Internet Marketing in India – Challenges

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 got 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 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 take 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 in.


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.


  1. Ajith – Rightly said, India is more prone to cultural and political issues, rather than focusing on the technical advancements. But the day will surely arrive when we Indians will rule the World of Internet Marketing, because I cannot see what other way we can evolve. Nice thoughts you have and a good way to express them. Keep writing.

    • Yes Praveen, we will get there and there will be soon a situation where we actually promote Indian products via Indian networks rather than depending on big affiliate networks outside 🙂

  2. But this problem will be disappear with minimum 2 years, I guess.

  3. In a country plagued by a lack of opportunities, this certainly provides a way to earn a decent living for many educated people.
    Great article buddy.. Loved your focus…

    • Thanks Arpan, Affiliate marketing in India will certainly open up avenues for thousands or Indians to earn a decent living. As such there are plenty of them but all of them work with foreign networks and traffic. This will change soon…

  4. Wow, nice article!
    India can definitely stir up and earn huge, since it has a woofing population, mostly as per census are young. The internet user base in India has been rampant over the last few years and will feature India as a healthy contender in the segment.

  5. Ajith, You are absolutely spot on. Great analysis. Hope in near future there is a turn around.

    But what i say due to the less people knowing this. Those who start now will be big when it becomes big.

    I hope you got my point 🙂

  6. Hi there,

    must say these are nice findings and at the same time it’s a good sign as we as a internet marketers be feel proud to be associated with it from the beginning and if we stay tuned long enough rewards will follow too.

  7. Hi,

    I am more interested in stats history on PC Penetration in India till 2011, that will throw a light on access to technogloy factor.
    Let me know if you find out this stats, I searched a lot but was invain.

  8. I agree to the points you have mentioned. The Indian shopping scenario has its own glitches as well as immense opportunities. In spite of many odd challenges, online shopping has picked up in India. Online grocery shopping stores too have come up like mygrahak that cater to the need of home-based shopping. Challenges will always be there but it is surprising to see how India is responding to online shopping.

  9. Very well written blog. I agree which all the points you have mentioned in this blog. Hope we get good services in the coming future.

  10. Hi everyone,
    I have a question please help me out..
    My ques is:-
    1. I am an affiliate with few foreign company’s, now when they wire my commission i take it to my normal savings A/C, is that right?
    2. What are the rules and regulations or the proper way for an affiliate of india to receive its commision from foreign gateways or companies..
    3. What is the limit of the transactions..?

    Please any one here answer me

    • Well, you seem to be just like me. I receive part of the affiliate income via PayPal and partly via direct wire transfer (And very rarely checks as well). To answer your questions…

      1. Normal Savings a/c is good enough if you don’t have a registered business. If your business is registered, you need a current account as per my understanding.

      2. Rules are mainly RBI and IT rules. First, you need to provide a ‘reason’ every time you receive money. This can be set in PayPal. For bank checks, you need to fill in a form when you encash. And for direct transfers, for any amount exceeding a certain amount (I think it’s Rs. 50,000), the bank will ask for a reason. As for IT rules, obviously you need to pay income tax for the money you earn.

      3. Limit…hmm, PayPal is usually USD 3000, I think. Not sure if there’s an upper limit for bank transfers. There may be, I haven’t tested the upper limits yet 🙂

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