Why Indian Languages Failed to make a mark Online!

Why Indian Languages have failed so far to create much desired impact on Internet?

With due respect to companies & entrepreneurs working in Indian /Indic languages – let me put practical thoughts on Indian Languages proliferation in Indian Online industry. Technology is nice, great infact – we love it when we type in English and the text gets converted to an Indic language. Technology does makes us say – WOW!, but it is not enough to assume that millions of Indians will adopt it and it would bring about an revolution in Indian Internet Industry.

Revolution in Indian Internet Industry will be when about 100Mn Internet users in India grows to 500Mn (not in next 20 years, but in next 3 years) & about 1XX Mn Mobile Internet users grow to 500 Mn (not in next 10 years, but in next 2 years). Hope the revolution of this sort does happen – but will acceptance of Indic languages lead to it – answer is definitely NO! The ecology for this change is simply non-existent in India today; and is far from created.

Having worked in the Internet domain – we have repeatedly heard that Indian languages to be the next thing. These predictions actually looked more like “me-too” product offerings – thats worked-in-US will work-here-too. Because China has Baidu does not mean we need one!

Coming back to Indic languages, in my opinion – the languages space has been highly misunderstood. We saw several efforts in this direction over years:

Rediffmail introduced feature to send and receive emails in multiple Indian languages many years back. However the usage of this service is not more than 1% of overall service. Ajit Balakrishnan, CEO, Rediff.com said earlier – “Lets not assume that (Indian) users want Indian Languages!”
Microsoft started offering its Windows Operating System and MS Office Suite products with Indian language versions since last few years. The adoption rate of same is questionable – to my best positive guess it will be still <0.5% of overall installations.
Keyboards / Input devices with multi-lingual keyboards were at one time were hailed as innovations to drive computing to rural India.
Indian fonts also saw its own best days when they were introduced to the market.
Bi-lingual (English+Hindi) mobile phone keypads were once a rage. Nokia introduced a series of phones and around same time we saw a huge interest in mobile applications working on Indian languages

Most of these services/launches were well received, were thought and perceived to be game changers. Maybe at times even I did think in same way – but while I have studied this space and have interacted with few wise people in Indian & International scene – Can strongly put forward the conclusion that Indian Languages will NOT make a mark in Computing, Mobile or Internet domain. It will not happen very soon – the ecology for such change to happen in India does not exist.

Here are of fews considerations that makes me form such strong opinion and conclude on absence of ecology favoring Indic languages adoption:

Diversity of India:

While this is what makes us proud of India – this is one of the strongest reasons why Indic languages have failed to make a mark.

Consider emerging markets like-

Brazil: Over 99% of population speaks in Portuguese
Other Central & South American countries like Argentina, Venezuela, Peru, and many other countries have Spanish as the official language with over 90% population in these countries speaking in Spanish.
Similar with French – it is widely accepted in many European countries as official language.
Consider China – it is as diverse as India, but all most popular versions of Chinese languages are based on standardized version of Mandarin (based on Beijing dialect)

Consider India – while Hindi is leading official language, but no single language has adoption across the country. State governments have endorsed respective regional languages as official, Hindi failed to find the common ground – but English did!

How Innovation starts in Local Language:

Take market like China – The innovators, the early adopters, the influencers, the decision makers, the entrepreneurs – all of them DON’T KNOW English! So innovators developed softwares, websites, products in Chinese; early adopters used Chinese products and so did the influencers, decision makers, and everyone else in China.

Take India – we know our Mother Tongue (our Mother Tongues are different) + we know English!

English is Aspirational language!

English is an aspirational language. Nothing official about it!

It can be confidently said that the percentage of users who will read/write/speak English language will keep growing for next 50 to 100 years. The same cannot be said about Indic languages.

How new users are learning computers:

For applying to government jobs that involve computer related work, few state governments in India have provided guidelines / benchmarks or minimum criteria based on examinations/programs acknowledged by them. Once such program with examination is MS-CIT for Maharashtra Government.

Had a chance to visit once such center – the communication with students may be in local language – however many users prefer to give examination in English language and during their classes learn computers that have English versions of Windows / Office and other software applications.

