When it was launched in April 2022 with a lot of fanfare, Tata Neu was heralded as the next big thing from one of India’s most-celebrated conglomerates – the Tata group. Even after it faced initial technical glitches, the group’s goodwill led almost everyone to bet on the super app’s success. Two-and-a-half years later, however, the enthusiasm has waned – substantially.
The consensus seems to be that in its bid to offer a complete selling experience, Neu has not been able to shake off the old problem of most super apps – they are jack of all trades but master of none because today’s consumers prefer more specialised shopping sites. This lack of a differentiation in a cluttered and crowded e-commerce landscape along with technical issues has hit Neu hard.
Numbers bear this out. The app missed its first-year revenue targets by 50%. Tata Digital, the holding company for all of the group’s digital entities, reported widening of losses at Rs 5,553.11 crore in FY23, the year of Tata Neu’s launch, from Rs 2,945.01 crore a year ago, on the back of a significant increase in purchase stock in-trade and other expenses, which analysts attribute to tech development and marketing. The initial investment into the exercise was estimated to be $2 billion.
A detailed questionnaire sent to Tata Digital did not elicit any response.
Professor DVR Seshadri of Indian School of Business (ISB) says, “While the perception within the Tata Neu super app launch team was that it was implementing a blue ocean strategy, it actually entered a quasi-red ocean, with many established incumbents in the allied broad-spectrum apps space. The problems that unfolded for Tata Neu may have had their origins in this fact.”
A blue ocean strategy in marketing parlance refers to the effort to pursue differentiation and low-cost to open a new market and create new demand. It hinges on capturing an uncontested market. In case of Tata Neu, the market was nothing close to uncontested with multiple apps in different domains already enjoying top of mind recall among users.
In the most basic sense, Tata Neu is an aggregator of various Tata entities in their digital avatar. An aggregator’s USP lies in making it convenient for users to access products and services which otherwise they would have had to hop from platform to platform to acquire. Tata Neu fails at the convenience aspect as well, since items in different categories chosen by the user, are directed to different carts, requiring different check-outs.
“Now this is not user friendly at all. This exhibits no customer centricity. I can do similar things better in Amazon, where all the items irrespective of their category get added to a single cart to confirm and pay for the entire list. That is undoubtedly convenient,” Faisal Kawoosa, chief analyst at Techarc, said.
In addition to the lack of convenience, there is also the problem of Tata’s existing digital entities from apparel to electronics to hospitality and airlines being fiercely independent, and having an established presence in the consumers’ mind. Coupled with the lack of convenience, this only dissuades users from accessing Tata Neu over the individual Tata apps (which all exist outside of Tata Neu even now).
Perhaps the biggest shortcoming for Tata Neu, and all super apps in the country for that matter, was the failure to identify and build a core cohort or target group to which an increasing number of services can be marketed. This is where the likes of China’s WeChat have succeeded, analysts said, since the app is built on a strong userbase from the initial proposition of social messaging.
“There is no domain that Tata Neu dominates. So, the initial hook to attract users is missing. In contrast, if you look at Swiggy – it has a clear proposition – quick delivery of essentials. It may have started as a food delivery app, but it has increased in services within the intra-city delivery domain to expand from food to groceries and couriers,” Pareekh Jain, chief executive of EIIRTrend, a tech-focussed information platform, said.
WeChat in this context built its platform on social messaging, and then expanded its service offerings to the captive userbase to include e-commerce and payments. In India, PayTM tried to evolve from just a payments wallet to entertainment and e-commerce platform, but did not find much success.
The incentives programme under NeuCoins also did not reap the rewards management would have anticipated because the value proposition of the incentives did not match up to the existing rewards on the individual digital platforms.
“Tata Neu failed to communicate a unique value proposition that would motivate users to switch from existing platforms. Customer incentive to switch (through NeuCoins and other similar inducements) was insufficient to offset the convenience of using standalone apps like BigBasket or Croma that customers were hitherto used to,” Sheshadri explained.
Simply put, if the IHCL rewards programme allowed a user to collect points and get a room upgrade after a certain threshold, converting the same to NeuCoins may not be as efficient. In fact, there is no clarity on what happens to the existing reward points collected across Tata products and services, and how they can be used.
Despite the bumpy start and consistently tepid performance, the Tata Group obviously has not given up on Tata Neu. The latest salvage attempt comes in the form of leveraging fintech and stock broking to breathe fresh life into the app. Also on the anvil is Neu Flash, the group’s entry into the quick commerce space, which will roll out services to select users selling grocery, electronics and fashion. These are all expected to be powered by a fresh $1-bilion injection by the Tata Group. So, the jury is still out on whether these will bring in the much-needed momentum to Tata Neu.
