Online influences Indian purchases

26 April 2013
NEW DELHI: Digital media currently influences $30bn of consumer spending in urban India each year, a figure five times higher than total ecommerce expenditure in the country, new figures show.

The Boston Consulting Group surveyed 25,000 people aged 18 to 55 years old in 26 cities across the Asian nation to create its Digital Intensity Index.

Overall, it predicted that new media would impact $150bn of expenditure in India's metropolitan centres by 2016.

More specifically, 40% of its panel agreed that the web currently had a role in shaping their purchases, most typically as a result of researching and comparing products and prices via this route.

At present, air travel is one of the most “digitally-influenced” categories, as six different touchpoints on the path to purchase were influenced by this medium.

The auto category, by contrast, posted one of the lowest scores on this measure, as digital activity consisted almost entirely of product comparisons.

Digitally-influenced shoppers generally earn higher incomes than the norm, are disproportionately represented in key categories, and spend more money on products than their less-connected peers.

For example, digital consumers made up just 16% of mobile phone buyers, but accounted for 24% of sector spending, and bought devices that were 46% more expensive than the average.

Looking forward, the study forecast that the number of internet users in India would rise from 125m in 2011 to 330m by 2016, causing the “digital influence on purchase decisions to explode”.

Successfully exploiting this trend, however, will require action on several fronts, including integrating online and offline strategies, and building customer loyalty.

The mobile experience also needs to be optimised, as this is the primary point of access for much of the country's internet population.

Advertising budgets will similarly need to be refocused to reflect digital's increased prominence, according to BCG.

Data sourced from Boston Consulting Group; additional content by Warc staff
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