The Battle for India’s Internet Markets
22nd July 2019
Dear Reader,
For the last few years the Indian digital story has always been one of ‘potential’. The potential largest open digital market. The potential of a billion customers. The potential of both mass and differentiated products. But it often seemed like this potential took its own sweet time to realize. But we finally seemed to have turned the corner on that front. It can now be reasonably argued that India’s ‘potential’ markets are now alive and kicking. And there is an intense struggle being waged to gain control of these markets. Six of the seven stories we have today explore this struggle, how companies (and the government) are bracing to take advantage of a maturing ecosystem, and what all this means for the workers involved. The last, seventh story is very different from the others but is a necessary PSA that not all is hunky dory with the government’s current obsession with new technologies. Do read on and as always, any and all feedback is appreciated.
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Order Me Some Customers
In the Indian e-commerce space the ‘Next Billion’ is the holy mantra. It refers to the potential market of a billion people who have only begun taking tentative steps towards the digital realm. For long, much of the Indian e-commerce boom was driven by the top 100 million customers, mostly concentrated in metropolises like Delhi, Mumbai, Kolkata, Chennai, Bangalore and Hyderabad. The true gold-mine however lies beyond these in smaller cities and towns, which most internet companies in India have had difficulty penetrating. This however seems to be changing now, if the new numbers released by Zomato and Swiggy are to be believed. These two are India’s biggest food-delivery apps and are a good bellwether of changing economic fortunes within India. With the fortunes of Zomato and Swiggy, and other apps like TikTok, being increasingly driven by the so-called Tier-II and Tier-III cities, the ‘Next Billion’ might finally be ready to take the digital realm by storm.
Netflix and Chai
Netflix has had a bad quarter. For the first time in its history it has lost subscribers in the US. Its share price fell by 12%. And it has added a net total of 2.7 million subscribers from all of its international markets. That is 2.7 million net new subscribers from over 190 countries. Clearly Netflix has maxed out its market potential almost everywhere. Everywhere that is, except India. To say that on demand video streaming has experienced a boom over the last few years in the country would be an understatement. With hundreds of millions of people getting online for the first time, aided by dirt-cheap 4G data rates and affordable smartphones, India is the largest potential market for any OTT video service provider. For Netflix especially though, India is the final frontier. The answer to its current prayers. This explains why India was the most mentioned country in Netflix’s recent earnings call, why Netflix is doubling down on Indian content- led by the incredibly popular Baahubali franchise, and why it is creating India-specific subscriber plans. However Netflix will not have it easy. It faces far stiffer competition here than it does anywhere else, and not just from its global rival Amazon Prime, but also a whole host of local rivals such as Hotstar, Zee5, and Viu- all of which are cheaper than Netflix. What Netflix decides to do from hereon in India could become a binge-worthy watch.
+ P.R Sanjai, Lucas Shaw, and Sheryl Tian Tong Lee, Bloomberg
Alexa, What is Fashion?
In the no-holds barred competition between Amazon and Flipkart for Indian e-commerce, for a number of customers, the two are interchangeable for most products. Phones, electronics, home furnishings, books- the brands offered on each platform might differ but the products are more or less similar and the two platforms compete with each other on a somewhat equal footing. This however is not the case when it comes to fashion. Flipkart, through its subsidiaries Myntra and Jabong, has a near-stranglehold on the online fashion market. If Amazon has to continue competing it must create a breach in Flipkart’s fashion fortress. The question though is how. Amazon as an underdog that must fight an entrenched dominant online platform? It is not everyday that you see this.
+ Abhinaya Vijayaraghavan, The Ken (Paywalled)
The Government’s Amazon
The Indian government can often seem like a mind-bending bureaucratic nightmare that has been created by Kafka’s ghost. It can however also be surprisingly innovative. Take for example the Government e-Marketplace (GeM)- a sort of Amazon for government procurement. From cars to pens, anything that a government department needs can be procured on the platform as easily as shopping on an Amazon or Flipkart. The inevitable result would be a reduction in corruption and an increased willingness of small and medium enterprises to transact regularly with the government. Along with the Unified Payments Interface (UPI), GeM is clearly one of the aspects of ‘Digital India’ that is panning out in the way it should. It is also an India-specific model that could be exported to other countries.
What’s Your Gene?
In a country as obsessed with bloodlines and familial ties as India, it seems perfectly natural that the market for genetic testing has been growing at an exponential rate. So far atleast these tests have been used for medical purposes, to determine if someone is a carrier of rare genetic diseases and if they can be passed onto future generations. And here is the surprising bit- genetic tests that help determine lineages are not popular at all in India. The growing market for genetic testing is indicative of how in all the noise over the internet realm, one of the biggest growing tech niches in the country is actually biotech.
I See You…
The government of India is really really pushing for advanced facial recognition technology to take off in the country. The latest effort has the National Crime Records Bureau (NCRB) inviting bids for the implementation of ‘Automated Facial Recognition Systems’. As the Internet Freedom Foundation points out, this is meant to be a repository of all crime related facial image data and will be compatible with biometric solutions and other related databases. Yikes. This great thread by Vidushi Marda unpacks what exactly does the NCRB want and what it could potentially mean for the common Indian citizen. The Internet Freedom Foundation has sent a legal notice to the NCRB regarding this, in what could be the beginning of a long legal battle.
