I mentioned in a recent post about top affiliate programs in India that Internet marketing in India is yet to pick momentum. In fact, India along with the other BRIC (Brazil, Russia, India and China) countries has huge potential to make it big in the Internet volume business but it is still untapped or underutilized due to multiple reasons. In this post, let me try to analyze the reasons behind the lower penetration of online marketing in the Indian context.

India is a huge country in terms of population and our cities are really scoring low on infrastructure resulting in huge traffic jams, crowded malls and long queues. Ideally such a scenario should push people to do more things online but at the moment that’s not the case. The situation, hence, is not conducive for Internet based marketing as well.

Why Online Marketing in India is Yet to evolve?

As I just mentioned, Internet marketing can boom only IF (1) there are a lot of online sales & service opportunities and businesses and (2) the Internet is the best proven channel out there for marketing campaigns. In the case of India, both are not yet at their best and the following are the reasons.

#1. Governance, laws and regulations

India is still not a very open economy although things have been changing for good since the mid eighties. Our financial and banking rules are not always the best conducive environment for anyone to get started with a business – online or offline. When it comes to online businesses, there are even stricter money transaction rules. For example, it is not at all easy to provide a payment mechanism such as PayPal to your domestic customers in India. Similarly the RBI (Reserve Bank of India) has stricter Forex policies that doesn’t help the end customers who want to transact in other currencies. We pay a lot to buy forex and we get less when you sell the same.

When it comes to law enforcement and protection against cyber crime, though we have taken some initiatives, how often an online criminal gets caught in this country? For that matter, if you raise a complaint in a police station against a cyber crime, you may have to first educate them on what has happened and in most cases the criminals don’t get caught.

Widespread corruption is another big issue. Many people don’t want to set up online shops to escape taxes and do things unaccounted. Even if some noble person wants to do things through the right channels, he may face severe issues with officials at all levels and multiple organizations.

#2. Cultural issues

Indians are highly social and sociable people – sometimes we often over do it. Most people believe that shopping online can prevent them from getting the best deals out there from their favorite shops and shopkeepers (and their families) that they know for generations. Also, this gives them an excellent F2F opportunity to do maximum negotiation and receive other freebies. And festive offers in India during Diwali, Akshay Tritiya etc are unbeatable and probably not feasible to provide such discounts via online mechanisms at the kind of volume involved.

Further, if you know the shop people well, there is even zero down payment option available for home appliance purchases etc. This is definitely not possible in an online scenario.

#3. Online shopping worries

A lot of computer literate people are still hesitant to consume online shopping facilities that are available out there in India for the following reasons.

  • Fear factor: A lot of people still do not believe things that are not tangible. It’s perhaps more of a cultural issue
  • Unreliable delivery mechanisms: In India, even the postal service or the most expensive (and so-called safest) courier companies may not be able to guarantee prompt delivery due to multiple factors including theft, tracking issues and corruption
  • Credit card fraud and usage: Like in any other country, swiping a card is not always safe. In India specific cases, there are even scenarios where you have to provide your card number to the customer care executive over the phone which is not the right way it should work

#4. Lack of technical infrastructure

Broadband Internet access is still and expensive thing in India if you get one for your home computer and still there are connection issues. Many people do shopping kind of things using the Internet access at work but there are still other issues with online businesses.

The backbone of any reliable online service or sales is a strong supply chain. In volume business, this has to be at its best and this is exactly what many online services in India lack. Many times, the delivery of the advertised service or product does not happen due to bad supply chain management.

Additional issues include the lack of supporting infrastructure such as escrow services, legal advisory for online businesses etc

#5 Marketing philosophies & channels

Due to the social aspects that I mentioned before, the Internet is still not the best marketing channel in India. Television, hoardings and cinema ads are still way ahead of the Internet when it comes to preferred marketing channels. This also results in poor quality affiliate networks, online ad services and everything else.

Continuing from that problem, the online marketing can attract the marketers and affiliates only if they are given a good cut for their efforts. Most of the affiliate networks in India do not provide a good commission package to the affiliates making them less attractive. Moreover, there are a lot of inconsistencies and dishonesty prevailing with the networks as well. This has further decelerated the affiliate marketing penetration in India. The CPA (cost per action) model itself is not fully available in most Indian business scenarios.

Further, social marketing is still a new thing here though many businesses, of late, have started looking into opportunities there.


With huge potential out there, the Indian culture, infrastructure available, government support and marketing philosophies haven’t really helped the cause of Internet marketing in India yet. Most of the online marketers and affiliates in India are still promoting foreign products and networks due to these reasons. However, I hope that the situation will change over the years for good and we all get to benefit from the same.

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