India's Internet Economy - a demonstrative path to next level of development at all stages

Post the 1990's economic reform that open the gate for the industrial and business institution to scale high and go globally, the internet economy boom in India is making the domestic consumption to increase and giving way to new entrepreneurs to solve the infrastructural issues that were plaguing India for long; boosting the ground level innovation and inclusive growth at all stages.

The medium which helped the economy to grow and innovate starting from old age are river, sea, roads, air and now the Internet. The internet economy is accelerating the innovation in finance, payment, delivery, inventory, marketplace, customer acquisition, customer experience and selection, etc. The power of this medium is there for everybody to see and enjoy, a local seller in Surat whose reach extends to Kashmir to Kanyakumari has broken all infrastructural barriers today with respect to acquiring a customer. The customer as well have varied options to select, experience and convenience to acquire product that they desire with the power of a simple touch.

The government initiative to boost this new form of the internet economy need to be brainstormed with all stakeholders - state, business and customer's. The digital India initiative is in the right direction. The non-cooperative policies at centre and state level can make or break these developments. Any non-cooperative policy's that undermines the power of internet economy will have a negative impact on the growth and innovation in this space. 

Let's visit some of the policy's, business and consumer behaviour to understand what's in store in the coming years. 

FDI Policies: 

• FDI in B2B (100% as of today) policy is helping the small players to innovate and compete with the big fish like amazon and e-bay. These companies are forced to innovate at equal level, though need to understand the consequence of this policy in the long term and what store in the future?
• FDI in B2C (increase to 100% )- Govt. Contemplating the same and if convinced that they have given enough time or cushion to Brick and Mortal players to match the capital and experience of e-commerce companies to grow and compete equally, this will not be far away from approval.

The e-commerce companies will be able to provide geography less boundary for selection, convenience and experience compared to B&M players. This will not be fair for Brick and Mortar (B&M) as they cannot compete with respect to the geography and territory reach that these e-tail companies enjoy. They need to innovate and possible solution to partner with existing e-tail companies. Can all Brick-and-Mortar players have an e - tail as a strategic business model to expand the reach?

Mckinsey report rates India's internet supply ecosystem in fourth place behind US, UK and Sweden during the year 2004 to 2009 and during the same period Internet contributes 5% to India's GDP which is growing at a faster rate. I am sure these numbers will be higher post pro government’s policy and initiatives starting 2013.

Consumer behaviour changes: Why consumer prefers this internet touch point for buying experience? It gives not only convenience but also a selection option with improved decision making. The internet is changing the way people communicate, doing business and most importantly the behaviour changes with respect to buying. The mobile and internet economy, helping out to reach the corners of the rural India, which was impossible a decade ago. A simple money transfer was a huge task for one before, but with the help of the internet and mobile, this become a simple one touch operation. The payment mobile ecosystem is helping consumer to make decision with respect to purchase and also increasing the spending power at rural places.

A well-funded start-up with early lead will have a good success rate in solving infrastructural issues and reaching out to millions via the internet and mobile; this is possible only when it increases the market size of existing retail or any business. The examples are the existing unicorns and well funded startups with unique value propositions; who have innovated and increased the market size instead of taking the pie out of existing brick-and-mortar players.

Voonik, a leader in the unbranded fashion marketplace is taking all challenges and innovating in the indian eco-system today. The customers are loving this marketplace with the power of select, search and filter different categories at a price elasticity that B&M can't provide. The seller ecosystem also loving this marketplace as they can now compete to a branded fashion players. This is new era and innovation at each stage of the supply chain in this marketplace will go a long way to grow the customer experience at rural and urban places, and also mature the seller ecosystem in India. 

The game is on and in this economy all are winners and those who thinks that this new form of economy is taking out of the existing market instead of expanding they will be left behind to catch up.