YourStory, in collaboration with Kalaari Capital, launched a first-of-its-kind pan-India survey of e-commerce consumers a few days ago with the intention of collecting extensive data and deriving valuable insights. On the one hand, the insights would reveal consumer behaviour that could be valuable for the existing players and on the other, the feedback would give a chance to the consumers to shape the future of e-commerce in India. This provides the next level of detail compared with the e-commerce sector analysis that we had presented for Q1 2014.
The survey was scientifically designed to eliminate respondent bias and also to maximize clarity of choices. The survey responses totalling over 1100 revealed an excellent demographic spread in terms of age, gender, profession and location of residence. For example, 22 to 30-year olds formed 65 percent of the respondents; Bangalore, Mumbai and NCR accounted for 53 percent of the respondents; salaried employees and entrepreneurs made up 62 percent of the respondents.
The infographic below provides some interesting insights from the survey analysis.
The initial hiccups
It has been chronicled that the great e-commerce story of India kick-started around 2006-07 when pioneers like Redbus (2006), Flipkart and Myntra (2007) and Snapdeal (2010) started experimenting with the online model for different categories. Not surprisingly, only 10 percent of respondents had made an online purchase prior to 2007. The majority of people transacted online for the first time in the 2008-10 period; but the period that saw the single largest number of online converts was the 2011-13 window when nearly 55% of all respondents first made an online purchase not related to travel.
Nearly 55 percent of respondents said that the main reason they were worried about making an online purchase was because they were not sure whether the product would look exactly the way it appeared online – the touch-and-feel concept of purchasing a product and only 15 percent felt that not having a credit card was the deterrent. Thus, in a way, this implies that the problem solved by the Cash-on-Delivery (COD) model was not the lack of plastic money, but the resolution of doubt on how the products would actually look like. Nearly 35 percent of respondents felt comfortable making a purchase online after COD was introduced by Flipkart and other players starting in 2010.
Once the initial hurdle was overcome, most users found tremendous value from the e-commerce sites. The most common reasons for extensive adoption of e-commerce were lower costs due to various sales / discounts and also the convenience of getting the products home delivered (30 percent each). This reinforces the image of the Indian consumer as being value conscious and valuing convenience. The ability to browse through a very wide range of products in one place came a close third in terms of reason for adoption.
Next, we delved deep into finding how the e-commerce sites are used for discovering and making the purchase. An overwhelming majority of respondents (60 percent) had a mind map of different e-commerce sites for different categories or different objectives. For example, books and electronics from Flipkart and Amazon, fashion from Myntra, discounted products from Snapdeal and so forth. Further, about 19 percent of respondents also leveraged good old Google to discover the best site for a particular product or category. It is also to be noted that nearly 10 percent of respondents made it clear that they still feel purchasing online might be unsafe in some websites.
In terms of frequency of usage, nearly 48 percent of users made a purchase as needed, with no set pattern, while nearly 30 percent made a purchase at least once a month. However, when it came to browsing through in their free time, a whopping 32 percent browsed through product catalogues and discounted deals at least once a day. This indicates a pattern where users might be making many impulsive and unplanned purchases based on what they like while browsing, as opposed to the behaviour of purchasing what is already a need.
In terms of what they use e-commerce stores to purchase and how they spend money, there are some interesting insights. Given the standardized nature of products and well-defined warranties, electronics turned out to be the most frequently purchased category (32 percent) followed closely by clothing and books. Nearly 37 percent were willing to spend between INR 2000 to INR 10,000 in one transaction while most surprisingly, 34 percent were willing to go up to INR 10,000 to INR 50,000! Even when we asked about the most expensive product purchased online, electronics came up on top by a huge margin (78 percent). Jewellery and home décor are yet to catch up in terms of ticket size of transaction.
The next wave – Mobile
Every e-commerce player has invested in creating an excellent mobile app with very good UI/UX to drive higher adoption – and almost everyone has also reported a drastic increase in the mobile traffic month-on-month. Nearly 53 percent of respondents have made their first mobile transaction in the preceding 12 months. Surprisingly, over 40 percent of respondents have not just used the mobile app / browser for searching and comparing products, but have also ended up making a purchase using the device.
Clearly, mobile transactions are going to drive the next wave of growth for e-commerce players.
Do you think these findings resonate with your own experience? Share your thoughts below in the comments section.
Watch out for the part 2 of this series – An infographic on some interesting factoids from major Indian e-commerce websites