Indians to spend $550b digitally

Digital maturity is the primary determinant

Indian consumers spending through digital channels is likely to increase tenfold by 2025 to $500-$550 billion from $45-$50 billion a year at present accounting for almost 35 per cent of the total retail sales.

While India’s initial digital consumers were male, millennial and metro-based, according to Boston Consulting Group, by 2020, half of all internet users will be rural, 40 per cent will be women, and 33 per cent will be above the age of 35.

“The primary determinant of consumer behaviour is not age, gender, or location, but digital maturity — that is, the number of years that a user has been online. The more digitally mature people are, the more they do online. As a consequence, digital’s influence on purchases and actual digital commerce are both increasing. From 2014 through 2016, the number of online buyers rose sevenfold, to between 80 million and 90 million,” it said.

Noting that the adoption of digital in India is occurring considerably faster than that of technologies in the past, BCG said India would have more than 850 million online users by 2025, more than the combined populations of the G7 countries.

The study also found that many Indian consumers are still apprehensive about online transactions, and the first one looms large in their minds. A good experience encourages a second transaction, and a third.

A bad experience sets the individual’s online development back.

“If an online retailer makes it easy and natural to research, buy, and take delivery, for example, the new online consumer will be off and running. When the shopper encounters problems like a hard-to-use website, payment difficulties, poor-quality goods, or, just as important, trouble with delivery— the experience is likely to inhibit further online shopping,” it added.

While companies in India have recognised the consumer’s shift towards digital channels, the study found that they yet to make sufficient investment in digital infrastructure capabilities.

According to it, many companies are basing their plans and investments on the expectation that the Indian digital marketplace will evolve as it did in developed markets.

“We believe this underestimates the digital potential in India, companies may actually be underinvesting for the long term,” BCG added.

The study found that many Indian consumers are still apprehensive about online transactions, and the first one looms large in their minds.