Indian languages are complex; Do not follow standard / global script:

One of the most favoring factor for languages like French, Spanish, Portuguese, etc was the fact that they followed alphabets from English language (ABCD…XYZ). No additional fonts, hardware or input devices were required to be created when uses adopted computers usage in these languages – both reading and writing.

In contrast, all languages in India do not follow standard script and are very complex to input and still be grammatically correct. To a small extent, another disadvantage is – like English we cannot drop vowels (AEIOU alphabets) to make shorted and communicable form of any Indic language, an convenient SMS lingo of Indic languages could not be developed.

Even Devanagari script is very complex to be standardized for its multiple languages on a input device like keyboard; even if it were – all languages in India are not based on Devanagari; while in China most Chinese languages have standard Mandarin script.

Internet was built on Content; Indic languages lacked adoption by early movers:

Internet was built over years – the most popular activity till date on Internet has been creation & consumption of content – through content sites, social content, or services & products that communicate through a content (language). While content was created in other global languages based on English alphabets from early days of Internet – it took a long time before content in Indian languages started appearing on Internet. By the time ability to create content in Indian languages was available – English had taken a mighty lead in its adoption as Internet’s mother-tongue for India.

In early days of Internet in India, most early adopters had English as first/second language. It made more sense for these users to adopt English language than create content in Indian languages as content was readily available elsewhere to. Most early and popular Indian websites too focused on creating content in English.

Even if they were to adopt Indic languages – the question will always be – which one to start with?

Indian Languages are great for Consumption; Not for creation!

As users we consume all regional languages through other Media – Television, Radio, Newspapers. Its very easy to consume on traditional media and the ecosystem exists for – content (TV programs, news content, audio content for radio), publishers (multiple TV channels, news papers & radio stations) and advertisers (promoting products in Indian languages). There is huge amount of content produced, audience availability & consumption, and advertiser interest.

Indic languages are great for consumption; not for creation! Ask yourself –

How many times have you sent an official email in Hindi? No business may deny communication in lndian language if it gets you more business – but did you send?
How many times have you sent an email to an friend in any Indian language?
How many times have you composed and sent (not forwarded) an SMS in Indian language?
You may talk with your friends in any language – like Hindi, Telegu or Bengali – but did you write email to them in that language?

No Rewards for creating Content for Publishers

Even if large publishers now take efforts to create content in local language – the cost & economics associated with this may not justify the efforts. The questions to ask would be –

Is there audience that would accept content in Indian language. If there is – are they online today?
Are advertisers willing to include these in media buying plans, develop creatives in multiples of Indian languages – would the right advertisements be displayed to correct audience?
How will they get traffic? How will they optimize for SEO? If they post an message on their Facebook fan page – will the users reply back in local language or in English?
The monetization – how will they?

Monetization for local language content publishers:

Should we charge consumers to access our content in local Indian languages – that will not work. The debate if content should be free or paid has been ongoing since we have known – its best concluded that content should be free as it has been.

Coming to online advertising opportunities, agencies and publishers need to take extra efforts if they have to cater most of the Indian languages – the time and effort required in doing so may not justify the returns on many metrics.

Even current large publishers like Yahoo, BBC, etc having local Indian versions of its service – feature display advertisements in English itself and have comparatively less advt spots than their English versions. Many small and medium publishers will rely on Google Adsense for revenues – but Google does not do any wonders here. No robust technology available to content sense Indian languages – and even if it were available – there are no advertisements available in languages to match up and show them in relevance. Fill rates for advt-spots would been lower and with fewer revenue generation options – small publishers will think twice before putting efforts on creating Indic language content.

Take a look at large portals in Brazil, France, Spain or China – the ecology exists with an huge array of content providers, publishers and advertisers communication through respective local language.

Literacy Rates of India:

While most predictions about Indian languages are made that it will increase penetration of Internet users in India – we forget to acknowledge the fact that there still exist an huge population that is illiterate. Unfortunately, 35% of world’s illiterate population is in India.

As of 2007, India’s youth had literacy rate of 82%, while that of Chinese youth was 98%. Literacy rates are based on an individual’s ability to read and write, not on his ability to understand or use computers! Hence the addressable Internet market in India for any language will be far lower than the entire population.

