The year 2017 has been a great year for the consumer internet industry. With the sharp increase in the number of online users due to Jio effect the overall industry benefited. The key sectors saw a good growth and a there was a significant shift observed in the business models of some sectors to ensure better consumer experience. Although the growth has been fair there is a still a significant opportunity for the sectors as majority of them have less than 10% online penetration.
Consumer Internet: In 2017 the internet sector has evolved with a clear value proposition in consumers mindset
There are sectors which are showing clear signs of growing to large potential but can still be driven by discounting, followed by sectors which have proven value and might not be driven by heavy discounting, then there are emerging sectors which are in nascent stages but can potentially grow large, and finally the sectors which are matured and might not show exceptional growth from here.
Value proposition of Indian consumer internet sectors, UoM
(Market Size vs. Online Penetration)
E-tailing: Tier-II+ online shopper population is the growth driver for e-tailing - growing 3X faster then metros
E-tailing industry saw a rapid increase in the number of shoppers in T2+ cities in 2017 contributing nearly 41% of the overall online shoppers in 2017. This is going to be the significant lever for the growth of e-tailers in Indian market in 2018 as well.
(% Growth in number of unique shoppers from 2016 to 2017)
Online Mobility: Shared Cab economy is going to be the future of cab-hailing in India. There are two strategic drivers for the next frontier of growth for cab hailing industry:
1) How to tap the low-income demography with lower fare values and
2) How to address the growing concerns around the supply constraints from cab side. Shared cab economy has been effectively able to target both thus making it the key growth driver for the industry in coming year
Hotel-tech: Full inventory model is the way to go for the hotel aggregators
There has been a clear trend of higher customer stickiness, unit economics and control via. the full inventory model vs. part inventory model, The aggregators are adapting to this model with full inventory becoming the leading model within the last one year. The interesting play would be to see how the pure OTA and aggregator relationship evolves in near future.
Partial VS Full Inventory model split of Hotel Aggregators
Food-tech: Food-tech will be ruled by the players with high-quality captive delivery players
It is becoming increasingly clear that food tech is more and more of a logistics play, restaurant discovery is not a deep competitive advantage. There are clear trends in customer and seller satisfaction supported by the better delivery speed and compliance that vouch for the superiority of the captive delivery model in Indian market.
Self Fleet vs Partner fleet used by Online Food Aggregators
(Infographic Source: Redseer)