As more Indians join the smartphone brigade, e-commerce companies are changing tack with mobile applications taking centre stage
AS e-commerce posterboy Flipkart kicked off its Big App Shopping Days sale last week, there was a surprise in store. Visitors to its website were treated to a flash ad that said it had shut down and directed them to its mobile app. While the ad did say “just kidding”, perhaps it’s an indication of things to come. For some time now, it has been rumoured that e-commerce biggie Flipkart along with its subsidiary Myntra are planning to shut down their respective mobile sites and exist only as app based platforms. In fact, if all goes well for Myntra, by the end of this year one will no longer be able to access its website on desktops or laptops. The fashion e-tailer may hive off its website once it starts to generate 98% of its traffic from mobile. So what does this indicate? Simple, gone are the days of laptops and desktops as mobile emerges as the new access point for the Indian online shopper.
The reason behind this is obvious. According to a report on the mobile internet by the Internet & Mobile Association of India (IAMAI) and IMRB International, the number of mobile internet users in India is expected to reach 213 million by June this year. As of December 2014 the number of mobile internet users stood at 173 million. While the number of mobile internet users in rural India are likely to grow to 53 million by June 2015, urban India will continue to account for a larger share with 160 million users. According to the report, while 11% users use mobile internet to shop online, 17% of online transactions take place through mobile. No wonder that e-commerce players want to net these users and convert them into loyal shoppers.
“The trend is gradually changing with people opening up to shopping through their mobile. Earlier mobile apps were used more to browse—the final purchase would still happen through the desktops/ laptops. Today an increasing number of shoppers are completing the entire purchase cycle through their mobile apps,” said Mausam Bhatt, senior director, mobile marketing, Flipkart.
The change in lifestyle too has aided in the usage of mobile apps. “With the hustle and bustle of daily life and long working hours, customers want to stay updated at the convenience of a click. Surprisingly, the usage of mobile application for the purpose of online shopping is observed more in smaller cities than the metros,” said Akshay Sahi, head, customer experience, Amazon India. And the mobile revolution does not comprise only first time buyers. “The repeat rate of customers is very healthy indicating a good shopping experience,” he added.
One big advantage that the mobile app offers is the ability to send targetted advertising to the customer based on her previous purchases. Again, push notifications sent on the mobile app while may not necessarily translate into sales, it does help in bringing the users onto to the app. This way the app’s usage increases.
The changing game
Mobile-commerce is today going through a phase that e-commerce has gone through in the last five to seven years. From advertisements focusing on the convenience of mobile apps, a la Flipkart’s ads on the convenience of shopping via mobile apps on a train journey, to designing apps that are easy to navigate and include targeted push notifications, in-app notifications and email with product recommendations, to huge discounts, e-tailers are promoting their mobile apps in a big way. India has emerged as the second largest mobile commerce market after China, and mobile commerce is one of the key factors driving the e-commerce revolution, says Prasad Kompalli, head, retail, Myntra. “With over 150 million smartphones users in India and the number increasing every day, no e-commerce player can afford to ignore this segment. Today more than 50% of new customers visit Myntra every day through mobile devices,” said Kompalli.
“Don’t forget it all began with online companies offering heaving discount to drive trials on their website. So for now the action has shifted to mobile as everyone wants to catch up with the new set of smartphone users,” said Ashvin Vellody, partner, management consulting, KPMG in India. “This is a country of mobile first and if e-commerce players are looking at building their businesses then they will have to focus on mobile,” he said.
On a regular day a consumer can avail 20-40% additional discount shopping via the mobile apps. As Praveen Sinha, managing director and CEO, Jabong.com, says discount is a necessary evil to break the threshold. “Once established, we shall be able to sustain this without offering exorbitant discounts,” said Sinha.
As of now, e-tailers are aggressively courting deal-hunting consumers by launching special schemes and deals on their mobile sites and apps. From Amazon’s launching Appiness Day in November last year to Myntra launching Binge Weekend Sale in February this year to Snapdeal’s App Fest, launched in the same month to Jabong launching flash sales ‘App Day’ exclusively for its app users to Flipkart’s Big App Shopping Day, it’s been raining offers on mobile apps. “Great offers on mobile apps and sites only act as a trigger for consumers to start experimenting with this platform. We have observed that once customers realise how convenient and time efficient using this platform is, they tend to
use this platform more often while shopping online,” said Ankit Khanna, senior vice president, product management, Snapdeal.com.
Heavy discounts have indeed paid off with 60-70% of the traffic coming from the mobile app and site, for the top five e-tailers —Amazon, Flipkart, Snapdeal, Jabong and Myntra—taken together. In fact, Jabong claims its mobile site and the app gets a combined daily traffic of approximately 1 million, while its arch rival Myntra recently announced it generates 90% of its traffic through mobile devices. Myntra claims that close to 85% of the traffic is driven by Android, iOS and Windows platforms. “We see higher contributions from mobile during early morning hours and later in the evening. However, we see higher engagement of the consumer when she is one on our mobile app compared to the website. This clearly indicates a shift towards mobile,” added Kompalli of Myntra.
