India was once set on a path to become the next China in the internet space. Internet economy was booming and startup valuations were skyrocketing. However, in 2016, it hit a roadblock as high growth numbers began faltering.
Moments after ignition, the Indian e-commerce engine seemed to have developed a snag.
India’s e-commerce sales in 2017 just reached $20B and the growth already started to crawl while China’s e-commerce sales in the same year stood miles ahead at $935B! The real questions to ask here are: What is the reason for such large disparity in e-commerce sales figures, despite achieving comparable internet penetration wrt China? and What has actually caused the growth in Indian e-commerce to falter?
One key factor which is generally ignored but has profoundly impacted the Indian story is the ‘adoption’ of digital commerce.
In 2018, out of India’s 566M internet users, only 21% transacted online whereas out of China’s 800M internet users, 75% transacted. It proves that internet penetration alone does not equate to digital adoption.
The slow down in 2016 led to one significant realisation: the Indian user base is highly non-homogenous in the aspect of digital adoption. Instead of a monolithic segment, it comprises of two fundamentally different user segments that are adopting digital commerce at extremely different rates:
- English India, which has adopted digital commerce at a breakneck pace
- Vernacular Bharat, which is adopting it at a sluggish pace or is yet to adopt it
So, why are the Bharat users not adopting digital commerce as quickly as their “Indian” brethren? What makes the Bharat users tick? To understand this, we must first understand the Bharat user.
Bharat- Dispelling the Myths
Bharat segment is often shrouded in mystery for most businesses. It is considered very challenging to reach out to, and to have significantly lower ROI. The reason is that there is far too little understanding of the Bharat user-base in the industry, leading to various misconceptions and myths. So let us start by dispelling these myths.
Myth 1: Bharat Users Are Poor And Illiterate
Reality: The Google-Omidyar report puts 150 Mn people under the top socio-economic segment of India. This is the relatively rich and educated population of India. Yet 80M out of the 150M people belonging to this top segment haven’t yet adopted digital commerce. This shows that the rich and educated folks too may belong to the Bharat segment.
Myth 2: Bharat Users Are Rural
Reality: Bharat users reside in Tier 1/2/3 cities as well as in rural areas. The study by Google shows that of all the non-transactors, 62% come from urban pockets (50% from non-metros and 12% from metro cities)
Myth 3: Bharat Segment Is Relatively Small and Insignificant in terms of business
Reality: The Google Omidyar report states that of the combined segments of NCSS A/B/C (665M), the top half of India, less than 20% are online transactors. The percentage of active transactors is far less. About 80% i.e over 500Mn people either do not use the internet yet (but will start using soon) or use the internet but do not transact yet. This opportunity is enormous just by the sheer size of the user base.
Bharat – beyond numbers
Though these numbers give us a good picture to start with, they only provide a surface level understanding of Bharat. To understand Bharat in depth, we need to move beyond numbers and instead try to understand their behavior, this would require us to redefine user segments behaviourally. It’ll not only enable us to ask the right questions, but also give us a window into their psychology.
Here are our behavioral definitions of India and Bharat users:
- India user (Digital user): A person who prefers a digital lifestyle over a non-digital one.
- Bharat user (Non-digital user): A person who still prefers a non-digital lifestyle over a digital one.
This segmentation shows us that Bharat is closer to us than we realize. Case in point, my Mom. We live around people like her without realizing how different their lifestyle preferences are from us.
As represented above, while I prefer a digital lifestyle, my Mom still prefers a non-digital lifestyle.
A report on Digital Consumer spending in India by BCG and Google predicts that women over the age of 35 in tier 2/3 cities will propel the growth of e-commerce in India. It means that our mothers living in Lucknow, Raipur, Indore or Guntur could be the most significant user-segment in the next phase of Digital India story.
Though we have used mothers as an example of the Bharat user persona, our definition shows that most of our parents, relatives, vendors, security guards and many others whom we see every day in our lives are all Bharat users since their preferred lifestyle choice is non-digital.
