This is a subset of a market assessment done by IBM in early 2014. The assessment looked at the potential for e-commerce for the smartphone market in India. IBM colleagues, Sanjay Panikkar and Murali Tirupati, worked with me on this study.

1. March 2014
India: e-commerce for smartphone market

2. e-commerce in India is growing at a CAGR of 53%
• Online retail revenue in India is
expected to grow from US$1.6B in
2012 to US$8.8B in 2016
• Mobile phones are in the Top 3 of
products/services purchased online
• Consumers who use internet to make
buying decisions spend more than
less-connected peers. For instance,
digitally influenced mobile phone
buyers, buy products that are, on
average, 46% more expensive than
others.*
*Source: BCG study, Apr 2013
Page 2
Online retail market size (US$ Bn)
1.6
2.4
3.7
5.7
8.8
2012 2013 2014 2015 2016
Source: Forrester study. Revenues for intermediate years are projected based
on overall CAGR

3. In India, a high percentage of Online, as well as Offline,
buyers publish their opinions online
Source: GlobalWebIndex Q2 2012
E-Commerce Engagement: LOCAL SPLIT Post Purchase Influence at a local Level
(% of Indian internet users)
91% of multi-platform
publish opinion online
75% of online buyers
publish opinion online
79% of “offline fulfilment””
publish opinion online
20% of rejecters publish
opinion online
Page 3
Multi-platform: Phone & Tablet. Online: PC only

4. A Global comparison of Influence vs. Online Purchase shows that India is
positioned quite well with respect to its peers
Markets mapped by % purchase online via a PC / Mobile / Tablet V % influence post purchase
Source: GlobalWebIndex, GWI.7 Q2 2012. E-Commerce Segmentation
HOW TO READ: 65% OF USERS IN POLAND ARE ONLINE
BUYERS (PC / MOBILE / TABLET) , EQUATING TO 12M. 77%
OF INTERNET USERS IN THE MARKET HAVE PUBLISHED
ONLINE ABOUT A PUCHASE IN THE PAST MONTH.
Page 4

5. Although the India Mobile Phone market is still dominated by Feature
phones, fast transition to Smartphones has started
Source: IDC Worldwide Mobile Phone Tracker, March 2013
Page 5

6. India is expected to have the highest growth rate in
Smartphone shipments
Source: IDC Worldwide Mobile Phone Tracker, March 2013
Page 6

7. There are challenges to e-commerce in India, but these can be mitigated
by the right strategies
Source: survey results cited in Abhinav Journal report Volume II Oct 2013
Forrester blog says returns between 5 and 25%. % depends on category and is higher for COD (Cash on Delivery).
FDI: Foreign Direct Investment
• Product returns between 5 and 25%*
• High where CoD* is offered
• Product delivery challenges
• Consumer concerns
• 37% cite delivery issues (late, quality)
• 30% cite inability to touch/feel
• 8% cite website complexity
• Payment gateway issues
• High failure rate (20-40%)
• Number of hops a key reason
• Regulatory issues
• FDI* companies cannot do direct B2C
online
• Have no CoD option in website and offer EMI
options
• Alternatively, charge customer additional cash
handling charges for CoD
• Partner with reliable logistics providers to
address delivery concerns and reduce returns
• Suggest stores or café chains to try out
products
• User experience focus in website design
• Understand technical capabilities of gateway
partners
• New companies offering fewer hops leading to
15% increase in success
Challenges Mitigation
• Work with trusted partners to set up and run e-
commerce operations
Page 7

8. Low broadband speed is compounded by poor physical infrastructure (e.g.
roads, ports) and complicated customs and inter-state tax rules
Page 8

9. Indian government’s policy in the area of e-commerce is not
clear and implementation is slow
• The e-commerce sector is yet to open up fully in India,
and no comprehensive set of laws exist for this sector
• Retail trading (B2C) e-commerce not permitted for
companies with Foreign Direct Investment (FDI)*
• Compliance required with several other laws like
Contract law, IT Act etc
• FDI is permitted for brick and mortar Retail business
• FDI is permitted up to 100% in B2B e-commerce
activities
Source: DIPP (Dept of Industrial Policy & Promotion), India
Page 9

10. e-commerce prospects for Smartphones in the $160-565 (INR10-35K)
price range looks very promising
Overall purchase
break up by price
Online purchase
break up by price
17.4% of all respondents purchased online (multi-brand online or company e-store)
Source: IBM survey with 150 respondents
1 USD = 62 INR assumed
23.6%
21.4%
20.2%
28.6%
25.7%
28.6%
16.2%
4%
14.2% 17.9%
$565+
$400-$565
$290-$400
$160-$290
<$160
Page 10

11. We conducted a survey of web influence on smartphone purchase in India
Which brand of smartphone do you
Own?
What is the price you paid for your
smartphone?
Samsung
HTC
40%
6%
Apple
14.5%
Sony
9.4%
How did you purchase the phone?
35K +
25K – 35K
18K – 25K
10K – 18K
< 10K
Multi-brand physical
Retail store
Multi-brand online
retail
Company’s physical
brand store
Company e-store
48%
14.4%
5%
Source: IBM survey
Page 11

12. A very high proportion of people surveyed went online to research product
and price
Before buying the phone, did you research the
product online for product and price information?
If you used the web for product research, what sources did you
rely on?
0.0%
50.0%
100.0%
91.4%
Co Website/
e-store
61%
3rd
party
website/blog
88%
Social Other
25%
The company website/store is a trusted source of product info
52% of respondents felt the online experience was very important in influencing phone purchase
Page 12
Source: IBM survey

13. Among those who used the company website, primary reasons for revisits
are product info, deals and customer service
If you used a company website or e-store (like
samsungindiaestore.com or Lenovo's thedostore.com),
what would be your primary reason for visiting the
company website/e-store again?
Product info and price
Deals and discounts
Customer service
61%
19%
8%
Page 13
Source: IBM survey

14. The company website is one of the key “Go-To” options for customers
requiring support
If you required customer service, where would you go? (select all
that apply)
0.0%
50.0%
100.0%
Co physical
store
Co website Co call
center
3rd
party
retailer
3rd
party
service center
Online
forums
62%
51%
64%
13%
18%
Page 14
Source: IBM survey

15. But of the people visiting the company website for support, more than half
felt the site was useful “sometimes” or “not at all”
Yes 38%
No 17%
Sometimes 45%
If you used co. website for support, did it help
in resolving your problem?
If you have used the company website support,
which aspects of the website did you find helpful
Troubleshooting
guides
37%
Firmware/
Software 25%
Forums
18%
Ticket Logging
15%
Page 15
Source: IBM survey

16. The survey also found that a high proportion of respondents were inclined
to consider buying their next smartphone online
Yes 76%
No 24%
Will you consider buying your next
smartphone online?
Which brand of smartphone do you think you will
buy next?
Samsung
24%
Apple
33%
Micromax
8%
HTC
4%
Sony
7%
Page 16
Source: IBM survey