Our Generation is learning to give up Indian Languages:

Few factors around us might be making us give up our inclination towards Indian Languages. One of the strongest is influence on Cinema / Bollywood – Indian audience is bombarded with promotions of movies close to its release date, most promotions today feature names of Indian Movies in English characters!

Did you notice that – Ghajini, Dabangg, Golmaal, Rajneeti, or many latest blockbusters from Bollywood came out with posters/promotions focusing with name of movie only in English (or Hinglish). And so are television programs and contests .

While sending SMS’s even to our friends – its easier to type a local Indian language in English (Hindi + English = Hinglish), not just for Hindi but for all languages.

We are slowly learning to give up Indian Languages when it comes to usage on Mobile or Internet.

The Litmus Test for Indian Language Usage !

Amitabh Bachchan on KBC (Kaun Banega Crorepati) asks viewers a question for winning 1 Lac, users are expected to send SMS KBCQ followed by options A, B, C or D.

One fine day if he declares that only SMS in local languages will be accepted. How many users you think will send the answer as (केबीसी क्यू क, ख, ग, घ) or any other local Indian languages? Will there be a SMS responses go up or fall drastically?

For a simple message like this – there will be multiple variants in multiple languages. Try composing this on your phone in Hindi or in your own mother-tongue. Now – Did you get my point about Indian Languages?

Concluding Notes:

There is definitely a pain area that has to be addressed here knowing the potential that can be unleashed will be tremendous. The challenge that needs to be addressed is not about creating a tool to translate content to Indian Languages or simplifying the creation in Indian Languages – but it is about creating an ecology that enables creation, consumption and monetization of Indian Languages!

Notes from above article:

Indian languages are based on complex scripts – it may be easier to read content, but not to create it.
There is no common ground for one Indian language – hence English takes a lead and will continue to.
Although there are technology innovations that lets one type in English and then auto-translate in a local language – but the minimum criteria to use the same is knowledge of English!
For Indian languages – it would definitely be the Mobile Story! Mobile Penetration in India is already about 50% of entire population – is the rest 50% a addressable market is questionable – even the new mobile operators in India have to prove themselves.

But with Indian youths – 82% literacy rate and high mobile penetration already are key factors. A solution for proliferation of Indian languages usage needs to be out before English becomes the De facto communication medium and an lost opportunity for Indian languages!

Marketers Wishlist for Facebook Pages

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Lazy Sunday – Started checking on how the multiple Facebook Pages I have created have performed over time – was surprised at the level of analytics provided by Facebook to page administrators – it is just about OK!

This is not surprising. Facebook was always centric towards more user engagement with his/her contacts – more features and capabilities for users to interact, share and discover content. While in between this – Facebook created Pages (earlier Fan pages) about 2 years ago. Marketers were quick to understand and grab on to creating Pages, and promoting user to be a Fan (or ‘like’ the Page) – now to an extend that value of a brand is getting judged by the amount of users who like the Fan page.

(Still stuck with old terminology – For further notes, Facebook Pages will be referred as Facebook Fan Pages and its users as Fans)

Facebook today is rumored to be touching revenues of 2 Billion USD, to my judgement a significant portion of that revenue is contributed by brands & marketers promoting its Fan pages to users. That means – huge revenues are generated for Facebook without moving traffic out of Facebook (smart move..huh!).

Facebook did two version of Insights for Fan Pages – the newer version with simplified graphs of old information with few minor updates. However, when it comes to level of engagement that a Fan Page can offer and level of Analytics that can be made available about the Fan Pages and interactions happening on them, Facebook still has a long way to go. The pace of innovation and development on Facebook Pages is far less compared to attention (and revenues) received by it from digital marketers.

Based on my experience with managing Facebook Pages, here is a marketer’s wishlist for Facebook – Features, Interactivity and Analytics that should be introduced.

Marketers Wishlist for Facebook Pages

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The Future of Television

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Writing after a long break… Started writing this post over a month back!

On 20th May 2010, Google announced new Google TV in US, that was late evening by Indian Time. Incidentally, same day morning – my very good friend working in an Television Channel was discussing about how TV programming will shape up in next 10 years. Below is the extract of the same mail I had sent to her and followed by the presentation on SlideShare with some concrete ideas about the Television of future.

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“Past Few Years:

Television as hardware device – evolution from standard television box to slimmer versions

From Regular to Flat Screens
From Flat to LCD
From LCD to LED
The evolution will continue towards personalized broadcasting.

