First Myntra, Then Ola; Who’s Next?

Pratima H

INDIA: The problem is not that the world moved from pigeons to postmen to emails to texts to instant messaging to apps and what not every now and then. The problem is the difference of speed then and now. It tends to get slightly discomforting when you look at the disproportionate pace witnessed between the pigeon-era to the email-era jump and the email-world to social messaging hop.

Just as we had gotten used to the unusual idea of shopping from a computer, and catching a car at the click of a button; we started hearing about how Myntra or Ola (and possibly, Flipkart too, in a matter of time) are rolling down every other window and sticking to the mobile app one.

Only apps? There is nothing so bizarre about this choice of virtual estate at the face of it, but when we look around the other pieces like websites or call-centre support systems or desktop versions that some players have jettisoned, we can’t help scratching our heads as to how light do their ships become now with this supposed-weight thrown off?

What made the desktop or the phone turn into a pigeon? Smartphones and Apps, really?

Really.

The Onslaught of Smartphones

Consider this. As per Forrester’s research, by 2019 India will have 70 per cent unique smartphone owners out of total mobile subscribers’ base compared to about 40 per cent currently. Translate this in other words and we are looking at a clip where the number of unique smartphone owners will more than double in India in a time span of just where five years.

India is undoubtedly catching up as the second-largest mobile market in the world after China. This can be attributed to almost a billion cell phones or the second largest Internet population after China, as some estimates anticipate.

This automatically blossoms into more room for apps. Statista captures that people are paying somewhere around $235.4 billion just for mobile transactions. Figures also suggest that Snapdeal pins about 90 per cent of its orders from consumers who buy through mobile devices in next two years and eBay is watching at a number of some 70 per cent of the orders coming from tablets and smart phones.

Smartphones do serve a very important function of helping users make decisions in their mobile moments of need. “It makes perfect sense for taxi apps because they're needed in mobile moments only. However this is also important for e-retailers because they can also get a higher conversion rate on the mobile platform on account of more impulse purchases made by their customers.” Remarks Ashutosh, S Vice President, Research Director at Forrester Research.

Shiju Mathew, Head – Mobile products from Vizury (a player that works closely on the data aspects for some well known e-commerce names as a big data-marketing company that works in the backhand to analyse customer browsing behaviour) seconds that prognosis.

As per Vizury mobile report, E-commerce app downloads in India have grown by 31 per cent just over last year. About 79 per cent of customers bought using apps compared to only 37 per cent last year.

As to India, this region is unique in the manner in which a huge number of Indian customers are leapfrogging the traditional web channels and coming online directly on mobile. “This means these firms are finding that a large amount of traffic to their systems is already coming from mobile and is likely to grow further as a percentage of total traffic and has a better conversion rate.” Ashutosh observes.

Mathew offers another peek at how apps are catching a lead over other formats of consumption. “Shoppers spend 89 per cent of their time on Mobile app, says our research. With 60 per cent of the world going mobile, the e-commerce players are looking to provide a tailor-made experience for their customers and app is the way forward.”

Got it, but what makes app really tick?

You must have already heard a customer-care person telling you that if want to flag that taxi or order your usual shopping parcel, download that app first. Even if players have not gone all-app like Myntra and Ola just did or where Flipkart’s intentions are headed (come September), they have been strongly leaning towards mobile-apps for quite some time now. Snapdeal’s Android play, MakeMyTrip’s approach or that of Jabong, Zomato, Quikr, OLX etc show adequately how they have been encouraging downloading of their apps, with tactics like links to an app download page, or app-specific downloads which are not offered to mobile users or desktop users.

A rich interface, well-designed apps and well-crafted engagement have led to a 2.5x higher conversion rates on apps as compared to mobile web. Also, a wider sales funnel and a conversion rate of some five per cent on E-commerce Apps matters when you put it across the two per cent figure on mobile web, explains Mathew.

“Apps also give richer insights into customer intent helping brands give the perfect experience for every customer. A better experience guarantees better engagement levels and customers buy more.”

Imagine what can happen once a user allows you that coveted real estate on his/her phone. There is so much that a native app stacks up for an e-player.

The sheer ability to customise and personalise the experience and activity potential of an app that is always logged in is huge. Activity mapping around location of user, or recurring purchases, browsing patterns, and other profiling nuances can help sketch a sharper picture of the customer or prospect.

Not to forget those new possibilities of data mining, contextual push notifications, geo-info-based notifications, relevant alerts, deeper engagement, or features like voice-based search, automatic shopping lists, reminders, a natural second-factor authentication for payments, activity during slow/no internet zones or language-personalisation that apps bring in.

Raghavendra Prasad, CEO, AppDra, Software Solutions Pvt. Ltd. dovetails those perks and brings in the element of cost and operational ease. “It really makes sense for apps like Ola, Myntra to go mobile app only route as there is an exponential increase in the number of smartphone users in the last couple of years, there are about 1.9 billion mobile users and expected to reach 2.2 billion users in 2016. Also digital marketing being extremely competitive and expensive, it makes sense for any company to spend it only on one platform, here they have the liberty to spend more money on digital and social marketing platforms.”

