net. It will take time to become comfortable with the practice. In time, yes. There is no other way but forward.

Great posts, btw!

Sanjay Gupta said...

Hi Anurag !

Yes ! Of course...

I am quite optimistic as far as infrastructure is concerned.

Mobile phone is a living example which even rickshaw puller, sabziwala or even maid servant considers it as a necessity.

And if this happens, you are very right in saying that small towns will be the growth engine for internet in India.

I really enjoyed visiting your blog... though just by chance.

Best Wishes for Your Projects.


Replacement Parts said...

I now see exactly whats going with this world. If you say yes, the others say no, its a tough world out there in order to get ahead..
But, as long you stay up, keep your head up right, do your homework like the Mister that wrote this well written piece did.
Sooner or later, you'll have a plan and succeed, so its never too late to begin, start now! Don't procrastinate, get to organizing your life and you too will make it in the business world! :)