Apps undoubtedly drive the e-commerce economy, but is it wise to completely ditch the website? While the likes of Myntra, Faasos and Ola have boldly gone app-only, we have brands such as Amazon, Snapdeal and Quikr rooted to desktops. Meanwhile, Flipkart certainly flips the issue!
By ALIEFYA VAHANVATY
In a surprising move on August 24 this year, Flipkart, India’s largest homegrown e-commerce marketplace, stated that it was putting on hold its app-only plans, which it had announced just a few weeks earlier. Flipkart said this was because some of its sellers were wary of losing out customers, especially for big-ticket purchases like furniture, electronics and home appliances.
Flipkart’s app-only move would have quite possibly been the most ambitious move made by the e-commerce company, maybe even bigger than its introduction of Cash on Delivery (COD) way back in 2010, which had revolutionized online shopping in the country and put the company in the driver’s seat for the e-commerce boom.
With 70% of its sales coming from the app, and its other company Myntra already in app-only mode since May 2015, Flipkart’s app-only move seemed to have firm foundations. Also, according to media reports, India is poised to have over 250 million smartphones by 2016, surpassing the desktop penetration by a huge count. So what then does Flipkart flip-flopping on the issue mean for other brands grappling with this dilemma? To app or not to app?
APPONOMICS
For most e-commerce players, the past year or so has seen tremendous growth in sales and traffic on the mobile app. A primary reason for Myntra moving to an app-only model has been its claim that 90% of its traffic and 70% of its sales were already coming from the mobile app and so in Myntra’s case, it was just going where its market was.
The caveat here is that percentages are not a zero-sum game. Traffic from the mobile app might have shot northwards from close to zero to 70% in less than a year, but that doesn’t necessarily mean declining desktop traffic. On the contrary, it could indicate stable desktop traffic growth and maybe even an increase but of course, less dramatic than the climb of app traffic.
At the same time, it’s also entirely true that the smartphone has unlocked additional time online for users rather than merely diverting traffic from desktops. Plenty of users today are surfing the web on their smartphones while they are commuting or after work hours. A recent Yahoo Flurry Analytics report reveals that India’s app usage is growing at a rate of 131% year-on-year, outpacing global growth. As per the report, the phablet is the fastest growing mobile device globally, with growth in India outpacing growth in the US. According to an IAMAI & KPMG Report, ‘India On The Go: Mobile Internet Vision Report 2017’, India is projected to have 236 million mobile internet users by 2016, with the number reaching 314 million by 2017.
However, an interesting fact here is that e-commerce players are constantly offering users incentives to shop via the app, rather than the desktop or mobile website. Myntra sweetened the move with app-only deals that enticed users to readily download the app — a win-win situation for those who already access the site and for new users too. The exclusive discount factor is a big driver for app downloads, say experts. App-only discounts have now become de rigueur for e-commerce companies. Users, on the other hand, have also come on board – apps are now regularly installed for discount periods/flash sales and then just as easily deleted to free up real estate on smartphones. This in itself is a strong indicator that the shift to app-only is not as independent of other factors as the companies would like us to believe – the e-commerce companies are, after all, through the selective discount route actively shaping the demographics and skewing it towards app-only. It is therefore, quite likely that this shift is not altogether an organic one driven by customer demand but is actually one that is engineered by the principal players to fit their preferred narratives. “With all these trends, the new thing has not killed the old thing at all. In fact, in most situations, the old has got a new lease of life. E-books, for example, were promising to kill paper books, but now people are only buying more paper books. However, in case of snail mail, email has definitely made it irrelevant. So it can play out either way... but it’s very early to make that call and these may just be waves in experiments that people are doing to see what will work best,” says Karthi Marshan, Head Marketing, Kotak Mahindra Group.
WHO BENEFITS?
A major incentive for most e-commerce businesses to go app-only is the possibilities it offers to personalize and enhance the experience of the end- user. For certain segments such as taxi and food delivery services, which are location-based and use a smartphone’s sensor to locate and then provide relevant services, the move to an app-only platform is a win-win for both the company and its customers. In such cases, the cost of maintaining a website is an unnecessary investment by brands and is also an unsatisfactory user experience for customers.