In future the televisions will act as display devices,that could be plugged in to any input devices not necessarily only satellite or cable channels.

They would be used to stream information. In US time spent by consumers online is today much higher than on televisions. Consumers are willing to view video streaming online for TV shows, Sitcoms and also movies. If that happens and continues over a period of time – TV business (as a hardware will go out of business) which large players like Samsung, LG will not want to. Simple because when users would want to spend time online and consume same content online – the players who will gain most are the laptop and desktop manufacturers – HP, Dell, Apple and others – among which LG and Samsung dont have much share.

So to keep TV in business they would reinvent the use of TV box. So expect devices like TV to get IP addresses and WiFi features that could be hooked on to the Internet. Consumers would want to create playlist (of youtube videos?) or information streams (twitter, facebook) or photo stream (family albums, etc ) that could be broadcasted over the internet to their TVs or personal devices.

Unlike what users see today – a choice of channels that they browse on TV, they would create their own broadcast and stream it to televisions. So users end of creating their broadcast, they would access it from wherever they want to. Like you are on a vacation, and you have a TV at your hotel, you would connect that to your own broadcast and view entertainment of your choice.

So media channels and networks will not just face competition from existing television competitors – but anyone would could participate in these broadcast of consumer’s choice – even a small website. These broadcasts online will be standardized to any web content format or APIs or anything as simple as a XML or RSS feed.”

Below is the presentation format of the same ideas.

The Future Of Television

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Social Buying: Attack of Clones & Indian Market

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Group Buying in India: Attack of the Clones

Happy, Merry and Cheerful on success of Groupon. Social shopping was the way forward, most of them spoke of this since mid-2007; however the way Groupon solved the puzzle, no doubt earns them a success.

Came across Andrew Mason’s take on Groupon Clones on TechCrunch and through links stumbled upon Sanjay Mehta’s review on one of the India offerings – Wanamo that incidentally was also one of Groupon clones. An interesting discussion between Sanjay and Wanamo’s founder follows the review.

So back to my crunching game – how large can Social Commerce or Group Buying become in India. What potential lies in it?

Current Scenario:

Market Stage: Chicken or Egg? Still nascent stage, but already crowded – too many chickens and too any eggs.

The Players: Snapdeal, Wanamo, Mydala, Mobstreet, Grabbon, Koovs, Group2Deal, and others I haven’t noticed yet.

First Thoughts: Star Wars – II. Attack of the Clones (or Cousins). Incidently one look at all of them, and you see all design elements, features and placements are similar with each other and with Groupon. A few of them actually ripoffs.

What would differentiate: Quality of deals, execution of ideas & ability to innovate this space.

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Group Buying: What is the market size in India??

Known group buying websites in India: 7, Estimated: 10
Average Transaction Size offered: Rs. 500 (80% of them are under Rs.400)
Average Successful Coupons sold: 50 (as claimed)
Current Cities Catered: 4 (Top Metros only)

Total Market Size: 10,00,000 INR per day = 1 Million INR per day
Thats a kewl: 365 Million INR per year or 7.3 Million USD per year

These numbers are assuming that all ten Group Buying services see 50 Transations per day in all 4 Metros. This is were the analysis starts…

Will this model be successful in India… NO (Not till the point attack of clones continue)

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Why Groupon succeeds and has potential to grow:

Original concept & product. First mover advantage.. and its huge!
Groupon has plans to move to 100+ cities across world
Groupon sells about 200 to 2000 coupons per day from $10 to $125 in each city
They are already in 45+ cities as of today

What Group Buying services in India need to re-think upon & probably revise their business strategy:

It worked in US, it will work in India too approach
The front end UI has been adapted/copied. Hopefully some player has built a robust backend too.
India does not have 100 (or even 20+) highly penetrated ‘Internet’ cities. It would pinch beyond the IPL cities (Cities with representations in Indian Premiere League – IPL Cricket) on both sides.. Consumers & Partners.
Most rely on Social Media for marketing & buzz. Good.. but Social Media is notoriously known for buzz and communication, and not conversions. However for Group Buying deals – this might just work if the deal fits right.
Most deals in US are for Food, Spa, Coffeshops. Unlike US, in India we have choices not just in restaurants but also cuisines… Punjabi, Mughlai, Goan, Chinese, Indian Chinese, South Indian, Goan, and so on. Deals, typically on food & restaurants need to be much wider to appeal to wider audience.
India.. We still don’t know how many users we have (Claimed 50 Million Internet Users)
Others concerns – Internet Transactions, Security, Credit Card Penetration. But for the kind of audience they choose.. this might not be significant issue. But would be when they expand to more cities.
Indians by culture and by nature love to bargain by themselves! And take pleasure in doing that 🙂
We love to choose – don’t we? One deal per day might not fit our appetite.
Cricket & Bollywood; Cricket & Bollywood; Cricket & Bollywood
You are not alone to solve these problem.. at this early stage itself you have huge competition!

Ending Remarks:

So now that you have started, get started on the execution. Few cues to work for this model in India are:
Multiple Deals in a City, Payment Options, Alternate Revenue Channels like Advertorials & Advertising, Go beyond Internet… (Mobile) and much more.

Innovation and adapting to Indian market will hold the key for Group Buying services. And they need to execute that fast, as many deep pocketed services that are remotely and closely associated to related domain (like city event trackers, and hotel review sites… & you know who else?) will find it much easier to replicate this business model overnight.

A clone will be clone… so Innovate & Differentiate 🙂

State of Internet

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Came across this presentation – kewl one.

JESS3 / The State of The Internet from JESS3 on Vimeo.

Adapting to how consumers think offline (in real world)

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Driving is fun for me and a great stress-buster ever since I discovered it (discovered… stress). And throughout the day I at least check one automobile site besides being a huge follower of Team-BHP since last 2-3 years now; and amongst the portals, Carwale.

While talking with a friend who was trying to finalize a car to buy, I realized there such few instances of how differently people think and how conveniently we develop an online product.
And I checked multiple sites, screenshots below.

Most of car portals provide users only 2 options – Select Cars by Manufacturer or Select Price Range. With some noted differentiations by Carwale & Gaadi that have tools to recommendation a car.

Just one basic flaw in this which I realized post my conversation with a friend who said it straight – “I can spend up to Rs. 12000/- per month in the EMI.”

This was exactly that I thought while I purchased my car. Wouldn’t it hold true for most of the middle-class Indians who thrive on hatchbacks and mid-size sedans as well? Over 80% of new automobile purchases in this segment are done through Car Loans paid in EMIs.

Could the right product approach for Indian price conscious market be this as well?
o Allow users option to enter the amount they can spend on EMI per month
o Change EMI period and Down payment and show relevant options to users.

Something like this:

The reason I like this approach is that’s the way consumers think while buying, and it also allows consumers to see more options when they stretch their budget 🙂

Everyone wants to have a have a piece of German Engineering, but what they buy is different alright!
PS: Ignore my design skills.

How Reserve Bank of India (RBI) can facilitate eCommerce and Online Transactions in India

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Online Payments & Transactions – one of my favorite topics. Are the volumes of Internet or Mobile Transactions important – YES!

Internet Businesses will be sustainable in India only when the volumes of online transactions in India go up, which in turn happens only when Internet Banking, Debit Card usage and proliferation of Credit Cards happen.

Why it is must?

Not just direct eCommerce websites, but Internet Industry will grow along with that. Why I say this because the cycle goes like:

Take two of the biggest spenders amongst Internet Industry – Online Travel & Matrimony Services
To be in business – they need Transactions (Online Bookings & Paid Accounts)
If consumers don’t transact online, they will not have any revenues
No revenues – No or lower advertising spends
They don’t spend – Online Advertising Networks suffer, hence publishers, and hence it affects the complete ecosystem.

In happy happy scenario – when volumes of Online Transactions are higher – you see more Online Travel Bookings, Movie Tickets, eCommerce websites sell products, Consumers opt for Paid accounts on Matrimony Services, Paid Classifieds… and everyone is smiling.

The volume of online transactions will determine how mature the Internet user base in country is. And the fate of Internet Industry lies in hands of Reserve Bank of India by ensuring facilitation of usage credit /debit cards & internet banking facilities by all scheduled banks in India.

