M-commerce: Turning point for digital media in India

The year 2014 was significant for the Indian digital media and the entertainment industry. With a favourable global economic environment, the top global organisations predicted outstanding growth rate for India.

S&P, a rating agency, named India as the "bright spot" in the Asian Pacific region, while International Monetary Fund forecast that India will exceed China's growth rate in 2016. The digital media is also not lagging behind. In 2014, there was an astonishing 44.5 per cent growth rate in digital advertising compared to 2013. The government has announced Digital India, an initiative to transform India into a digitally strengthened society and economy. India also topped the list of the world's fastest growing smartphone market in 2104.

By the end of 2014, the number of internet-enabled smartphones in India was around 116 million. This is expected to rise to 435 million by 2019. Supported by other factors like availability of low cost smartphones and dropping rates of data plan, this has led to a record-breaking number of internet connections. This development clearly shows a favourable scenario where application developers, advertisers and digital content collectors can connect with users through significant mobile related strategies.

If we compare the Asian counterparts, Indian telecom operators are offering the lowest voice and data rates and the difference between voice rate/minute and data/MB is becoming narrower. In 2014, the number of mobile internet users grew by 33 per cent compared to 2013. There were approximately 173 million mobile internet users in India at the end of December 2014 and this is expected to touch 457 million users in 2019. Moreover, the total number of mobile internet users is expected to grow at a compound annual growth rate (CAGR) of 21 per cent from 2014 to 2019. At the same time, the number of internet enabled smartphones in India is also expected to grow at a CAGR of 30 per cent.

Urban-rural internet penetration

The maximum internet users live in cities. Currently, the rural areas are showing slow but steady growth rate of internet users. Rural India is becoming a prominent contributor to the mobile internet growth saga.

Awaited 4G rollout

India has made a late entry in the 4G market. The 4G rollout across India will take a few years to cover the entire mass of potential customers. Globally, it reaches 26 per cent of the population which can be bifurcated into 90 per cent reach in developed markets and 15 per cent in developing countries. As established telecom operators like Reliance, Airtel and Aircel roll out their 4G services, India is stands on the brink of an internet revolution. It is expected to gain momentum from 2016-17.

India at the top

India has attained the position of the world's second largest mobile phone market and third largest with regards to smartphone users. Therefore, it comes as no surprise that India tops the list of fastest-growing smartphone users in the world since smartphones are available at cheap prices. Indian mobile handset manufacturers have played a crucial role in this development.

Globally, 1.3 billion units of smartphones were sold in 2013 and the figure is estimated to reach 1.4 billion units in 2015. This is an annual growth rate of 7.7 per cent. The global smartphone market observed a growth of 27.6 per cent in 2014. Having reached the peak, the growth rate is expected to slow down in the coming years.

Digital India Initiative

Digital India Initiative, launched by the government, is to develop growth in internet penetration. The initiative will introduce new schemes and at the same time promote existing schemes to strengthen India's technological infrastructure in different sectors like finance, agriculture, education, healthcare and governance by offering better connectivity. The Digital India Initiative revolves around three main areas --- digital infrastructure that can be useful to all citizens, empowerment of citizens through digital media, and governance and services on demand.

E-commerce shifting to mobile app platforms

With an increasing number of online shopping platforms, there has been a growth in the number of transactions that are executed through mobile apps. The current online shopping trend shows that it consumers are shifting from e-commerce to m-commerce. Hence, major e-commerce portals are considering focus solely on the mobile platform and discontinuing their full-version websites. A well-known lifestyle e-commerce company attracts 80 per cent of its traffic and 60 per cent of its sales through mobile apps. Moreover, it is anticipated that it will reach 90 per cent by the end of 2015, when it is expected to discontinue its web portal. If this happens, this company would be the first e-commerce outfit to go totally mobile.

Reference:

1. Kpmg.com