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Meta: Betting On The Omega of Digital Explosion in India

Digital payments and small-tier commerce are hot growth areas in India. Will this be another Big Tech ‘three men in a boat’ scenario? Is Meta in it?

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Paris Syndrome. That’s what many big brands encountered in India. From global marquee fast food chains, world-ruling cereal boxes, skin care queens to automotive giants – unless they became humble enough to empathise with the unique consumer taste and psychology here- they could not impress India. Time and again, the country’s regulatory landscape, vernacular versatility, spending psychology and data localization have pushed top-notch social media, cloud and mobility players too to hit the ‘reset’ button. But they have also faced the ‘other’ syndrome. The Stendhal Syndrome. The sheer openness, a huge demographic playground, a fast-growing economy and a robust ecosystem with rare and unprecedented possibilities. For Meta, this Florence syndrome, is at its full blossom in the country’s current economic and cultural milieu. With WhatsApp under its belt, it is eyeing new SME, E-commerce and digital trade inflection-points. Albeit, with walls to climb.

The ‘Florence’ in India- Why it enchants?

A neighbourhood grocery store owner in a small town here has expanded its customer base with in-app payment options; a phone-distributor in a tier-3 city is tapping market-channel-advantage through JioMart. A home-grown bespoke T-shirt seller reaching fast to buyers and WhatsApp saree-shopping groups- India is in a new age. “Today, India tops the global rankings for digital payments and nearly 90 mn digital transactions took place in 2022 Meta (including WhatsApp) and Google are prominent players along with US retail giant Walmart (PhonePe).” Affirms Devroop Dhar, Co-Founder and Board Member at Primus Partners.

As per the last count, in April 2023, seen in media reports- WhatsApp with UPI payments reached 15 mn transactions, with a total value of Rs. 1300 crore. With about 530 mn WhatsApp users, including approx.300 mn business users, India poses itself as too big an opportunity (with a 16% growth rate) to turn a blind eye or a cold shoulder to. But what’s raising Meta’s heart beat and adrenaline here is the part that’s still untapped here. India boasts of 750 mn active Internet users (growing to hit 900 mn by 2025) as per IAMAI. There were 338 mn digital payment users in 2022 and Indians shopping through social ecommerce showed a 51 % jump in the 2022 IAMAI-Kantar analysis. As per a WPP’s GroupM and Wunderman Thompson report with Amazon Ads- by 2030, 46% internet users in India would have shopped online- that means a lot in a country with roughly 1.4 bn in population which is showing 48 to 50 % Internet penetration, 77%-and-growing mobile connection penetration and about 30 % social media penetration.

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No wonder why then, lately, Meta has been trying new tactics. Like imminent roll-out announcements of broadcast tools like WhatsApp Channels. Like new pricing policy for business marketing messaging for monetizing WhatsApp for business. Like handshakes with Jio. Like a tie-up with Confederation of All India Traders (CAIT) – to digitally train and upskill 10 mn local traders using the WhatsApp Business App and localize digitalization activities in 11 Indian languages. These strategies could not have been better timed. India now has ONDC or Open Credit Enablement Network. Amazon has already joined ONDC with its Logistics & SmartCommerce offerings. It has also evinced plans to digitize 1 crore small businesses by 2025. Yes, Meta has a lot of work cut out ahead – in light of competition and its own gaps.

The ‘Paris’ in India – Why it disorients

Big Tech companies won’t be able to copy paste the same game plan which may have been successful in USA or Europe, points out Dhar. “Our country operates at a different scale, size and complexity than any other country in the West.” It’s hard not to recall a tweet at this point. From Ashneer Grover, former MD and co-founder of Bharat Pe (a payment unicorn in India): “WhatsApp Pay has to be the biggest failure in India as a tech product. Everyone has @WhatsApp on their phone - sending money on WA using UPI is as easy as sending pic...” Indeed, WhatsApp reportedly had a volume market share of 0.1 percent and a value share of 0.09 percent in a staggeringly-huge digital payments turf like India. Front-runners like Paytm and tech rivals like Google Pay and Amazon Pay are way ahead in this race when WhatsApp was not just struggling with data security, localization and legal issues with RBI but also criticized for a friction-led interface that takes too much time to get through.

As Dr. Gaurav Raina, Professor, Department of Electrical Engineering, IIT Madras weighs in, “In terms of adoption, Phonepe seems to have the largest market share. The key is to customise the payment app to cater for a range of typical Indian use-cases, and not just person-to-person payments.” Listen to what a Gen Z psychology researcher Yashraj Garg says- “In a hyper-digital world, an excessive fixation on the merits of digital currency is also a psychological phenomenon. Activities which release dopamine can be addictive. But the platform has to capture this nuance.” Many new to the world of digital payments in India are finding themselves driving this hockey-stick curve. Dhar underlines that any tech player being able to offer an end-to-end service would definitely have an advantage. Noted brand and marketing consultant Gaurav Gulati recommends that Meta must focus on building trust and credibility in India. “Many Indians don't understand that all these platforms are part of Meta. It needs a common branding and advertising strategy.” Data expert and Founder & CEO, VanShiv Gaurav Kheterpal opines, “While there's no doubt that the landscape is extremely competitive with Paytm, Google Pay, PhonePe; Meta can leverage its existing product base to the fullest to push digital payments.”

As reckoned by the Economic Survey 2022-23, India’s e-commerce market can rise 18 % annually through 2025. UPI-based transactions grew in value (121 %) and volume (115 %) terms, between 2019-2022. The recent Digital Personal Data Protection bill being passed in Lok Sabha in the Indian Parliament also brings new challenges and hopes for Meta. There are now new provisions for consent of data and data breach-related responsibilities. If data can now be transferred outside the country except a government blacklist- this could bring new business implications for Big tech platforms. India is also a different market in many ways, it's a volume play, it is price sensitive with huge cultural, lingual and often religious factors - Kheterpal reminds. Its digital divide, infrastructure development, and price sensitivity necessitate targeted efforts to ensure sustained success, adds Hardik Khatri, Technical Analyst, Opensignal.

And that’s the India Effect! If Meta can crack it.

Sources:

(emw)

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