Internet Opportunity for SMBs in India is at a Tipping Point

We interacted with Rajiv Sodhi, VP and MD for GoDaddy India on the Internet opportunity for SMBs in India, their challenges in going online and how to alleviate them

– Anil Chopra and Rashi Varshney

How unique is the Indian market in terms of Internet connectivity?
India is second largest connected country in the world. We have just overtaken USA, which has a total population of about 330 million. India’s internet user based is now300 million. Globally, the internet grows about 14% -15% worldwide in terms of connections. In India, it’s growing at about 26%. China and India are fastest growing market. India took 10 years to hit the first 100 million, 3 years for 200 million and 1 year for 300 million. This tells how fast it is. Even at this figure, we are at about 18% penetration of the whole population, which means 80% of the market is yet to come online. This assures that India is one of the most exciting markets to work in.

What’s the break-up of the 300 million user base of Internet users?
The country has a digital divide that splits India between the tech savvy urban population, and the rural masses. A large part of the Internet penetration is by the urban population, but the other side of the divide has to be brought online now. Already, out of the 300 million users, 100 million are rural today, and what’s even more fascinating is that they’re growing by 49% year-on-year. While the overall country is rising at about 26%, a large part of this growth is driven by rural and tier 2-tier 3 towns, which is primarily driven by mobile devices.

Most online users in rural India would be consumers connecting from their mobiles. How about the small and mid-sized businesses in these areas? What are the challenges in taking them online?
The three major constraining factors with SMBs in smaller cities to go online are— access, awareness, and adoption.
Our number one problem is lack of ‘awareness’. Most people are saddled from the ‘Not-for-me’ syndrome, and that the Internet is only meant for big brands or firms. That is a challenge companies like us are facing.
The second issue that people have is ‘complexity’. They think that buying a domain name, setting up a website, moving to social media and all are very complex. The third challenge is that people think it is very ‘costly’.
Indians are very conscious about value and returns. So while India is usually referred to as a price sensitive market, the truth is that it’s not price sensitive, but value sensitive. So people have money to spare, but they will not spend if they are not clear about the value it will give.

Moreover, India is a ‘Do-it-for-me (DIFM)’ country unlike western countries, which are more in the Do-it-Yourself (DIY) mode. This has huge implications on what we are trying to do.

What are companies like Godaddy doing to alleviate these challenges?
The first thing that companies like ours are doing is driving massive awareness about the ease and benefit of coming online. We actually believe that 300 million is a tipping point, because this is the size of America that is now sitting online in India and as this market grows, a trader or anybody cannot ignore such a market, which is doing transaction at a much faster pace than offline is.

So our belief is that as long as we keep reaching out to people in a manner they understand and in a language they understand, the challenge of generating awareness can be tackled. So till recently, we did campaigns with famous personalities like Mithun Chakraborty to spread our message. Now, we will do campaigns in local languages because we know that people who’re coming online are not from metros and are not English speaking people.
The second challenge of affordability can be tackled by offering products that are both affordable and relevant. So today, for as little as Rs 99 a month, one can get a domain, website, and professional email.
Also, since India is a DIFM market, one needs support. For that, we ensure that we provide 24*7 free customer care to our customers.
So we are trying to make sure that people know it’s easy, fast and simple. We are trying to build local bundles that bring our solutions together so the number of steps for customers is cut down.

How do you overcome the multiple local languages barrier?
India is a country where language changes every 200 kilometers, so it’s tough to cover it at a national level. This is where channels play a very important part as they can talk to customers in their language and dialect. What’s therefore required is to use a combination of pushing the message from channels and advertising and branding with regional flavor.

SMB owners can (and are) doing business with freely available e-mail ids and a lot of them are also registered with free online trading platforms. Why would they invest in their own website and email id?
If you want to start out, then you can do so with any of the free packages, and there are dime a dozen available. The same is the case with our website creation as well. You can build it free, but for any new feature, one has to start paying, which is where they need the right advice so that they don’t spend exorbitant amounts.
With listing providers, typically we have seen people repent it later. That’s because you have huge competition there. So if you are a plumber, then there are 15,000 other plumbers also on the same list, so you have no way of differentiating. So as people start scaling their business, they need additional services to differentiate themselves from others. This happens gradually after the person gets the first few orders from internet, and realizes that it’s a potential new channel.

There’s another barrier of investing in a website, but not getting any returns?
This is a big challenge because most people think that website is the face, but companies have to realize that it’s only a start. So one of the first things is to educate the customer on the amount of traffic they will get. Our concern is not whether they have a website or not, but whether they have a content strategy or not, which can feed their website. This also requires awareness creation, and there are many resources online that help with this. Even we have a section on our website called ‘Garage’ that does this.

There’s also a marked difference between new age and old age entrepreneurs. So, typically the new breed of emerging entrepreneurs are typically young people, who understand the importance of being online and take it very seriously. As a result, they’ll first book their domain name even if they don’t build a website immediately.
We also found that India is high on identity and need, which can be gauged through the number of documents an Indian has for their identity in India. We see that many SMBs especially traditional SMBs are very particular about their reputation, and one small next step in the online world can improve that and that’s again is a part of our education.

What kind of SMBs are more aggressive in going online?
Typically if a business is export centric, it would invest for internet presence much faster than an artesian kind of business. Verticals like professional services, education, etc. are more aggressive in terms of IT spending. One thing that helps take such businesses online are templates that are more tuned to their requirements. Verticalization of websites therefore helps, be it for professional services, hospitality, wedding, jewelry, etc. At the same time however, one has to also have a horizontal approach in order to address the market at scale.