For hands-on players like Shankar G the app-only format easily translates into something that takes the burden away of maintaining two platforms. This Co-founder & CEO, from crowd-sourcing platform Spini can sense why players are betting big on the app-only version. Two is always costly and heavy to maintain, he dissects as he feels affirmative on the app-only direction that the industry is swinging to.

“We are definitely looking at this route seriously because it is ‘the’ future scenario eventually. We are watching it very closely and depending on the kind of audience we have, we will decide on this format.”

Ditto. Maintaining a mobile app is undoubtedly cheaper than maintaining a site and it gives specific location based data, conversion rate is higher as study says people who browse products on their mobile are more likely to buy it, Prasad asserts.

Even when Myntra took this decision their 80 per cent traffic and 60 per cent revenue was from the mobile app, he contends and points at the strong indication that mobile app is the present and future.

“Hence even startups like tiny owl are going app only. Also with digital India and the Internet Org coming in, a light weight app will be more handy even in remote location to load data faster, enabling caching, offline viewing.”

To add to that there is the customer behavior pattern to look out for too.

John Feland closely watches the mobile landscape as the CEO of Argus Insights and he hints here well that as smartphones are becoming larger, and ‘phablet’ adoption increases, consumers are increasingly turning to their phones for tasks that used to be done on a computer or tablet. Like – online shopping, surfing the web, social media etc. “This phablet phenomenon is hurting tablet sales as users are empowered to do more and more on their smartphones as manufacturers increase their size and capabilities.”

There has been a drastic drop in number of laptop and desktop users in their personal time, the maximum time spent on a day by individuals is usually on hand held devices and not laptop, people also spend lot of time in commutation everyday and are totally hooked to their hand held devices, Prasad reckons as well.

Now look at how this morphs into a strategy worth betting a lot of status-quo on e-players.

Why Apps Ring Cash Registers?

Changing device usage patterns for customers become a great USP to the companies to sell it internally and to their investor based on number of downloads. Prasad explains that it gives access to a user’s personal information, phone number, personal preferences and their social pattern (Most of us don’t notice when we accept terms and conditions when downloading the app, he reminds.)

There are other not-so-apparent advantages too for such players. Think of all the exclusive information and customer insights that apps can offer. A walled garden on Internet can have some unique views for sure.

S Ganesh, MD & CEO - Dun & Bradstreet Technologies and Data Services, distills his vantage point views as someone who helps banks crunch analytics in smarter ways to understand their customers better. “You can search within an app and that offers a different strength to the player when it comes to profiling a customer better. Not to forget that entire strong authentication that an app will allow for the seller in a world where users can easily make fake profiles and have a wide footprint on the Internet. The in-built authentication mechanisms for an app address such issues. Plus, it allows the seller to track user’s interests and other factors while no one else can do that, since it is a walled garden.”

App-azards

So yes, like a 2015 study by eMarketer into mobile ad budgets tells, in 2015 mobile ad spending is hovering around 49 per cent of digital ad spending.

But a review of mobile usage in the United States, Britain and Canada, shows comSore telling that for Britain, desktop still accounts for 44 per cent of usage time with smartphone apps coming at a 34 per cent. For Canada, desktop sits at a 48 per cent of usage time and smartphone apps pile at 31 per cent.

Desktop Internet usage has also been noted to account for a big portion of usage time among those over 55 years old.

In other words, there are questions around opportunity cost of losing other class of users, high uninstall rates, user behavior on smartphones vs. other footprints, diluting one’s market segment too much, shrinking the radar, and other many concerns that have been and will keep popping for app-only players.

For instance, Ganesh wonders what happens to new customer acquisition goals and all that free-wheeling audience that one might miss out on by constricting one’s ground to apps.

A mobile-only strategy lands itself fine to services like Ola and Uber and has been tried and tested internationally with such services but the same for an e-retailer is still a big unknown. This is unique to India and has not been tried in developed markets where customers have been using traditional web-commerce channels for some time, Ashutosh cautions.

What Ramanathan, Founder & CEO, Inthree, a rural-e-commerce venture points out here sounds apt then as he explains how the space can happen to be too crowded and why this won’t be too encouraging an idea for him personally. “Selling behavior has to ultimately align with buying behavior, and I cannot rule out what catalogues and personal selling do for our customer segment. So apps may be a good idea but only for a particular customer segment and would otherwise have restricted footprint.”

Myntra's sales seem to have dropped a bit, some industry watchers worry after they autopsied the 'mobile only' move and it is still a blurred picture when one wonders what would happen to other players whose mobile traffic and desktop traffic vary widely enough to support a mobile-only jump.

Meanwhile, OWASP (Open Web Application Security Project) has started questioning how mobile apps are as vulnerable as web apps bringing to fore questions around mobile malware, unsafe app capabilities, hidden processes, and complex code vulnerabilities that may cause applications to crash or share data with third parties.

With so many advantages and flip side flanking this strategy equally well on both sides, the jury is still out on whether the app-only compass will play out as expected in the coming years.

Or may be before we get around to concluding that, we would be too busy caught up looking at a completely new jump from apps to something else again?

Like pigeons (and not drones) coming back as e-shopping delivery boys? If that ever happens, remember - you heard it here first.