App-titude test

Online players are experimenting with app-only and app-first strategies to make the most of the rise of mobile internet. Is the trend sustainable?

When 99% of business orders are received through a mobile application, does it make sense for a company to be present in the website form as well? This debate has been raging ever since e-commerce fashion store Myntra, made public its decision to pull down its website and be accessible only through a mobile application. In fact, with Ola’s recent decision to conduct transactions only through its mobile application, a new trend is seen in the Indian e-commerce market — of maintaining a mobile-only presence.

“Even four years back, the demographics were totally different. When we started out, about 20% orders came through our application. Last year, this number touched 60%; last month, we witnessed about 99% orders through the application. That is when we decided to go with an app-only presence,” says Ola’s senior director, marketing communications, Anand Subramanian. The decision to be present only through an application is not restricted to e-commerce giants either — many start-ups have also opted for the same.

Anand Subramanian, OlaEstablished in 2011, Faaso’s, which specialises in wraps and rice dishes, gets more than 90% of its orders through its application and has over a million downloads on Android, Windows and iOS phones. The company has decided to go app-only by the end of August 2015. “For us, this is the way the business is now. Open our application at any time of any day, across any location and you will witness a different menu. We are making our menu relevant as per the time of the day,” says Revant Bhate, chief marketing officer, Faasos, according to whom identifying the correct locations is key. 

Myntra, which decided to go app-only in early July, says it has not witnessed a significant change in its business after pulling down its website. Before moving completely to the app, Myntra used to get 90% traffic and 70% of revenue from mobile devices. Post going app-only, it has reported a growth in the number of app installs (12 million in all) and increase in the number of visits and transactions from its existing customers. “Loyal customers, who visited our website at least twice a month in the past, now visit our application about seven times each month,” says Prasad Kompalli, e-commerce platform head, Myntra.

Prasad Kompalli, MyntraHowever, Meru, which has over 5 million app downloads, still accepts orders through its call centers. “A first-time user would require additional help, which is why the call centers are there. But our attempt is to convert those users into app-based users,” says Siddhartha Pahwa, CEO, Meru Cabs.

The company, which claims to be growing at the rate of 3 lakh downloads per month, currently witnesses 70% app-based bookings and aims to reach 90% by the end of the year.

“Repeat purchases on the app are four times more than those through call centers. In fact, our top 5% customers use the application more than 500 times a year,” adds Pahwa.

Siddhartha Pahwa, Meru CabsOnline travel aggregator MakeMyTrip also confirmed that mobile bookings had overtaken desktop bookings for the first time, contributing 53% of the overall domestic hotel bookings, up from 29% last year. “We ended the quarter with approximately 8.5 million cumulative mobile app downloads, up more than 150% annually,” says Anshuman Bapna, chief products officer, MakeMyTrip.

Other biggies are also happy with the response from small towns. Around 60% of the traffic on Amazon’s application currently comes from tier 2 and 3 cities. “Customer behaviour on mobile devices is evolving fast. The unique capabilities of mobile such as location awareness, camera and voice will transform the shopping experience dramatically,” says Ram Papatla, director seller product management, Amazon India. The company, however, has no plans of pulling its website down and is focusing on an app-only presence. “All our development and innovation is app-first and it will continue to be our flagship experience.However, we will enable our customers to shop anytime, anywhere and in any way they want, including a mobile and desktop site,” he adds.

According to Tracxn, a start-up locator, there is a lengthy list of over 30 start-ups beginning 2014 that have established a mobile presence only. “They want to focus their attention on the mobile apps space, which is likely to be the largest consumption medium for their products. In the short run, this might lead to a slight revenue dip but it helps the company to be better prepared for the market two years later,” says Neha Singh, co-founder and CEO, Tracxn.

Puneet Agarwal, Money ViewDazo, a five-month-old start-up, acts as a mealtime marketplace by aggregating meals from its partner restaurants and giving a wide variety of options to customers and is present only via its application. “Eighty per cent of our orders are done within 50 seconds of the application being opened,” says Shashaank, co-founder, Dazo. Similarly, Money View, an eight-month-old start-up, aims to manage its users’ finances exclusively through its mobile application. “The product is much more focused and interactive on mobile. We can send timely notifications and take instructions in less than a minute,” says Puneet Agarwal, co-founder, Money View.  

Going mobile

Clearly, the decision to go app-only is not just based on novelty value, but is a strategic move guided by logistic challenges. Bengaluru-based start-up Beaconifi promises hyper-local delivery of products from various stores within a 5-km radius and functions through a location-sensitive application on mobiles. “We provide a dashboard to the merchants, where they can process customer behaviour,” says Ritabrata Bhaumik, CEO, Beaconifi. The company, which has around 660 app downloads, received 350 calls through its mobile app last month alone. “Our work is based on the customers’ location, which is why we’re application-based. We are moving completely to a mobile-only strategy,” he adds. But while rivals both big and small are swearing by the app world, some companies are obstinately resisting the change.  

Staying put 

Players such as Snapdeal have reiterated their decision to be accessible even through their websites. “Our data shows that there are still many customers who use PCs to shop online. We do not want to force our customers to use one specific medium to shop on Snapdeal. We will continue to offer our services on both PCs and smartphones. We do not see this changing in the near future,” says Snapdeal’s spokesperson. 

Others have made the leap but with a lot of trepidation. Hipcask, a wine and spirits platform, receives its orders only on its mobile application and generates content on its website. “Going forward, a lot of online transactions will happen over mobile phones. Our idea is to be app-first but not radical enough to say app-only,” says Aneesh Bhasin, co-founder and CEO. Online grocery site Zopnow’s co-founder Mukesh Singh, on the other hand, does not believe in an app-only presence. “It doesn’t make sense to lose the 5% orders coming from the website.

Mukesh Singh, ZopnowLet the customer choose the channel. Mobile-only is not our strategy,” says Mukesh, after confirming that Zopnow’s app orders have risen from 10-20% in 2014 to 40-50% this year. According to Quettra, a mobile intelligence firm, the convenience of placing orders and making easy payments through a mobile application seem to have attracted a large number of customers. “In many markets, mobile phones provide consumers the first taste of the internet and through apps, they are not only able to browse but also purchase products.

The app market is also burgeoning for e-commerce players because of the ease of making payments, compared with that on mobile sites or desktop websites. This puts players like PayTM in an extremely good position, as they are the gateway to consumers’ digital wallets,” says Ankit Jain, CEO, Quettra.

Baqar Naqvi, business director, retail practice, Wazir Advisors, says that the growth of traffic is much more on mobiles as smartphone penetration is happening at a fast pace. “Now, the strategy is mobile-first. Whether mobile-only is the right approach, only time will tell,” says Naqvi. “Going mobile brings down customer acquisition costs compared with websites. A loyal customer will open the app more often.

Similarly, the deletion rate is also very high,” he adds. In fact, KPMG’s recent report on mobile internet highlights the fact that more than half of all internet users today are mobile internet-based. “However, there’s still a strong segment of buyers — predominately in urban tier 1 cities — that is familiar with PC/ broadband internet connectivity and looks forward to having that option as well. Finally, it will boil down to the choices and conveniences that matter to the customer segments one wants to attract,” says Ashvin Vellody, partner, management consultancy, KPMG in India.

While it is difficult to understand which approach will bring the maximum benefits for e-commerce businesses, one thing that underlines the trend is the growing usage of mobile internet among consumers. Being present only on a mobile application might be a debatable trend but the necessity of being present on this platform is no more in question.


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