The coming click-time boom

Price seems to be no barrier for online shoppers; they are now buying items which cover a range of prices, writes Preeti Desai*, president Internet and Mobile Association of India.

The Internet wave has broken on Indian shores with a vengeance. The nuances of the medium coupled with changing lifestyles and shopping habits have made this medium most interactive, and therefore so attractive, to today's shopper. It's brought in its wake the phenomenon of online shopping, which is bringing in indelible changes to the Indian retailing industry.

The figures in the graph below demonstrate how big the wave really is. In 2002-03, e-commerce transactions were worth Rs130 crore, which shot up to Rs570 crore in 2004-05. By 2006-05, the online shopping industry is expected to be worth Rs2,300 crore.

There are enormous opportunities in the online retailing business. Just like in the physical world of brick-and-mortar retailing some of the questions that an online retailer should be asking are: what does my consumer look like, what does he spend on, and how much does he spend and when?

One of the most common perceptions about online shopping is that while consumers are willing to spend small amounts over the internet, they won't go in for larger purchases. One look at any online shopping site shows that this is a fallacy. For instance, some of the products on offer on prominent Indian shopping sites are laptop computers (that can cost as much Rs90,000) and jewellery sets priced at Rs1.50 lakh. What's obvious is that price is no barrier as far as online shopping is concerned.

According to a recent survey of internet users and their shopping habits by the Internet and Mobile Association of India (IAMAI; formerly known as the Internet and Online Association of India) and Cross Tab Marketing Services;

Wallet Size -Amount spent online in the past six months

Base 1493

• The low percentile for the 'small wallet sizes' reflects a frequency to purchases and hence the marginal representation in the less than Rs100, Rs100-Rs300 and Rs300-Rs500 wallet sizes category.
  
• 14 per cent of online shoppers have bought goods in the Rs500-Rs1,000 price range, for books, accessories and gifts.
  
• 38 per cent of shoppers on the net have spent in the Rs1,000-Rs5,000 range on booking railway and airline tickets and electronic gadgets
  
• Another 20 per cent have spent as much as Rs5,000-Rs10,000 price range on booking railway and airline tickets and electronic gadgets home appliances, etc.
  
• 16 per cent have spent in the 'Rs10,000 plus' price range on computers, hotel rooms, jewellery, airline tickets and home appliances.

According to the age and spending criteria, the 26-35 age groups is the largest online spending group across all wallet sizes excepting the Rs100-Rs300 and Rs300-Rs500 wallet sizes which is dominated by the 18-25 age group. What is noteworthy is that young will age and dominate the 'older' age groups and with the internet transcending itself from a luxury to a necessity this age group will also be an example for following generations to emulate.

The current dominance of this young demographic across wallet sizes isn't surprising for the following reasons. For one, this is a segment that has grown up using the Internet, is tech-savvy and comfortable with ordering things online. Two, people in this category have plenty of money in their bank accounts – many are from double-income families – and are willing to splurge on the "good things of life".

There are over 28 million internet users in the country today. According to IAMAI estimates, this figure is expected to reach 100 million by the year 2007. This means that the number of online shoppers will increase exponentially in the years ahead. Many of these will have a degree of familiarity with the internet much greater than the users who preceded them. They will also have much better information about the various products and services on offer. They won't hesitate to spend on even expensive products over the net.

*The author is president of the Internet & Mobile Association of India