Posts filed under ‘Evolving India’

Mobile Penetration, Mobile Data Speed and Consumption in India

In this blog post, we mentioned that India is the #2 market in terms of Internet users behind China. But did you know that India was the #2 telecommunications market in terms of subscribers since 2008?

The telecom revolution stated in India on July 31st 1995 with a mobile call between the then WB chief minister, Jyoti Basu, and Union communications minister, Sukh Ram.  Since then, mobile phones have permeated everywhere in India. There are 1,036 million telecom subscribers, 97% of these being mobile subscribers. The urban mobile teledensity is a mind boggling 147, 3x higher than rural at 49 (overall mobile teledensity of 79.2).

With such high penetration numbers, every telecom operator is now turning towards data to increase revenues. The growing smartphone penetration in India, driven by cheap handsets is expected to fuel this. In 2016, smart phone shipments are expected to overtake that of feature phones with analysts pointing out factors that can drive the average price of a smartphone further down from Rs.10,700/- in 2015.

While users in India are still more concerned about voice quality than data services (and the leading telecom operator has tried to take the high ground on this aspect with the open network campaign), among smart phone users elsewhere, data speed is considered to be the most important factor in determining both network performance and satisfaction with an operator.

 

mobile

 

[Here’s a quick look at the data in the infographic above (2015 data) :

  • 1,010.9 million wireless telecom subscribers
  • 311.7 million wireless internet subscribers
    • 60% of these connections are on GPRS/Edge networks
    • 36% on 3G technologies such as HSPA/WCDMA
    • & only 0.8% of connections are on 4g networks technologies such as EVDO/CDMA/LTE
  • The average mobile connection speed was 1,016 kbps with…
    • … the average 2G speed at 77 kbps
    • … the average 3G speed at 1,932 kbps and
    • … the average 4G speed at 9,415 kbps
  • The average mobile-connected end-user device generated 149 megabytes of mobile data traffic per month
    • Average non-smartphone generated 49 megabytes of mobile data traffic
    • Average smartphone generated 430 megabytes of mobile data traffic per month
      • 9x more mobile data traffic per month than a basic handset
      • Within this, the average 4G smartphone generated 1,256 MB of traffic per month in 2015, compared to 430 MB for non-4G smartphones.
    • Average tablet generated 1,671 megabytes of mobile data traffic per month
      • 34x more mobile data traffic per month than a basic handset
  • There are an estimated 239 million mobile connected smartphones, 23.9% of device connections, and they generated 69.1% of total mobile traffic
    • Incidentally, India has overtaken Japan to become the world’s third largest smartphone market
  • There are 3.8 million tablets, 0.4% of device connections generating 4.2% of total mobile traffic
  • In India, mobile video traffic is estimated to grow 20.8-fold from 2015 to 2020, a compound annual growth rate of 83%.
  • Currently, web and other data applications generate about 48% of mobile data traffic, Video generates 40% , streaming audio generates 10% and file-sharing the balace 2% of India’s mobile data traffic
  • Currently web browsing, emailing and social networking are the top three internet activities on smartphones ]

 

What these numbers tell you is that Indians are embracing the internet on the mobile, not PC. And this mobile Internet is currently work and social networking related. Going forward it will be increasingly video.

However, the quantum of consumption is still low. For example, the 430 MB consumed at an average speed of 2.643 kbps by an average smartphone on an average mobile connection is good enough to stream about half a movie in SD quality from Netflix. And, if you are going to use a social network like Facebook exclusively, it will last you about 4-5 hours (1 -2 MB per minute). These are of course averages. There is always the pareto principle, 33.9 Million mobile users (~11% of total mobile internet users) consume over 2 gigabytes of data per month. And it is from survey of these users, that you hear the hype about mobiles and apps.

The next few years are going to be exciting in this space, launch of multiple high spec smartphones at Rs.10,000 price points, roll out of 4G LTE (and imminent data price wars) and better last mile connectivity  will further fuel mobile data consumption.

{The Cisco, Ericsson, CMI and TRAI reports are sources for this article and infographic, and can be accessed at the links given.}

  • Ravindra Ramavath
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September 8, 2016 at 3:05 pm Leave a comment

E-commerce – Proportional contribution by categories

Our last post was on the penetration of e-commerce and the proportion of retail sales contributed by e-commerce , across 5 countries. After reading it, one of our loyal readers asked us for some more information about e-commerce in India. Hence, this time we’re looking at the total value of e-commerce sales contributed by various categories of purchase / transaction.

