Digital Business: Don't Ignore These 4 Vital Areas
This past June, KPCB released its annual Mary Meeker Internet Trends Report, which identified the top emerging markets in the world for digital business. This year, there’s a new country at the top: India—ranking #1 in new user additions. For businesses everywhere, there’s one simple takeaway: if you don’t have a strong, clear strategy for working in India you had better get one.
Many US-based companies have already found great success in India. It’s the top market for Amazon as well as a number of social media platforms including WhatsApp, Twitter, and LinkedIn.
But India’s market character is multifaceted and it’s by no means a simple process to set up your online shop or provide SaaS tools to foreign customers. Following are the 4 most important things to know for any business looking to enter and grow rapidly in India.
#1 - India is a complex landscape
There’s no plug-and-play strategy for doing business online in India. It’s an incredibly diverse country with an equally diverse business landscape. You can’t expect to fit the same success metrics you’d use in the West to your ventures in India—the landscape is just that different.
Consider the following:
*India, though still an emerging market, is already incredibly competitive—and the quality of the products or services you’re bringing to the table is the highest priority.
* Society and business are hierarchical: unlike the startup disruption we have here in the US, India typically functions form the top-down
* Time is different. Everything tends to take longer (up to 4x the time compared to the West) as decisions are made from the top but they can also be quickly resolved and executed when decisions are made.
Most companies are best served by finding a partner (both on the business and online infrastructure fronts) to help lay the groundwork for an initial launch. As you business grows, this partner can also be vital in advising about expansion efforts into different areas of the country.
#2 – Commerce is mobile but not app-based
In 2014 alone, mobile sales accounted for a whopping 41 percent of e-commerce in India—more than any other country including China (33 percent) and the US (15 percent).
Digital is still relatively new in India—meaning the digital habits of its people are unique. India’s major online shopping companies have a greater proportion of mobile commerce (mcommerce) purchases, even, than giants like Alibaba and eBay. In fact, some commerce companies are so popular via mCommerce that they’ve transitioned to an app-only model to limit demand. They’re able to remain profitable this way because apps allow for direct customer access, so vendors can deliver relevant alerts and coupons based on customer data to keep them coming back—and push notification response rate is 8 times that of email.
But considering that only 8 percent of the country has a smartphone to access those apps, companies looking to start doing business can’t cut out that share of market potential right away. Instead, start by making sure any customers can easily browse and purchase goods via mobile or app. But be prepared to transition to the app model: within 3-4 years, nearly every adult in India will own a smartphone.
#3 - Content isn’t Local
The general rule of thumb for fast, uninterrupted Internet access is to make sure content is hosted as close to users as possible. Given the massive population of individuals accessing the Internet in India, you might expect them to have a high percentage of locally hosted content. In reality, however, only 30 percent of the Alexa 100 located in India actually use a host server within the country. While this is above average for the region—Sri Lanka hosts 14 percent of content locally, Pakistan hosts less than 5 percent—the size and complexity of India’s Internet market makes this a major challenge for doing business in the region.
What this all boils down to is that in India, Internet users have relatively high latencies when connecting to most European and US businesses.
For companies looking to do business in India, make it a priority to ensure inbound customer access to your content is quick and seamless. That means finding a way to host your content locally or finding a reliable Cloud Service Provider. CSPs have access to multiple networks, giving companies the ability to direct traffic in the most direct way possible—day-to-day as well as during outages, pipeline failures, and other IP complications. Staying relevant in India will mean making sure your content has the most direct journey from Cloud to user.
#4 - More Changes are coming
India is likely to keep its #1 ranking in new user additions due in large part to the government’s plans for national reform. Prime Minister Modi announced plans for the Digital India Initiative in 2014, which aims to implement digital infrastructure, allow universal access to digital services, and promote digital access and literacy. The Initiative is scheduled for completion by 2019. In the interim, however, the Initiative will face a host of challenges along the way including issues like privacy regulations, data protection laws, and cyber security issues.
For companies, that makes finding local partners even more important. Your success will depend on their help to stay informed of the political climate and navigate the impending changes. Business models should be designed, first and foremost, around flexibility and the information your partner is able to provide.
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