As Western tech companies compete for shares of India's increasingly crowded market, they're confronting the challenges of a customer base largely dependent on cash payment and mobile internet access.
The big picture: Internet user growth is slowing down worldwide, but it's booming in India, the world's second largest market that's often referred to as "the next billion" internet users.
The numbers that matter:
- In India, 97% of internet users access the web via mobile phone.
- Jio, an Indian telecom company, lowered the barrier to entry for hundreds of millions of new users by offering ultra-cheap data plans and investing in infrastructure.
- By the end of this year, it’s expected that nearly 45% of India’s population will be online.
- Meanwhile, only 10% of India’s transactions are digital payments, as more than half of urban merchants won’t accept them, and debit card ownership has dipped by 11%.
What's happening: Western tech giants, facing a consumer population with purchasing and phone usage habits substantially different from those of their existing customers, are revising their approaches, offerings and platforms to emulate local tech companies.
- Amazon invested $404 million to expand business in India and is reportedly considering buying a 26% stake in Reliance Retail, India’s largest brick-and-mortar retailer, to help it compete with Walmart-owned rival Flipkart for the country's middle class market.
- Uber began accepting cash payments to stay competitive with Indian companies like Ola.
- Netflix recently announced a low-priced mobile-only streaming plan designed to compete with India’s Hotstar.
What to watch: India's push for a “cash-lite economy" has met with mixed results. If customers in India do shift toward online transactions, it could ease the path forward for Western companies.
- Investors from China, frustrated by their own oversaturated market and the intensifying trade war with the U.S., are also making massive investments in India’s budding digital payments sector.
Girish Mathrubootham is the co-founder and CEO of Freshworks, which develops customer management and support software, and an active angel investor in India.
