64706f52e8327f36a7a79c2e

Market

Indian Urban Mass — The Next Frontier?

No items found.
Urban Mass

Summary

In my previous blog, I wrote about what products/services are online in India. In it, I referred to the Indian Urban Mass as coined by Goldman Sachsin their detailed report on India. It is a very insightful report and I’m including a couple of images from that report in this blog.

At this moment in time, India has north of 300M smartphone users as per various publications (here’s one report by the Economic Times). With the launch of Reliance Jio, and subsequent mobile data price wars, the average price of data in India is one of the lowest in the world. What this means is there are 300M+ people in India capable of transacting online.

But, when you actually look at the transaction data across the various businesses described in the blog above, there are only about 60M+ people transacting online. One of the major reasons for this is the income levels across India. Majority of people transacting online belong to the top 4 categories of people in the Income Pyramid — Movers&Shakers, Govt/SOE Employees, Urban white collar/SME owners and the Educated Urban mass — which add up to about 60M.

Urban Mass

Don’t get me wrong, these 60M people are transacting quite actively on the internet. If we look across startups in India, some of the best in class startups which started around 2015 are able to get to a scale (in terms of # of transactions/day or GMV) in half the time than a startup that started around 2011–12. This is mainly because of the increasing comfort of the higher end of the Indian consumer to transact online — thanks to the first generation of Indian startups such as Flipkart, Myntra, BookMyShow, Ola, etc. to name a few.

Having said that, the 60M transacting users is still a small fraction — 1/5th of the smartphone users. And that bring me to the reason for this blog — the importance of the Urban Mass in India. The Urban Mass, comprising of the Educated Urban Mass and the Urban blue collar/migrant workers account for about 130M people in 2015 and projected to grow to 165M by 2020. Their average income is projected to grow from $3200 (2015) to about $4800 (2020). This is projected to add about $400B in aggregate earning pool.

Urban Mass

If you look at most of the online services in India, only a few of them currently cater to this Urban Mass population. As an example, very few services in India, like Flipkart, PayTM or Ola serve north of 50 cities in India. But if you look at many of the other online services in India that are listed in my previous blog, they are focused on probably 20 cities or lesser in India. In comparison, many of the online services in China serve 300 cities.

Over the next 5–10 years, the Urban Mass with their increasing income and widely prevalent internet connectivity are going to consume/demand more of these online services. There will be a class of products/services that will cater and scale to this Urban Mass. But, there are probably going to be a new set of companies created who are more focused on this Urban Mass.

Any predictions on which products/services will be unique to the Urban Mass — in the top 20 cities or the broader population in the next 100+ cities? This could be across categories such as communication, commerce, entertainment, health, education or any other sector.

Related Articles:

  1. Untold Seed Stories: First 500 Days of Urban Company

Join our exclusive Bharat community

  • Best-in-class Bharat-focused content offering actionable insight for founders and operators
  • Specially curated events and thematic summits
Register Now

Enter Details

Uploading...
fileuploaded.jpg
Upload failed. Max size for files is 10 MB.
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.

We’re looking for the next generation of successful Indian marketplaces. If you’re an early-stage marketplace founder, apply now here or learn more about the #DecodingMarketplaces Startup Hunt.

We’d love to hear about your experiences with marketplaces. Let us share our learnings and build a better and stronger ecosystem. Write to us at seedtoscale@accel.com to be a part of the Accel family.

Interested in authoring a guest article or narrating your start-up journey for SeedToScale?
Write for us

AI Powered Summary

Summarize

Focus Mode

Use this soundscape to help you with knowledge retention or long periods of reading.