Says Revant Bhate, co-founder of Faasos, the online food on-demand company, that went app-only since August this year, “In the latest version of our app, you will actually be able to see the delivery guy zooming across the street like you would when you’re ordering a cab from Uber. All of those things are not possible on a mobile site or website. Talking about convenience on the app, we give menu items available by location and quantity. So when you open the app, whatever food you see on it is actually available only in those quantities. So if the app shows you there are three veg biryanis available, once those are ordered, these will no longer be displayed on the app. These are very small aspects, but are presently not being addressed by anyone else in the industry. Because we have the technology, and we operate the end-to-end business from supply chain to distribution to logistics, we are able to build technology on top of everything we do.”
When Myntra shut down its desktop and mobile website, media reports quoted Mukesh Bansal, CEO, Myntra as saying that fashion was a very personal experience. Myntra, he said, could only deliver this ‘personal’ experience through the app as the smartphone captures the user’s lifestyle and context in a manner that no other medium does. Considering all the hardware and software features that one can leverage like camera, contact, location, etc., to understand the user’s context and deliver the experience that is deeply personalized, it was an argument in favour of the app-only model that few could refute.
THE PROS AND CONS
To drive users to their portal, e-commerce websites subscribe to online marketers as well as to programmatic ad exchanges. The ad exchanges, in turn, group users and target ads by user behaviour depending on which websites or products people have previously visited or viewed. But cookies are also a double-edged sword: While they can push a customer towards a website, they also power ads from competitors on the browser through intermediaries. It’s a situation of win-some and lose-some. But the app, on the other hand, offers complete privacy to an e-commerce company about the needs of its users and thus the company can hope to sell more to them over time.
For taxi service company Ola, adopting the app-only route was the best strategy for its category. “We’ve always looked at ourselves as a mobile first player. I don’t think there are any disadvantages to being an app-only platform. Instead, the advantages we have experienced with regard to the phenomenal amount of data points we get to make the customer’s ride more convenient and easy have been fantastic. It is a wonderful experience to be able to book a cab with one touch and one tap without having to access the website. I think app-only in the mobility space has changed the way many people look at transportation today, and so for our category, it has been a game-changer indeed,” says Anand Subramanian, Senior Director, Marketing Communications, Ola.
But it’s more a situation of different courses for different horses, caution others. “It’s a no-brainer that today most people are buying smartphones and all the consumers are moving to smartphones. But it depends on who your customer is. If your customer is only fashion-focused and someone who is between the age of 16-27, then one can still take a chance to only be on app because the customers are there. But if a company is into groceries and wants to include other consumers, who are above 30 years of age, a lot of them would not only want to shop from their mobiles. If you want inclusiveness, if you want to add more people who may not be buying online right now or are yet to join the bandwagon, I think it’s important to keep all options open. It depends on who your customer is and what your strategy is,” says Devendra Chawla, Group President, Food & FMCG Brands at Future Group.
REAL ESTATE REALITY
Whereas brick and mortar real estate is measured in square feet, on a mobile phone, the space is measured in pixels and brands can’t exactly pay more to buy more of them to ensure presence on a user’s smartphone. Since apps come with limited realty, this may seem egalitarian in theory but in practice, this makes it difficult for categories like white goods, large appliances and furniture to retail exclusively through the app. This is the very reason Flipkart cited for deferring their app-only strategy. But, it’s not just screen size that is a consideration. The storage capacity of budget smartphones (the most popular category sold in India, according to sources) adds another dimension of limitation for the app-only strategy. The app size obviously varies from smartphone to smartphone, but most shopping apps would consume anywhere between 15 and 30 MB of space on a user’s device. The Amazon India Shopping app occupies 27.33 MB storage on a OnePlus One smartphone while Flipkart and Snapdeal apps take up 22.80 MB and 14.96 MB space, respectively. Additionally, as you browse the app, more data get stored in its cache memory. These apps also ask for access to a lot of information on a user’s phone. In most cases, it asks for identity (find accounts on the device), contacts, photographs, device ID and call information, network access, device and app history. Some of these apps even store credit card/debit card or bank details for quick checkout.