Some Unrelated Linkage:

Major banking websites in India (HDFC, ICICI, Citibank, SBI, Axis Bank) attract over 16.25 Million Unique visitors each month (Source: Vizisense) . That probably will be a small percentage of total bank’s user base, but going by that number means:

If India has 35 Million Internet users in country- a whopping 46% of internet users frequent bank websites
It would be still 27% if Internet user base is considered to be 60 Million and yet it is a significant number.
Every 4th user of Internet is a someway related to bank. This is just considering the top banks in India.

The Scenario Today:

Unfortunately the credit card subscriber base in India is not so promising at less than 25 Million Cards issued in market and of which estimated 50% are active users.

Positives – Debit Cards growth seem to be promising for as many banks couple the same as Debit-cum-ATM card and have started distributing it to all new accounts. NetBanking user base quoted above could indicate user logins to netbanking (mostly to check balance) and not necessarily online transactions.

RBI’s Plan of Action should be:

So what is required to be done to create an environment to boost Online Transactions in India:

Curb the loss of opportunity –

Many banks in India issue Maestro Debit Cards – unfortunately they are not accepted on many payment gateways
All debit cards are ATM Cards; but all ATM Cards are not Debit Cards.
There are many Scheduled and Cooperative Banks in India offering Internet Banking facilities, however most of them only for purpose of checking account balance. They need to be enabled for Online Transactions as well.

Mandates to improve Credit / Debit Card Penetration –

Many Scheduled and Co-operative banks operate in India., not all of them issue Credit Cards or Debit Cards or ATM Cards.
There are at least 300+ Scheduled Banks in India, the government should enforce up all the banks to issue Credit Cards & Debit Cards cum ATM Cards within an stipulated time frame.
All Non-Scheduled banks in India with 300,000+ savings accounts operating at any level – City, Taluka, District or State need to compulsorily tie-up with a National Bank of its choice to offer Credit / Debit Cards to its customer base. (Similarly to Bancassurance Models)

ATM Network Connectivity –

Ever wondered how you can use any Bank’s ATM card on any other? It is due to their inter-connectivity on the BANCS ATM Network. Unfortunately not all Banks/ ATMs are hooked up on this network – So no question here to guess on the recommendation.
How is it linked to Online Transactions? – These consumers are most likely to use ATM cum Debit Cards and are more likely to mature and move to Online Transactions

Internet Banking –

Scheduled Banks in India need to compulsorily offer Internet Banking facilities to its users and also ensure training terminals for same in its branches. If implemented and executed well, this might be a first hand experience for many Indians to Internet, for that matter even to Computers.
There are many Scheduled and Cooperative Banks in India offering Internet Banking facilities, however most of them only for purpose of checking account balance. They need to be enabled for Online Transactions as well.

Payment Gateway Infrastructure –

The payment gateway infrastructure in country needs to be improved – by which it means even the payment gateways need to have mandates on accepting all credit cards, debit cards and internet banking facility of all banks currently offering them
There has to be also a mandate to integrate such services of any new bank within 180 days of it going live.

Connectivity –

No comments on the state of Internet & Broadband connectivity in India. But that is not the point here. Imagine you doing a transaction in a small town like Mahabaleshwar on a Dial-Up Internet Service provided by a local ISP.

Now enjoy the view:

From the merchant site you are directed to your Payment Gateway.
You enter your details on Payment Gateway and click Submit.
Through Visa or Mastercard switches that are located internationally of course – the same is routed to issuing bank for authorization and back to the Payment Gateway.
Phew., that’s not enough – Credit Cards are now 3D secured, you need also authenticate yourself again by the issuing bank and later again routed through Visa / Mastercard to record the authentication.
Post this you are routed back to the payment gateway and again back to the Merchant website.

Wow! And this is a world tour of some sort in 30 seconds, since by this time your transactions was routed through multiple ISPs, multiple Datacenters and multiple countries as well and all this multiple times. So now imagine with state of (poor) internet connectivity in India, how many chances you have for connection dropouts.

One last point to be added here – even after going through all this, note that authorization of a transaction is completely left to the issuing bank and not Payment Gateway, Visa or Mastercard.

Indian Electronic Payment Network (India Card) – Needs to be reality!

The last suggestion – RBI should possibly ensure facilitation and make roadmap for creation of an Indian Electronic Payment Network (owned and managed by Indian Government).

