Connectivity and internet usage in India

Absolute basics

Indian domain names end in “.in” and are used in a manner rather consistent with the usage of “.uk” – companies are typically “” for example.

It’s easy to register an Indian domain name. What isn’t so easy is to use it for retailing to Indian consumers. There are extensive restrictions, which we’ll cover later in this report in the section on FDI (foreign direct investment). Suffice to say here that you certainly are not going to be setting up and mirroring your home site on it with some minor localisation changes.

Demographics of internet access

Published data points on actual numbers of internet users vary, but the general consensus appears to be about 20-25% of the population currently. This is forecast to increase rapidly, with much of the growth coming from rural users, who by implication will almost certainly be using low bandwidth mobile-based connections: Figure 4.


More specific demographics are also changing rapidly. In 2013, only 27% of internet users were female, but this is forecast to become 34% by 2018; similarly 60% of users were under 25 by 2013, forecast to become 46% by 2018.

As internet usage grows, use of non-English content is forecast to increase:

“Currently over 200 million Indians are online and most of them are already proficient in English. We want to ensure that the next 300 million who are not proficient in English find the internet just as easy to use”

say Google, who have a vernacular language initiative ongoing.


What are all these users doing? This is a topic where that urban/rural divide is particularly stark (Figure 5). Even as internet access has rolled out to rural areas, this hasn’t translated into much online shopping; meanwhile enthusiasm for online shopping accelerates apace in the towns and cities.


Mostly they are doing all this from mobile devices (Figure 6), over mobile connections: the fixed-line infrastructure in India was very under-developed at the point when mobile phones began to appear, which in turn removed many of the incentives to invest in it. There are less than 18M fixed line broadband connections in India for its 200M+ internet users.


Online shopping behaviours

Size of Prize

Average cart sizes

Average cart sizes for purchases online are generally lower than in western markets, as might be expected, but in key categories such as clothing, not impossibly lower. It is always worth remembering that it is the wealthiest 6-10% of consumers who represent the online purchasing consumer-base in India (Figure 13):


Of those who use the internet to a significant extent and use it in English – a demographic inherently skewed towards the wealthiest and best educated – propensity to purchase by age group is shown in Figure 14.

As might be expected in a fairly conservative country, inclination to purchase online is skewed towards those demographics which have grown up with the internet. Online purchase propensity drops off significantly in the silver-surfer segment.

Online purchase propensity shows little or no variation between genders, but this is in the context of internet usage by men being double that of women.

The fashion-oriented marketplace Myntra shared some demographic data for this report: 60%-40% male-female split, trending rapidly towards a more female audience (with its sister company Jabong already more female), and with 40% being in the 25-34 age group and a further 20% aged 20-24.


Why do Indians buy online?

Indian shoppers claim, when surveyed, that factors like convenience are a key motivator for shopping online, and rank price somewhat further down (Figure 15):

In practice this is not necessarily borne out by the operating models of Indian online retailers. Until the recent changes in the laws to restrict the use of online discounts, the average investment by online retailers in discounts was a whopping 30% of revenues, with a further 12% spent on marketing and promotions. Unsurprisingly they traded at an average loss of 35% of turnover, hence the need for Foreign Direct Investment (see above) to sustain them through their initial growth cash-burn phase.

Nevertheless, for a brand or retailer considering targeting India with products which are not locally available locally offline, the emphasis on choice and ratings, plus the demonstrable understanding Indians have that ecommerce represents an alternative to traditional mail-order, are all encouraging signs.

Anecdotal guidance suggests that Indian consumers will tolerate price mark-ups of around +30-35% in order to purchase locally (e.g. on marketplaces) compared to the perceived risk of buying from a non-Indian site.


Unsurprisingly, top barriers to online purchasing include returns (24%), payment methods (28%), concerns about security especially of payments (20%), and finding delivery charges off-putting (10%).34 All of these show declines over the last three years as Indian shoppers’ comfort with online shopping increases.

However they are all factors which are exacerbated by cross-border, and any cross-border proposition targeting India needs to take very clear steps to address these with potential purchasers.

General purchase motivations

While not specific to online transactions, it is insightful to examine Indian shoppers’ general motivations for purchasing, because these are often somewhat different to those in the west, especially the critical importance of festivals and family events in the purchasing calendar.

Firstly consumer electronics, which show rather little variation compared with what might be expected in your home market (Figure 16):

By contrast, purchases of clothing and accessories, even amongst the wealthy educated professional demographic, are extraordinarily strongly driven by family events and festivals (Figure 17):

If you are targeting Indian consumers in all but the most utilitarian of categories, it is essential to build your trading calendar around events such as festivals, and your marketing messaging around family-centric moments such as weddings and birthdays.

This is not the place to go into detail about the complexities of the festivals calendar in India; marketeers should bear in mind that India has multiple religions, and that even within these religions, festivals vary enormously by region, especially North India versus South India. In short, do your homework and target very carefully and tactfully. If you do this well it could have surprisingly high ROI, do it badly and you could easily give offence.


• There are a lot of internet users in India. It currently ranks second only to China in terms of absolute numbers of users

• There is a big gender skew, with only about a third of users currently being female (although those female users who are online spend more time there)

• Most of these users are accessing via mobile devices over mobile connections. By western standards, these are often quite slow. Any potential site implementation
 targeted at Indian users should plan for somewhat slower connections

• Time spent accessing retail sites has historically been low, but this is changing quite rapidly in urban areas; rural use of online shopping remains low

• There are regulatory barriers to implementing retail ecommerce in India; simply registering a domain and localising your existing site is almost certainly illegal

• Average cart sizes are lower than in the west, but not impossibly lower in key categories such as fashion; it’s the wealthiest Indians who are buying online

• Silver surfers are a less relevant purchasing segment than in more developed ecommerce countries

• Choice and convenience are what Indian shoppers say matters to them; practical experience suggests that the sense of getting a discount/bargain is much more important

• Barriers to online purchasing are those that might be expected, and which are exacerbated by cross-border: delivery charges, confidence in returns, security of payment, availability of payment methods

• Motivations for purchase in commodity categories such as consumer electronics are globally standard; marketing messages need little adjustment

• Purchase in other categories, such as fashion, accessories or jewellery are very strongly motivated by family or festival events. The festival calendar in India is complex, varying by religion and region. Tailor your marketing messages very carefully.



India's demographics

India's retail landscape

Marketing in India

India's legal framework

Payment methods in India

Logistics in India