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What is stopping 230 million Indians from transacting online?

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What is stopping 230 million Indians from transacting online?

There are several challenges before the companies before they can cash in the users coming from tier-3, 4, 5 and beyond in India. Especially, since they have not been able to monetise the overall current user base.

Internet going 'Bharat' way is the talk of the town these days. While Internet companies, whether they are operating in content or e-commerce segment, are mulling more ways to tap in the regional audience, investors are pouring in money into the start-ups which cater to this segment. However, there are several challenges before the companies before they can cash in the users coming from tier-3, 4, 5 and beyond in India. Especially, since they have not been able to monetise the overall current user base.

A recent report by Google, Omidyar Network and Bain and Company, titled 'Unlocking Digital for Bharat', highlights some of the challenges in front of businesses who want to address this segment.

According to the report, India has about 390 million Internet users in India and 80 per cent of this audience is from the affluent NCCS (New Consumer Classification System) -- A, B and C segments. New Consumer Classification System is used to classify households in India on the basis of two variables -- education of chief wage earner and number of consumer durables in the family.

It reveals that even in the current user base, transacting audience is quite small. As per the report, of the 390 million users in India only 40 per cent (160 million) transact online and out of this 160 million, 90 per cent transactors are again from affluent from NCCS A, B and C segments. It says that the balance 230 million users while go online for product research and content, they prefer offline channels for transactions. Another interesting finding of the survey says that India's digital journey has large number of dropouts as about 54 million users stopped transacting online after their first purchase.

So what's stopping these users from transacting online in India? Lack of trust, inability to find products, cheaper offline, no grievance redressal, offline more reliable, convenience of offline, no touch-and-feel, lack of trust -- are the top reasons listed by these users for not transacting online.

The study also reveals the reasons why users who have transacted online once, have stopped doing it now. The top reasons being -- product arrived too late, area unserviceable, unable to return, less discounts, poor data connection, better offline options, product/service not good.

As India gets on to the journey of making Bharat digital, the Internet businesses need to address these issues, before they can further foothold in the economy.