It is not confirmed if it will be named India Card, but RBI has plans to set up own payment processing system , as reported many times in news like this one last in Indian Express. This is in line with China introducing its own payment network – Union Pay through its central bank – People’s Bank of China (PBC or PBOC).

There are benefits of having an Indian Electronic Payment and Processing Network only if one understands how costly it is for the banks to be a part of existing ones:

When a bank issues you a Credit Card or Debit Card that is endorsed by either VISA or Mastercard, the issuing bank pays some amount to either of them.
This issuing fees is irrespective of the fact if that card is ever used for any transaction or not. Issuing fees are higher for premium cards like Gold, Platinum, Titanium (or any undiscovered metal).
The issuing banks probably also pay an annual fee to VISA or Mastercard to use its payment processing network.
And of course, VISA and Mastercard do charge a small percentage (<1%) per transaction to the payment gateway.
Plus, remember some one also pays for the bandwidth consumed while completing and online transaction too

So what are the benefits India Card comes to reality:

The costs involved will definitely be on a lower side for issuing of cards, transactional percentage charged and annual fees for the issuing banks.
Government could possibly waive off all fixed costs to banks for issuing cards (that is being very positive) and earn more with transactional percentage and taxes.
The whole chain of connectivity issues while making an online transaction will be reduced since it can be safely assumed that all processing servers will be in India itself and would have adequate connectivity with banks and payment gateways.
Currently different payment gateways charge merchants between 1.5% to 4%; when this lowers it significantly, directly & positively impacts profitability of all online transaction based services.

Sounds kewl isn’t it? But to bring that to reality is different game all together.

India Card will need complex systems for fraud detections, authorizations, authentications, refunds and many others developed by VISA and Mastercard over years. Most importantly acceptance of India Card in all countries and on all payment gateways globally.., for which India Card would also require affiliation with VISA and Mastercard.

That’s all for now. Till then – Happy Transacting! 🙂

Increasing eCommerce & Online Transactions in India

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Dissection of Online Travel Agent (OTA) Business: What is Market Size?

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Once an VC-favorite business domain in India, Online Travel Agents (OTA) business model has been quite silent since last 2-3 years in this activity. Primarily cause Aviation industry suffered huge losses in this time and most of the plans to expand the aviation businesses in India fell flat post the recession on 2008-2009.

Of course the direct impact of this was on OTAs. Consolidation is expected to take place, naturally since the number of players in market today are probably equal to or more than the number of airlines operating in India. The big 3 of course are Cleartrip, MakeMyTrip & Yatra, however the question is are other players in market big enough or valuable to get acquired or carry any differentiators to be acquired.

Nevertheless, this post is about some number crunching and to answer the question – How big exactly is the OTA market for domestic flights? Taking a reverse approach on this… from Supply to Demand.
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Domestic Airline Fleet in India:

As of	Airline	Fleet	Flights
Dec-09	Jet Airways	89	400
Dec-09	Jet Lite	19	110
Dec-09	Jet Konnect	19	125
Dec-09	SpiceJet	19	125
Dec-09	Indigo	24	155
Dec-09	Kingfisher & Red	66	400
Dec-09	Paramount Airlines	5	28
Dec-09	Go Air	8	55
Total	All Private Airlines	249	1398

Note:
*indicative data only, gathered from various sources available like company websites, news, etc. Consider all numbers as indicative figures
* Data excludes Air India / Indian Airlines domestic flight operations
* Actual flights per day may be an lower number since most carriers operate multi-destination flights, like Mum-Kolkata-Guwahati
*Jet Airways fleet size may be fleet in service for both domestic/international operations.

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Maximum Tickets Available for Sale:

Airline	Flights	Seats	Total
Jet Airways	400	200	80,000
Jet Lite	110	200	22,000
Jet Konnect	125	200	25,000
SpiceJet	125	200	25,000
Indigo	125	200	31,000
Kingfisher & Red	400	200	80,000
Paramount Airlines	28	60	1,680
Go Air	55	200	11,000
All Private Airlines	1398		275,680

Total Tickets available for sale each day = Total Seats available = 275,680

*indicative data only, gathered from various sources available. Consider all numbers as indicative figures
* Actual number of seats available may be lower than mentioned since flights operated may be lower, as mentioned in previous slide
* Most airlines in India operate Airbus/Boeing aircrafts with which seating configuration varying between 180 to 220
* Full service airlines like Jet Airways & Kingfisher operates flight with business class seats, and have ATR aircrafts in fleets as well
* Paramount Airways flies smaller Embraer aircrafts

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PLF – Passenger Load Factor:

Total tickets available for sale, indicates maximum inventory available or max supply From time to time, airlines in India have raised concerns on the occupancy levels of seats, that’s passenger load factor.

