All this meant that mobile internet subscribers in India soared. From 400 million users in 2016, it doubled to 800 million in 2020. Startups piggybacked on this. And the ones who pitched saying, “My industry is underpenetrated. Digital will solve everything,” raised lots of money.
But…there’s a problem now.
Especially for e-commerce. Because everyone’s an e-commerce user these days. Okay, not everyone. But the penetration levels are already quite high. 19% of India’s households shop online. If you dissect the numbers, you’ll see that in the high-income category (greater than ₹6 lakhs), the e-commerce penetration is already at 37%. Or as Blume put it, e-commerce has already captured the low-hanging fruit. (View Highlight)
That means if they want to go after the rest of the market, especially the rural side where penetration is around 19%, it’ll be hard work. Because if e-commerce companies want to acquire and retain a new shopping household, they might have to shell out anywhere between ₹5,000 to ₹12,000. That’s what Credit Suisse pegs the costs to be. So if they want 30 million new households in their kitty, they’re going to have to spend between 1.8billionto4.5 billion to acquire them. (View Highlight)
Maybe not. Especially if you think about the return on investment. While people in metros spend 500annuallypershopper,thefolksinTier2andsmallercitiesspendjustlessthanhalfofthatsum — 220. (View Highlight)
You see, there’s been a slowdown in mobile internet subscribers of late. Since hitting the 800 million mark in 2020, growth has been lacklustre. We are at about 837 million internet users today. (View Highlight)
Even smartphone sales are going through a tough time — it fell by 9% in 2022. And that’s because entry-level smartphones aren’t as cheap as they used to be. Prices have gone up. Combine that with the fact that 750 million people already use smartphones in India and it’s hard to see where the growth will come from. (View Highlight)
Blume points to an OTT platform called Stage which caters specifically to Haryana and Rajasthan for now. In July 2021, Stage had 10,000 paying subscribers. Less than 2 years later, it already has 235,000 viewers who pay. (View Highlight)
Either way, Stage can show the VCs that they’ve achieved their Product Market Fit. That subscriptions work. That they can replicate this model across the length and breadth of India. That with nearly 20,000 dialects across India, the opportunity is immense. People will pay. (View Highlight)
if regional OTT platforms can help companies target extremely specific audiences, then advertising could also blow up, no? (View Highlight)
First, Cred is a play on discovery commerce.
Have you ever, when bored, simply popped up the Cred app and started browsing through the store? I have. And that’s thanks to its discovery commerce features — A personalized feed of products. Perfectly searchable categories. And even in-app games like addictive casino-like ‘spin the wheel’ deals and ‘bidding’ for products. It’s entertaining. (View Highlight)
So while you’ll only fire up Amazon when you need to buy something specific, Cred’s store is scroll-worthy when bored. It’s an alternative social media feed. Just for shopping. (View Highlight)
India has a creamy layer at the top. They’re the ones who contribute the bulk of e-commerce sales. As per Blume, this is approximately 120 million people who have a per capita income greater than $12,000. (View Highlight)
And if you think about it, a subset of this is probably the same folks that are on Cred too. That’s because Cred gatekeeps its users by using the credit score as a filter. (View Highlight)
While Cred only has less than 5% of Amazon’s user base, it’s generating massive sales for some of the brands listed on its platform — anywhere between 30–50% of sales these days is thanks to Cred. (View Highlight)
