The Increasing Depth of the Internet Economy
The initial phase of lockdown during March narrated a different story though. The internet business too suffered hefty loss; tapering off to about 15 per cent. The growth became steady post lockdown relaxation announced on May with resolved supply chain flutters. Sectors like e-commerce, online education, e-pharmacies started showing slow signs of recovery.
By June, the internet market recorded a growth of yearly $45 billion, less than pre-covid market statistics but with a sharp rise from $10 billion during April. These dropping numbers clearly indicate the slowing down of internet business owing to the covid-19 outbreak. The impact of the pandemic has been contrastive; while sectors like travel, hospitality have been severely impacted, sectors like edtech, online groceries have seen good fortune.
By June, the internet market recorded a growth of yearly $45 billion, less than pre-covid market statistics but with a sharp rise from $10 billion during April
As per a report by market research and advisory firm RedSeer Management Consulting, customer retention rates have jumped to two three times for internet platforms during the last three months. The customer acquisition costs in online groceries, e-pharmacies, edtech too have shot up as much as 80 per cent and more. It is seen that companies like BigBasket, Grofers, Practo, Byju's and Unacademy have seen a surge in their sales and usage other than attracting investments at soaring valuations amid the crisis.
"Starting from the first usage of computers and the Internet in businesses, every single advancement towards a more automation-driven approach was another step towards digital transformation. In the modern context, this would imply complete digitization of every information and management apparatus of systems," states Ashish Mishra, Director, Alteazi Global Pvt. Ltd.
With internet companies spending up to $3 billion on customer acquisition last year, the savings is likely to provide a boost to the companies' net income this year. For these companies, profit is two-way - adding millions of new users and retaining most of them with minimum investments. These trends indicate that the pandemic has triggered some structural shifts in consumer spending habits and usage patterns that will bring huge benefits to internet companies over the coming years.
The Present State of the Internet
By and large, e-commerce has been one of the key drivers to the retrieval in the internet economy. If we compare the statistics with January 2020, online retail was up by more than 10 per cent to a yearly $33 billion in June. Stifled demand and clearance sales have driven recovery of e-commerce across sectors. The maximum surge within e-commerce is led by online grocery products, large appliances and other electronic products. Products like laptops and televisions are seeing high demand as people across large and small cities are forced to continue working from home.
"The whole world is now switching from offline to online. Those who used to purchase their daily essentials, groceries, and medicines from offline retail stores have now shifted to online aggregators. With more and more consumers now relying on digital platforms for making their financial transactions for e-commerce, on-demand service delivery, on-demand entertainment or collaboration tools from the comfort of their homes, tech-based platforms facilitating the same are likely to dominate the future," says Nityanand Sharma, CEO & Co-Founder, Simpl.
The growth in online groceries has been uninterrupted despite the partial reopening in cities. Other than this, online healthcare, digital education and entertainment content have been on a gainful spree amid the crisis. With most of the clinics shut, patients and doctors have been relying on the digital health platforms to treat ailments.
Online ordering of medicines has also become a common practice, therefore driving internet penetration in digital health. Digital education, too, has seen an up shot in demand - doubling its size from pre-Covid conditions. Entertainment apps, OTT platforms, have seen high leaps in terms of subscriptions.
Now is the Time
A 2019 RedSeer survey revealed that out of 583 million internet users in India, only 232 million people paid for any service or product online at least once while the rest used internet mostly for browsing. Among these 232 million people, only 135 million used e-commerce platforms for purchasing purpose. These same set of users have been the major growth drivers of the internet economy since May.
In fact, there has been a slow yet steady growth in the number of users shopping on e-commerce platforms. With such positive points and great numbers, perhaps this is the is the right time for more and more digital players to emerge.