India Ecom Contrib v2

 

The pie-chart above shows the proportion of e-commerce sales contributed by various categories in India :

(Data source: IAMAI IMRB Icube 2015 )

  • In India, the total value of e-commerce transactions was a whopping Rs. 125, 732 cr in 2015, and it grew at 28% CAGR between 2012-15.
  • That online travel drives a bulk of e-commerce revenue in India is a fact that anyone who reads a newspaper is aware of ; this chart adds the details – 61% of the total e-commerce revenue of Rs. 1.25 lakh crore was driven by online travel. Of this, domestic air tickets are the largest chunk, followed by railway tickets, and then international air tickets.
    • While online travel grew at a CAGR of 30% over the three years from ’12 to ‘15, rail tickets (17% CAGR) and domestic ticketing (22% CAGR) are slowing down the growth
  • What we typically call e-commerce and should more accurately be termed e-tailing – i.e. the purchase of various types of products online – is actually just 30% of the total value of e-commerce transactions.
    • However, e-tailing grew at a CAGR of 80% from ’12 to ‘15
    • The 3 categories within ‘e-tailing’ that are driving the growth are ‘Mobiles phones’ (126% CAGR),’consumer durables’ (135% CAGR) and ‘home furnishings’ (94% CAGR).
  • The ‘Food delivery’ segment , albeit relatively small at just 1.4% of total e-commerce, also grew by leaps and bounds with an 89% CAGR from ’12 to ‘15.

 

Now that we’re familiar with the data for India, let’s compare the proportional split of e-commerce sales in India by category with that in the U.S. :

India, US Ecom Contrib v2

(Data source: IAMAI IMRB Icube 2015 ; eMarketer Apr 14 for US showing 2015 projection, validated through other sources  )

  • In e-tailing in India, there is an over-dependence on ‘computers, durables and consumer electronics’ as compared to the U.S. – almost 50% of total e-tailing in India vs. 22% in U.S.
  • If we benchmark to U.S., most categories in India – e.g. ‘apparel’, ‘personal care’, ‘home furnishings’, ‘books’, ‘auto and parts’ – have the scope to grow faster than ‘computers, durables and electronics’. Of course, benchmarking to the U.S. is something that could led to wrong conclusions too, as so many e-commerce firms in the hyperlocal space have seen recently ; hence the need to tread carefully after investigating consumer needs, current satisfaction levels and the nature of the gap
    • Interestingly, ‘Auto and components’ is something that hasn’t taken off in e-commerce in India at all, while in the U.S. it is 10% of e-commerce by value. The Indian online car market is limited to ‘second hand cars’ which is mostly a ‘classifieds’ business.

 

  • Ravindra Ramavath

August 22, 2016 at 10:36 am Leave a comment

Infographic – India expenditure data , rural

We’d earlier shared a set of infographics on per capita expenditure on various categories in urban India (https://escape-velocity-blog.com/2015/08/19/infographic-india-expenditure-data-urban/ ), and the trends over time therein (https://escape-velocity-blog.com/2015/09/22/infographic-india-expenditure-trend-urban/ ). This post shares similar data for rural India.

India MPCE - Expenditure data - Rural

The first point to note is that the average MPCE (monthly per capita expenditure) is much lower for rural India vs. that for urban India (Rs. 1429.96 vs. Rs. 2629.6 respectively). Hence, while the absolute value of expenditure on various categories may be lower in rural India, as a percentage of the MPCE it’s much higher. For instance, though the average monthly spend on food is Rs. 622 per capita, it is 48.6% of the total per capita expenditure ; this is closer to the proportion spent by the poorer fractiles of the population in urban India. One area on which folk in rural India spend much less than their counterparts in urban areas is housing, others are education and transportation. In almost every other category, the proportional spends (spending on category as a % of average MPCE) of rural folk are actually higher than those from urban areas.

 

  • Ravindra Ramavath

 

June 6, 2016 at 11:55 am 1 comment

English-Vinglish, and all that jazz

Read this article about the English Dost app via a friend’s Facebook feed and was reminded of a few incidents that I’ve witnessed during the last year.

On the day a friend left Mumbai for Singapore, among those who visited her house to say goodbye was her maid. The maid had brought her adolescent children along too, and I was amazed at the difference between the maid and her children. Had the mother not introduced me to her daughter, I’d never have guessed how closely they were related; the maid seemed like someone one step away from the ancestral village, while the daughter seemed a native of a big city.

While the mother wears a sari, cannot speak much English and is rather diffident, her daughter prefers jeans and a shirt, speaks good English and is much more confident. While the mother is uneducated, she’s ensured that her daughter got a school education and learnt English, and encourages her to attend college; even though the young girl has to hold down a part-time job in order to meet her education expenses at college ,she’s determined to obtain a college degree that will get her a better job than her mother’s and a brighter future.

