Can India’s e-commerce industry survive with app-only?

Are Mobile Apps Future of Ecommerce in India


Are Mobile Apps Future of Ecommerce in IndiaThe thing about technology is that it is ever evolving and what we have witnessed over the last four decades is that the pace of evolution in technology is increasing with time.

Till the 1980s, IBM’s mainframes were the mainstay of the computing world and all companies were hedging their bets on developing bigger mainframes, but time showed it was the other way round. The desktop soon emerged as the mainstay of everyday computing and then the laptops and then the mobile phones.

We are now currently going through the phase where information, communication, transaction and entertainment are all moving to mobile and wearable devices. With websites being the go-to platform to engage visitors for the above mentioned activities, the mobile ‘app’ is now becoming commonplace. Therefore, it is no surprise that there is a vociferous debate happening on whether the ‘website’ for e-commerce should give way to company- or brand-specific ‘app’ or can they co-exist?

It is in this context that the decision by e-commerce fashion retailer Myntra to shut down its popular website and shift to an ‘app-only’ platform running on mobile devices has surprised many. The move is not restricted to Myntra alone, Flipkart, currently India’s largest e-commerce company, has also followed suit in shifting to an ‘app-only’ model. So have several smaller start-ups.

So what’s making the big e-commerce companies shut down their popular websites and shift to an ‘app-only’ model? The answer lies in evolving technology, user preference, and buyer behaviour.

Let’s examine the three.

Evolving Technology

Mobile phone is fast replacing laptop and desktop as the preferred hardware to access information, undertake transaction and seek entertainment. With 3G and 4G technologies offering a significantly faster and better user experience, the consumer preference is shifting towards smartphones. Thanks to the explosive growth in mobile phones, the number of persons having access to the Internet has significantly risen by each year. This is borne out by the data released by IAMAI in January 2015 that confirmed that there were over 300 million internet users in India, with user base increasing 32% over the previous year. With India’s population well over a billion and growing, the potential for expansion of smartphones and other wearable devices is tremendous.

User Preference

People now want to remain connected all the time and want instant access to information or service. This is possible only on a mobile device. Users don’t want to ‘log-in’ and then go through a ‘search’ process before accessing what they want over the Internet. People are not even willing to wait for the usual ‘boot’ time. With smartphones, it’s an ‘always on’ experience and therefore meets user expectations more than the earlier practice. This behavioural shift has led to smartphones becoming more popular over traditional hardware like desktops or laptops.

Buyer Behaviour

Buyer preference and behaviour are the major reasons e-commerce is growing exponentially now but failed when it was first introduced as the next big thing during the last dotcom boom, at the turn of the century. Internet availability and bandwidth are improving significantly with the introduction of 4G technology in India. Access to a shopping platform is now instant and easy; user experience is much better. Integrated distribution logistics is rapidly improving, with the ‘same day’ delivery acting as a catalyst to the shopping experience. Protecting user’s data and securing online transaction has vastly improved and now e-commerce is changing how people shop, react, behave and experience, acquiring a new product or service over the Internet.

Website vs. App-Only Model

Why have e-commerce companies like Myntra and Flipkart decided to abandon their existing and popular websites in favour of ‘app-only’ model?

Two primary reasons:

  • Increasing competition
  • Need for greater customer engagement

Let’s first look at ‘competition’ and why that’s a big worry for large e-commerce companies. Regular websites are open to access on the Internet and with technology penetrating niche functions, it’s becoming harder for companies to keep their client’s access pattern confidential. There are ‘cookies’ that track who is visiting which website, from which countries or regions, the time they visit and other visitor behaviour patterns, and this information is visible to competitors. Besides this, various open analytics platforms like Google provide free information on visitor trends. This information is then used by competition to develop relevant counter strategies against the target website and e-commerce companies don’t like this.

They realise that customer retention is tougher than customer acquisition. While potential buyers can be ‘acquired’ through traffic exchanges and directed to visit the website, converting them into buyers is another challenge altogether. And once they do make a purchase, retaining them as repeat customers is the biggest challenge. These were lessons not learnt in the earlier wave of e-commerce in the late 1990s. Besides technology of the kind we have today wasn’t available.

E-commerce companies have now realised that potential customers convert to ‘buyers’ based on their shopping experience when they visit the e-commerce platform and this is best served through greater customer engagement. E-commerce companies are now closely tracking visitor behaviour patterns by collecting vast amounts of data on them. The secret is not how much data they collect but how they analyze, interpret and respond to that data. They then come up with a slew of customer engagement ‘actions’ that offer ‘relevant’ information, offer best discounts on products or services of their interest and most of all capture instant feedback through engaging the customer. They then automate the process of further engaging the potential or existing buyer over an extended period to ensure that the buyer continues to return to the site. All this is possible through ‘apps’. And since the engagement is through the smartphone, it’s both instant and responsive.

The biggest advantage for e-commerce companies is that by avoiding search platforms like ‘Google’, they can retain all information and data without the competitor getting access to this. This is another reason companies like Myntra and Flipkart have switched their entire business model to an ‘app-only’ one.

Smartphones and Apps – The Game Changer

So why all other big e-commerce companies like Snapdeal have not yet shut down their websites and switched over to the app-only model? They will but in time. The best indicator to this is the phenomenal growth of Snapdeal, a company that started just five years back. Flipkart has been the dominant player in the field and was around 100 times larger than Snapdeal, in the latter’s early years. By 2013, Snapdeal had significantly closed the gap between itself and Flipkart, riding on the back of the ‘mobile phone’ and ‘app’ popularity. And now, it’s as large as Flipkart!

But Snapdeal is not about to shut their website, at least not anytime soon. Myntra, which took the first initiative to shut their website and make the switchover to ‘app-only’ model in May this year, witnessed 10% drop in sales the same month. While that is a significant loss of business, it has still not deterred Myntra from continuing its new app-based model.

It’s a matter of timing. There is still a large segment of potential buyers out there who are not comfortable transacting purchases over the mobile phone and prefer to continue using their desktop or laptops for visiting the company website. This is a phase when the transition is happening from a traditional platform like website to an app-only one and it will take time. Meanwhile, Top web developers think that e-commerce companies do not want to lose out on this valuable segment, at least not just yet, but it’s a matter of time before traditional e-commerce ‘websites’ will have moved into history. ‘Smartphones’ and ‘apps’ are here to stay, with instant gratification the new mantra.