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Indian online startups

Well, these are just my views; feel free to contradict them, i would love to have better insights by anyone 🙂

We did see the .com boom which appeared in the US and 10 years down the line, we have the most amazing services namely – Google, facebook, twitter at our disposal. Millions of users all around but what is the market like? Are there people on the internet who will buy your product? Things are incessantly changing in this sphere and for sure this is currently the biggest market and home for all kinds of sectors for e-commerce, marketing, sales, etc.

What about the Indian online scene? I will walk you through 3 important points to convey my entire learning and conclusions.

Low penetration, high volume – Visit this link which shows the World bank data, indicating 7.2% penetration (as of 2007) but that is like 81 million internet users! Surely, it is no small number. Infact, we are third largest after China(country that matches our population has 338 million internet users, which is four times) and Japan(just greater than ours) Source in Asia and 4th largest in the world with the greatest potential. More importantly, we will never see a “penetration boom” (a spike) in India, but surely a greater than steady rise, mainly because 70% people dwell in the rural areas where development is slower. Read this for more statistics and numbers within India.

Indian mentality – I have come across many Indian online startups in various fields. Seriously, earning-through-ads is not a revenue model(it is an art and not many can master it and definitely not something you can bank your startup money inflow on) which many wrongly think will power their multi-million-super-cool-to-be-companies. The biggest problem Indian online startups (IOS) face is the difficulty in monetising their ideas. It has been almost a decade since e-commerce has begun but it is close to zero in India. Indian mentality is to “go and shop” as shopping is not the means to survive and live life but a family outing. People are just not comfortable with buying things on the internet, there are trust issues. Hence, the Indian internet has shifted much towards providing services and no wonder why we have the IT biggies and almost thousands of them on every street in Bangalore.

Nevertheless, this is the time – New people are using internet, old people are dying!(apologies for being rude there) From the world bank graph an increasing upward trend in penetration can be easily seen. The new generation is all aware of “online” technologies. Kids of grade 6 know how to complete assignments using google, which during our time was a black demon box – no teacher knew it, no student talked about it. When our generation(people currently in the age group of 20-25) sprouts out into the corporate world, we will be the ones pioneering the online product(not only food  but eveything) shopping concept. I myself would like to buy things online as I know its importance. So, agreed this is the time when you cannot possibly earn much out of an IOS but in 2-3 years the penetration will soar upto 15% and within 5 years to about 30-35% which should be the motivation of setting up an IOS right away(believe me, most IOS take about 1 year to launch, unless it is twitter you are launching :P) It has now become a game of patience. But 10 years down the line, you would be earning much more than the companies similar to you but on the other side of the globe.

// the end.

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Categories: startup Tags: , , ,
  1. November 18, 2009 at 10:42 pm

    Nice work. It is very useful and impressive to me. Keep on working thanks.

  2. November 19, 2009 at 11:50 am

    I think “You cannot earn from ads” is not valid. What’s the earning model for orkut, facebook, twitter? Can you explain?

    • November 19, 2009 at 1:21 pm

      You cannot bank your startup on generating revenues through ads only! List all these firms you think, make money from ads – fb, twitter, orkut and 25 others. The number of online startups failing everyday is more than 10times this number. The main point is: these companies did not have ads in mind while they were turning this big. Ads can be a support mechanism for your revenue but the startup will be worth nothing until u have a great user base which can be monetised by ads. It takes 5 years to be a fb or orkut. If one is ready to give 5 years to any online idea, yes ads is the revenue model for you.

  3. November 19, 2009 at 2:28 pm

    Thanx. Totally true.

    I would suggest other monetization model (other than selling something which frankly speaking, most indians dont do).

    This is being used by a startup of IITD Seniors in which they have restaurant menus on their website. They have contacted some companies and they give some sponsored search results along with their detailed list of restaurants. I think that is similar to sponsored ads in google search. But at least thats different from adsense.

    Can you think of any other example?

    • November 19, 2009 at 2:36 pm

      Yeah, by selling I mean having a proper product or service in mind. Sponsored ads can come under targeted marketing i think; yes that is a model; in other words, it is a product which recommends or something and hence increases sales. This is clearly different from normal ad based revenue because this surely has a complete recommendation think. Its smart and new & we have seen rising trends in the industry. We have see wordpress.com do it, then digg.com did it on popular demand… So any niche market with recommendation plugin is a nice model according to me (provided the market is not over-niche and clearly has some basic potential)

  4. Amit Karan
    November 21, 2009 at 1:44 am

    Have to agree with Zubin on ads (and the other points as well 🙂 ), Pratik. Even if you look at the history of advertising, it has been the major source of revenue primarily in broadcast media (TV, print) where it is difficult to charge the consumers enough to recover the production costs. If you are thinking a broadcast-ish startup (collegehumour.com, for instance), ads is the logical choice. Otherwise, it just makes tremendous sense to charge money for whatever you’re providing. We do that every single day in real life. Internet should not be treated any differently.

    • November 21, 2009 at 7:46 am

      Rightly put example – collegehumour.com; and well said, Internet should not be treated any differently.

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