Were Flipkart, Myntra ahead of their time with app-only business model?
When Flipkart, Myntra's parent company decided to give the latter an app-only interface, discontinuing the desktop website completely, it did so with the thought that its customers who were mobile savvy, would be more than willing to adapt to an app-only model. But they were wrong. Myntra's sales fell in a month, prompting Flipkart to reactivate its desktop platform.
While Flipkart's psyche behind the move was to focus their resources on an app without having to develop a mobile site. Given the popularity of mobile retailing and their brand equity, they thought consumers would be more than willing to make the full transition, the report noted.
“We believe that while mobile matters more, the reality is that limiting shopping to an app can put off a number of people for reasons ranging from customer experience to the limitations of mobile devices,” said analysts Manish Jain and Natasha Prakash from Nomura Research in a report dated January 16.
A mobile app can be limiting in terms of consumer experience especially for anyone shopping for clothes. While a desktop interface can let you easily view different colour options and zoom-in and zoom-out of the preview image, doing so isn't easy on a mobile screen - something that could discourage consumers from spending on the app.
While the Flipkart - Myntra strategy failed in 2015, they weren't completely wrong about the importance of mobile retailing.
According to a report by Nomura, mobile retail has been gaining momentum "with this growth, internet retailing, particularly mobile retailing, could be a trend here to stay."
It said, "mobile internet retailing is expected to reach a market size of $11 billion by 2020F, accounting for ~19% of the total internet retailing market. This would imply a five-year compounded annual growth rate of ~36%, in our view.
There's a huge growth in the sales of smartphones in the country recently. The report notes that the sales of smartphones in the country have now outpaced feature phones. More people are connected to the internet at home and on the mobile thanks to cheaper data prices too.
The Nomura research cited that rural India now makes up nearly 40% of overall internet users, growing at twice the pace of urban users.
Mobile internet retailing in 2015 accounted for slightly over 12% of total internet retailing and is expected to reach a market size of $11 billion by 2020, accounting for approximately 19% of the total internet retailing market.
Analysts expect the internet retail market to touch $70 billion in India by 2020.
Nearly all the online retailers now have mobile applications to ensure their products and services are an option anytime, anywhere. An analysis of demographics suggest that 75% of India's internet users are under the age of 35, the highest among other countries.
While the younger generation are largely mobile savvy, companies are also indulging in discounts, online payments, preferable delivery options for people preferring to shop via mobile apps, to bring more and more customers onboard.
“Apart from ensuring that customers will be able to shop anytime and anywhere, companies are trying to make sure that customers are able to receive their deliveries at a time and place most convenient for them,” the analysts said.
A survey by Nomura found that 86% shoppers preferred to shop online to get better prices.