Understanding the Internet consumer in India is critical

12:54 AM Suvir Sujan 2 Comments

There has been a lot of "buzz" recently about investing in consumer internet in India. There are VCs flying down to India from all over the world looking for the next big Internet venture for the domestic Indian market. And keeping these VCs busy are a plethora internet entreprenuers with "me too" ideas (internet businesses that have worked elsewhere in the world)- social networking, blogging, travel, peer to peer collaboration, dvd rentals, photo sharing, matrimonials, ticketing, payments, classifieds, etc. As an Indian internet entrprenuer and now most recently a venture capitalist, I have met almost every internet entrepreneur in the country looking to start a new venture. A word of caution to those starting an online venture or to those looking to finance one - understand the "pain" of the Indian consumer that your online business is trying to mitigate. For example, lets take a look at a hot internet category - Online travel. Today, an Indian traveller calls up his or her travel agent (there are thousands of these companies in every part of urban India) and requests a flight or hotel reservation for a desired date. The travel agent does the research and typically calls back within a few hours with several options and fares tailored to the Indian consumer's request. The consumer then chooses amongst the several options given, post which the travel agent will send a person to the consumer's home to deliver the ticket and/or collect cash/check payment. The biggest pain today for the Indian consumer is seat/room availability and transparency (ie. Am I getting a competitive fare?). Collection of inventory and payments is not a pain for today's Indian traveller. And talking to an agent on the phone is certainly not a pain point for most. In fact it is something that the Indian travel appreciates. So a Online travel intermediary that provides competitive pricing of inventory on the website, guarantees availability of the most popular flight/hotel inventory, provides phone service, home delivery and payment pick-ups will win in this market. Online travel companies who insist on remaining purely online and not provide these so called "non online" services will find it hard to survive. It is no secret that internet is poised for a take off in India. And broadband will eventually happen. Entreprenuers who understand their target customer's pain points and come up with indigineous solutions to mitigate thier pains will make a lot of money for themselves and thier investors. Others who try and port US models to India will be in for a rude shock!


Kiran said...

Totally agree with you on this. Indian internet space is a different beast by itself. Have you seen any successful venture where someone has adapted an existing idea to the India market? There are plenty of me2 sites that are getting funded..but is anyone making money yet?

Ash said...

You mention that the Indian companies who port US models of Internet Businesses are not likely to survive. Companies like Seventymm.com and others who have received funding from US Venture Capital companies are doing extremely well in terms of subscription base. Don't you think that they could be extremely good acquisition targes by bigger players like Reliance Big, etc? ... And if their exit strategy is selling out, they are doing the right thing, one would believe.