Most of our Parents, relatives, vendors, security guards and many others whom we see every day in our lives, are all Bharat users since their preferred lifestyle choice is non-digital.
These behavioral definitions would enable us to not only relate with Bharat users at a personal level but also to ask the right question: Why hasn’t someone like my Mother, despite having high purchasing power and access to the internet, adopted digital lifestyle yet? To understand this, we first need to understand her digital journey thus far:
a) Digital Exposure: Me V/s Mom
I was introduced to the digital world in the year 2004 when I got my first computer, and I’ve been using computers for15 years now. Most of my peers also started using computers around the same time. What we did on the computer each day used to be a major point of discussion within my peer group. My Mom, on the other hand, got her first digital device 2-3 years ago, and it was a smartphone. Her peers also started using a smartphone around the same time.
The difference in the amount of tech exposure and digital adoption among peers has resulted in vastly different comfort levels with digital devices between my Mom and me.
b) The Digital Adoption Scale: Where does my Mom stand?
This is what a typical ‘digital adoption scale’ looks like:
The Bharat users are very nascent smartphone users, and on the Digital Adoption scale occupy the Rote learners or Limited Fluent stages. Rote learners have learned a few tasks flows on Apps such as how to open WhatsApp and read messages or to use the family WhatsApp group. These users typically only consume but not create content. I taught my mother how to use and read messages in the family group. She still continues to do so but is yet to create more content or engage in more sophisticated use cases such as transferring money through BHIM app or booking a travel ticket. ‘Competent’ and ‘Expert’ are the stages in which users generally start adopting digital commerce
It’s this digital journey which primarily determines her confidence and comfort level with the digital world:
Mom’s typical digital session
This is how my Mom’s typical digital session looks like:
She struggles to figure out how to use the apps by just looking at the interface as she doesn’t understand the visual language of Graphical UIs yet. Using even the slightly complex apps makes her feel strange, uncomfortable, and apprehensive. She is constantly afraid: “what if something goes wrong?”
So how exactly does her digital journey results in discomfort and apprehensiveness?
The Interface problem: A Case Of Cognitive Overload
Interface is not just what one sees; there are hidden layers. Comprehending these hidden layers is imperative to be able to use the interface
Consider an example of a travel booking app:
For proficient users like you and I, this screen seems elegant and straightforward to use. We can understand its visual language and intuitively figure out how to use it. But subconsciously, this is what we process:
- The sequence of steps
- What’s clickable
- What feedback to expect on the action
These are the hidden layers of Interface, which the users need to understand, learn and then act upon:
Now imagine, my mom using the same app for the first time on her own. Imagine the sheer mental load of understanding the hidden layer
Even a seemingly simple task of booking a ticket leads to a very high cognitive load for a new digital user like my mom, this is the reason most Bharat users currently are slow adopters of Digital technology and consequently more reluctant adopters of Digital Commerce due to added fear of losing money.
What does Bharat Need?
Today, Bharat users, like our mothers, try to overcome this barrier by seeking help/support from someone who can handhold them through the apps: children, partners, relatives, friends, etc. However, that is not always practical because they are not available at all times; this discourages them from adopting digital products and services on their own, and they tend to give up. What they seek is help and support in their digital journey, a humanized experience of the digital world. They need digital handholding of sorts to navigate through app UIs in order to overcome the Interface problem and eventually overcome the digital barrier. There are hundreds of millions of such users who need digital hand-holding to adopt the digital lifestyle.
Bharat needs digital handholding to overcome the Interface problem and correspondingly overcome the digital barrier
But how can we provide digital handholding to millions of users in a way which is both effective and feasible? Well, that’s a 100 Billion dollar question! (We’ll talk about this question in detail in our next post)
Are you excited about expanding your business to Bharat? Let Jiny help you.