MUMBAI
- News of US-based Internet company Yodlee
investing US$30 million in Bangalore over the next
five years is another indicator of India's
increasing online market clout. Yodlee's clients,
such as banks, can allow their customers to manage
their finances, pay bills and check accounts
online. That customer base could soon be 100
million by 2007, from the current 33 million,
according to the Internet & Online Association
of India (IOA). By comparison, the Internet user
population in China already runs over 87 million.
"The Asian e-commerce market is not a
single market, but rather a collection of
economies at markedly different stages of
maturity," observes market analyst E-marketer.
"Japan is the most robust ... But the market with
the greatest potential for
growth appears to be China."
India seems to be chugging along nicely in the
Asian Internet business bandwagon as well.
Estimating Indian e-business to be worth $130.8
million in 2004, the Mumbai-based IOA expects a
300% growth by next year.
The growth of
IOA itself seems an indicator of those happy
times. With a mandate to expand Internet business
in India, the IOA reported a 300% increase in
membership, with members including Ebay and
leading satellite news TV channel NDTV. According
to an IOA report released earlier this year,
electronics, air and train tickets, computers,
clothes and music are the big sellers online. The
average age of Indian Internet user is 18-45, said
the report, and over 70% of online buyers did so
from their office Net connections. The 24-hour
broadband net connections are increasingly common
in Mumbai, particularly in leading business
districts such as South Mumbai.
Given the
subcontinental travel industry growth - the
London-based World Travel & Tourism Council
says India's tourism industry is expected to grow
at 8.8% annually over the next decade, with only
Montenegro and China ahead - ticketing will be one
of the biggest gainers in business online. India
sold $80.36 million worth of air and rail tickets
online last year, a fraction of total potential.
For instance, the Indian railways online ticket
reservation site sells only 7,000 tickets daily,
according to the IOA report. About 14 million
passengers daily travel on Indian railways.
The future looks rosy likewise with the
airline industry. Besides the International Air
Travel Association's (IATO) decision to introduce
e-ticketing by 2007 in airlines worldwide, local
players are already contributing their share. New
free user websites such as Ghumo.com helps users
hunt for rock bottom fares in India's booming
budget air travel industry. On its home page,
Ghumo listed a Mumbai-Delhi fare of Rs2949
(US$67), less than half the regular airfare. The
owner, Ananth Narasimhan (30), an engineer and a
former United Airlines employee, claims his site
is the first of its kind in India.
Other
industries such as the media are unraveling bigger
plans. Sanjay Trehan, handling broadband at
Indiatimes.com, plans to shortly introduce a
broadband tabloid, video blogs, mobile blogs,
digitalized model portfolios, travel aids such as
audio-visual walkthroughs of hotel properties and
3-D product demos. The Indian online job market
(job sites) is itself growing at over 100%
annually.
Given the usual e-retail
problems such as delays in deliveries, a survey by
the Internet & Online Association of India and
Cross Tab in March-April 2005 found that a
surprising 80% of users expressed satisfaction
with their online shopping experience. But the
veterans in the business are still cautious. Ajit
Balakrishnan, founder and CEO of rediff.com, one
of India's earliest and biggest portals and now a
Nasdaq-listed company, said in a conference in
Kerala that it would be unrealistic to expect the
Internet to become a business model overnight. In
2004-05, his 10-year company posted revenues of
$12.6 million.
One of the poster boys in
the Indian Internet story thinks likewise. Sabeer
Bhatia, co-founder of Hotmail, accused the Indian
government of ruining Internet growth in India. In
an article for a news weekly cover story on the
spread of Internet in India, Bhatia said,
"Historically, the Indian government has impeded
the Internet with a combination of studied
indifference and myopic monopoly policies. For
instance, in the matter of allowing Internet
telephony, the policy in India allows only the
ISPs (Internet Service Providers) to offer
Internet telephony and that too in a very
restricted manner. This is detrimental to the
interests of consumers because it does not allow
them to enjoy the full benefits of innovation in
technology."
He added acidly: "In my
travels around the world, I am often asked a
question: 'Could you have done Hotmail in India?'
And my answer has inevitably been, 'No!' Had I
attempted to create Hotmail in India, somebody
would have come to me claiming that I was taking
away the revenues of phone or fax companies!"
But advertisers appear more optimistic
about the Internet in India than Bhatia. From
revenues of $6.8 million in 2000-01, Indian
Internet advertising reached $24.5 million this
year and is expected to be worth $46 million in
2005-06, according to Priti Desai, IOA president.
Significantly, the IOA has launched a market
research to gauge how effective Internet-based
advertising could be for marketers. Called the
"Indian Internet Consumer & Cross Media
Research Study" and being done in association with
leading market researchers IMRB, the study is
already being welcomed by Internet business
professionals as an important tool for online
industry growth in India - an entity that seems a
healthy, studious child looking at a rich future
career.
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