A few months later, I was at Bodh Gaya for the sales and marketing module of a Cream training program. The participants comprised micro-entrepreneurs from villages in Gaya and Muzzaffarpur district of Bihar. They could speak some English, but not much ; hence classroom sessions were conducted in both English and Hindi, with constant translation of any English sentence by an interpreter. All our training material (slides , hand-outs, question papers) had also been translated into Hindi for the benefit of the participants. Yet we witnessed an amazing zeal to learn new English words that pertained to their businesses, as if they saw these words as currency for garnering status in the eyes of their peers (remember that these were all rural micro-entrep[reneurs). There were participants who’d stop us mid-sentence and ask us to spell out ‘negotiation’, ‘consumer’ etc. and earnestly write down the English word in their notebooks.

English learning appsNo wonder there’s such a huge market for English learning apps and so many of them available now. There’re generic apps like Busuu through which anyone can learn English ( or another of a set of languages) by having conversations with native speakers of that language. There’re English Dost and enguru, both of which use a game with real-life situations to help users learn English, these seem to target those joining the corporate sector in junior management roles. English Seekho by IMImobile and IL&FS Education & Technology Services limited target a very different audience – junior level clerks, traders, unskilled laborers, frontline staff, taxi drivers, restaurant waiters etc. There’s also the British Council site that has several English learning apps, podcasts etc., and even an app to help Taxi drivers learn English to communicate better with their customers ! Clearly there’s a ton of demand from a large number of segments.

  • Zenobia Driver

December 10, 2015 at 1:18 pm Leave a comment

The MPCE calculation – methodology

This post is just a follow-up to the previous post – fulfilling my promise of illustrating how the MPCE is calculated.

Computing MPCE

  • The process has evolved over time to the current large sample quinquennial surveys (once in 5 years)
  • Broadly, the endeavor has been to get more accurate data and time periods have been appropriately chosen / designed to capture certain data.
  • The household consumer expenditure schedule used for the survey captures both information on quantity and value of household consumption.
  • Info collected consists of 142 items of food, 15 items of energy (fuel, light and household appliances), 28 items of clothing, bedding and footwear, 19 items of educational and medical expenses, 51 items of durable goods, and 89 other items.

Whew ! That’s a lot, isn’t it ?

  • Ravindra Ramavath

October 7, 2015 at 5:10 pm Leave a comment

Infographic – India expenditure trend, urban

India Expenditure Trend Urban - trends

  • Urban India has seen an increase of 128% in MPCE(URP) based on current prices
    • Real MPCE (measured using a price deflator with 1987-88 as base) has increased 29% between ‘04 to ’11, a CAGR of 3.7%
  • Share of food in MPCE declined by about 4pp in urban India between ’04 -’12 , you can clearly see the light green band receding from the right end
    • A few more points that are not shown in the graph :
      • Within foods, except for Milk, fruits & Beverages, all other products categories tracked have fallen in contribution.
        • While Milk and fruits has increased by 1pp, beverages have increased from 15% to 18% within foods
      • Cereals have registered the largest decline – from 24% to 19%
    • Among the rest of expenditure, durable & minor durable type goods has seen the highest jump of 2.4pp followed by rent at 1.4pp and clothing & bedding at 1.3.
    • Also, notice the steady rise in medical and education expenses
    • Proportion of spends on entertainment have also risen, albeit off a small base

The method of computing MPCE is rather interesting ; next week we’ll share an infographic on that too.

  • Ravindra Ramavath

September 22, 2015 at 2:47 pm Leave a comment

Infographic – India expenditure data (urban)

This infographic kicks off a set of posts that will delve into various aspects of income and expenditure distribution in India. This one describes the proportion of expenditure spent on various categories.

India MPCE - expenditure data

The pie chart on top shows how the average monthly expenditure per capita gets divided over several categories. But, as we all know, averages can be misleading. Hence the line chart below that shows how the percentages vary for different fractiles of the population.

The pie-chart clearly shows that food is the single largest component of the average expenditure basket, at 38.5% of the total average monthly expense per capita. What is even more interesting to see is how the proportion of expenditure on food varies with income, this is explored in the line chart (with expenditure fractiles being the proxy for income). The poorest 5% have a per capita monthly expenditure of Rs. 700.5; for this segment, expenditure on food is over half their total monthly expenditure. The richest 5% , on the other hand, spend only 23% of their monthly expenditure on food.

A similar trend can be seen in a few other categories, one of them being fuel and power. While on an average, the spend on these is 7.6% of total expenditure, it comprises almost 13% of the monthly expenditure of the poorest. As a proportion of their total expenditure, they spend more for electricity or cooking fuel than the richest do.

Many other nuggets buried within this infographic, but I’ll leave it to you to discover those ; we’ll be back soon to explore another facet of income and expenditure distribution.

  • Ravindra Ramavath

August 19, 2015 at 11:13 am Leave a comment

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