“At Snapdeal.com we get over 70% of orders through the mobile site and the app, up from a mere 5% just 18 months ago,” said Khanna.
And while consumers in the metros continue to use their mobile phones to shop online, consumers living in tier 2 and tier 3 cities are playing catch-up. Bhatt of Flipkart says the e-commerce giant has witnessed significant growth in the number of consumers from smaller cities. “We see increased participation from cities such as Ahmedabad, Pune, Mysore, Jaipur, Coimbatore, Lucknow, Indore and Ludhiana,” he added.
The story is the same for its rival Amazon. “The growth in mobile commerce is being led by consumers from smaller towns and cities which have a relatively low penetration of personal computers and broadband services. As a result, many use their mobile phones as their primary source for online shopping. As much as 50% of orders received on Amazon.in come from outside the top 8 metros,” said Sahi, adding that the traffic increases manifold in case of special days. “We saw a four-fold increase in mobile traffic last year on the Appiness Day. Post it, the adoption of the app grew significantly.”
Bhatt goes on to say that while people across age groups are now hooked on to their mobile apps, “it’s especially the younger generation who prefer this mode of shopping”.
The rise in traffic is not the only thing which has kept the ball rolling for e-commerce firms as they have also seen revenue growing simultaneously. Agrees Sinha of Jabong, who says that the fashion e-tailer generates 50% of its revenue from mobile.
Analysts say all the advertising in the last one year has also played its role. After spending about close to R 2000 crore on advertising last year, the e-commerce sector is expected to increase its advertising spend by 15-20% this year. According to the forecast by GroupM India, WPP’s media communications agency, India’s advertising expenditure is expected to touch R 49,000 crore in 2015.
Jabong’s Sinha says there is a reason behind e-commerce companies aggressively advertising their offers. “After the release of the ‘BeYou’ campaign, we have witnessed an increase in brand awareness across India, which is reflected in the order share,” he added.
Vellody of KPMG in India, however points out that e-commerce firms will have to move beyond deals and discounts soon. “While deals and discounts may help them get eyeballs now, services will play a big role in creating stickiness,” he said.
The marketing strategies of e-commerce companies will increasingly need to be tailored to suit the rising adoption of smartphones, social media and improving customer experience across touch points and platforms. E-commerce players claim work has already began to provide better services through personalisation. Kompalli of Myntra believes that more than discounts, a smooth app interface clubbed with engaging content will boost shopping behaviour. “We have created a few mobile-only experiences for shoppers such as ‘The Stadium’ with new experiences for cricket fans such as exclusively offering team India jerseys and look-books. Other mobile-only stores such as ‘The Wedding Store’ and ‘The Running Store’ offer engaging content for occasion led dressing and for the fitness conscious.”
Agrees Jabong’s Sinha who says initiatives such as managing the logistics judiciously, apart from keeping the inventory stocked on a regular basis has allowed the firm to curate services such as ‘within 24 hours delivery’, which has helped it develop a wider customer base. “Sales have scaled up as we have been successful in instilling a sense of confidence among our loyal buyers who come back to us for our services,” said Sinha.
Apart from ensuring a smooth delivery mechanism, e-commerce firms are also concentrating on building a safe payment gateway. While cash-on-delivery still remains the favourite mode of transaction, e-commerce companies are focusing on creating safe mobile payment gateways. From eBay’s PayPal to Flipkart making a strategic investment in Ngpay last year, the idea is to make transactions on mobile as smooth as possible. This is yet another reason behind Delhi based company Paytm, which started as a mobile payment gateway and later launched its own m-commerce platform, grabbing Chinese e-commerce giant Alibaba’s attention. “We are planning to add new features in our mobile wallet. For example, one of the features that we intend to introduce will allow transfer of money from one person’s wallet to another’s digitally. We are also working towards increasing and building our technology team based in Canada and Bangalore. We are also building capabilities for fraud detection,” said Vijay Shekhar Sharma, CMD, One97 Communications, earlier in an interview to BrandWagon.
Industry observers believe that in the next one year, mobile is going to be the epicentre of all the action. According to Technopak, m-commerce which has a 30% share of the $3 billion e-tailing industry today is expected to capture 40% of the $32 billion industry by 2020. And if all goes well, m-commerce could contribute to as much as 70% in the future. Bhatt, of Flipkart which also owns Myntra, says mobile will become the primary mode of shopping online in the next few years. “Mobile apps will get more sophisticated and intuitive as mobile shopping is an experience that surpasses the experience of shopping from a desktop. Investment in mobile technology will allow us to connect to millions of Indian customers. Higher participation from tier 2 and tier 3 cities is also expected,” said Bhatt.