The number of Internet users in India is expected to nearly triple from 125 million in 2011 to 330 million by 2016, says a report by Boston Consulting Group (BCG). This rise in Internet penetration will lead an increase in digital influence on people's purchase decisions.
According to the report titled "From Buzz to Bucks: Capitalizing on India's "Digitally Influenced" Consumers,", 40 per cent of India's 90 million urban Internet users say that online activities such as product research and price comparison influence what they buy. The digital influence, currently affecting $30 billion of urban consumer spending is expected to greatly accelerate over the next four years.
To determine how Internet use affects buying decisions, BCG's Centre for Consumer and Customer Insight surveyed 25,000 Indian consumers on their online activities during each step of the purchase cycle, in 101 different product categories.
"We found that the growing digital influence is particularly important in categories such as appliances and consumer electronics, in which 40 to 60 per cent of buyers have access to the Internet, and more than a third of them are relying on the Internet for product research or price comparison," said Arvind Subramanian, a BCG partner and co-author of the report.
The demographics of Indian Internet use revealed that men are far more likely than women to be on the Internet (32 percent versus 12 per cent) and more than three times likely to be digitally influenced (14 per cent versus 4 per cent). Although higher income levels are well represented online, even 18 per cent of the lower-income "strugglers" (whose annual household income is less than Rs 1.5 lakh) have Internet access, and 6 percent are engaged in commercial activity online, the report said. The report also showed that only 30 per cent of online buyers were drawn to Internet shopping for discounts. A higher proportion (37 per cent) valued the convenience of shopping from home, and 29 per cent said that they appreciated the expanded variety of products available online compared with what is available at brick-and-mortar stores.
In contrast to more advanced e-commerce markets, digitally influenced consumers in India rely on company websites for detailed product information as frequently as they refer to third-party sites for comparative research and online purchases.
Overall, the Internet has the highest penetration among people ages 18 to 24 (48 per cent) and the lowest among those older than 54 (6 percent). The Internet is projected to reach small towns and the low rungs of the economic ladder more quickly than retail chains will, bridging geographic barriers and feeding the growing appetite for consumer goods, the report said.