Mostly the number has hovered between 68% to 72% for most full service airlines & between 75% to 82% for low cost carriers. Assuming 75% PLF for India, total sold out tickets in India per day would be: 2,06,760

Total Seats Offered: 275,680
Passenger Load Factor: 75%
Seats sold: 206,760

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Sale Distribution through Different Channels:

Having said that 206,760 tickets are available for sale, lets not assume that all sale happen through online channels. Different channel includes – Offline Travel Agents & Tour Operators, Tickets sold as part of travel packages, Big Corporate Organizations booking tickets for its employees through offline travel partners, Ticket Counters at airports and yes – Online.

Assuming a healthy 40% of all airline ticket sales as online sales. However, consumers in India are price sensitive and do book directly from airline’s websites as well.

Doing the division
– Ticket Sales on airline websites = 15%
– Ticket Sales on OTA websites = 25%

Tickets sold by OTAs daily = 51690

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So What are Daily Transactional Sales like?

Total Ticket Sold by all OTAs per day = 51690
Assuming average price of ticket sold online at = Rs. 5000 (not all get a Rs.3000 ticket)
That’s daily sale of Rs. 258,450,000 -> ie. Rs. 25.84 crores
Monthly = 775.2 crores
Yearly= 9062.4 crores
Market size for Indian OTA Industry in Domestic Flights: 9000 crores approximately

On a 5000 INR priced ticket, you pay 2000 INR tax (that’s 40% ). Hence removing the tax factor, the number will be 5400 crores per year

Figures based on assumptions & numbers used in this post.

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Interesting take aways from this dissection…

this could have been extended to predict profitability of an OTA but has been restricted to predicting the market size only. However it’s a volume game!
On an average, every aircraft in India does 5.6 flights per day
If airlines could further manage route optimization and do 1 more flight per day, at 6.6 flights per day, OTA Industry Sales will be up by 15%
If an airline adds one more aircraft to its fleet, OTA business increases by 0.4%
Note that the airlines listed here itself (excluding Air India, Indian Airlines (now part of Air India)) have over 250+ air crafts in orders with Airbus / Boeing and others. This is equivalent to number of aircrafts in operations now. If market conditions remain positive and airlines accept deliveries of these aircrafts over next 5 years, the market size will be double of existing today!
Nevertheless, Online Booking of Tickets will only increase in coming years. This presentation assumes 40% of ticketing happening online, this percentage share will increase with increase in consumer’s likeness for online transactions. The share of online reservations between airlines & OTAs will be deciding factor.

PS: The flow has many assumptions, however if one has or knows the right numbers – logically the market size can be concluded. I feel the numbers I have taken here are little on higher side.

Thank you 🙂

Online Travel Industry in India – Market Size

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about pj

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over 13 yrs of exp of being internet user., since days of text browsing, irc chats & 9.6kbps dial up modems that disconnected on an incoming call.

key interests include – consumer products & platforms on internet, payment systems, airline industry, behavioral & audience marketing, demand side platforms, advertising networks & yield optimization, convergence of offline-online models, search engine stuff, etc. I claim no expertise in these domains and continue to learn. Love to focus on enabling technology to solve consumer pain points, building product road maps and simplifying complex platforms.

good at number crunching (with help at excel & calculator), time management (with help of organizers), product management (i think so). analyze business models of consumer internet products and offerings (without being asked for it). free time – driving, friends, music.

like to interact with startups and entrepreneurs. feel free to drop me a line or get validations for your products.

being practical is an my attempt to blog about technology, trends and my predictions & analysis of ecology in connected world. this blog will be not so much active and can be safely labeled as ‘endangered species’.

<contact> pj [at] beingpractical [dot] com </contact>

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