According to a Nielsen research report, the average smartphone app downloader has around 42 apps on his or her device. However, of 3,743 smartphone and tablet users who had downloaded an application to their device in the past 30 days, 84% said they use less than 10 apps daily, and 55% said that they use an average of one to four apps every day. Experts warn that for consumers to really keep those apps on their limited mobile real estate, the apps need to be extraordinary. The apps that will end up staying on a consumer’s screen will be the ones that feel like magic, whether that means getting them a car or a meal in five minutes or less or allowing them to watch an event halfway around the world in real time. Says Ashok Lalla, digital marketing expert, “The apps that stay on a consumer’s mobile are either profoundly useful or help them connect with the world.” These would be high transaction or frequent transaction categories like taxi apps, which are used several times a day; it makes sense for these companies to go app-only because the convenience to consumers outweighs other considerations. The same logic applies to grocery shopping and food delivery. “E-commerce is not a category that falls in the same frequency of use bracket and so perhaps should hold back on going app-only until consumer preference shifts towards app-only,” Lalla adds. Some of these apps that actually end up banished to the third or fourth screen may perhaps be better served as mobile sites, where they would remain easily accessible without using valuable storage on smartphones, according to experts.
A COSTLY AFFAIR
An oft-cited reason among the many given for a brand going app-only is that it saves the cost of running a website where traffic is anyway not growing as fast as mobile. But in order to go app-only, a brand would first have to put investments in technology, data-processing and algorithms in place into the neat app icon. And this app has to be built ground-up for each different mobile OS, although its basic structure remains the same.
Also, the nature of e-commerce today is such that the cost in the form of technology is insignificant (and actually a worthy investment) compared to the cost of delivery logistics, return logistics and of course, the massive discounts offered which are all a bigger drain on resources than the mere pittance required to run a desktop website. So, for an e-commerce company to claim that shutting down its desktop and mobile site is to save costs is complete hogwash.
An interesting point to note here, is that shortly before Myntra announced its app-only move in May, Flipkart had signed up for Airtel Zero. The tie-up would have let its customers use the Flipkart app, without paying data charges to Airtel. But the ensuing public furore over net neutrality saw Flipkart hurriedly opting out of the deal. The episode, however, made it abundantly clear that Flipkart was attempting to score over its competitors by ensuring that users would spend more time on its app since they didn’t have to worry about data costs. And now, with Flipkart withdrawing its app-only move as well, it’s evident that the country’s billion dollar marketplace has realized that perhaps there’s merit in there being more than one platform to reach consumers.
“You can’t serve all markets and all consumers via the app-only route. So that’s one of its main shortcomings. While companies may believe they are saving costs and serving customers better via app-only, if your brand is strong enough, then consumers will come to you regardless of whether it’s on desktop or app. So I don’t think app-only is the way to go,” says Vineet Sehgal, Chief Marketing Officer, Quikr.
GAME-CHANGER OR DEALBREAKER?
E-commerce companies in India are at a precarious stage of evolution. Everyone is competing on the same dimensions and aiming for the same things – cheaper pricing, larger discounts and even louder marketing spends. There is little to differentiate one player’s offering from another’s and almost every parameter is now seen as the new ‘normal’. Each player not only knows the strategies of the other players, but stands to gain nothing by changing only their own strategy. Also, the problem with this scenario is that it is getting predictable and boring – already ennui is creeping in among buyers towards discounts and sales. But with every new strategy comes a risk. Whether and when a company decides to go app-only, it should carefully calibrate how its core consumers are evolving. Flipkart backing down obviously had a lot to do with buyers in big ticket categories that require comparison and browsing before purchase decision — electronic goods and furniture, for instance — threatening to shift en masse to the competition. While marketers often dream of leading the consumer, following the consumer in this case is probably a better bet.
Feedback: aliefya@exchange4media.com
