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#DigiTales: Learnings from Flipkart holding its app-only move

With 70 per cent out of the 50 million Flipkart customers buying from its app, they were all set to go ‘app only’ from September 2015; a move that Myntra, owned by Flipkart, did in May 2015. However an official announcement made in last week of August says they are stalling that idea and will be available on desktops for time being.

They cited the reason as, “We haven’t assessed how this will affect the sales of white goods and appliances” and also mentioned some of these sellers are not convinced about this move.

Whether or not this is the only reason for putting the app only strategy on hold, there are many speculated guesses doing its rounds including, maybe they heard the sentiments of customers who, protested on social media to stop buying from Flipkart if they forced them to install the app by shutting down their website. One other opinion was that, Myntra going app only was a bad move and they want to avoid the same fate for Flipkart; and here’s the interesting one – they wanted to throw the competition off guard by misdirecting about the whole app-only move!

India is poised to have over 250 million smartphone by 2016, surpassing the desktop penetration by a huge count. Does mobile first really mean app only? What must brands grappling with this dilemma do? A few thoughts…

Chasing the bell curve
At one end of the spectrum, there are about 16 per cent of people who are the first movers and early adopters who’d be comfortable living a digital life through the way of apps, if they are the 80 per cent of your customers, then go for it and disregard the desktop site. After all, the advent of app ecosystem gave birth to Tinder and WhatsApp of the world.

Context of your business
Apps that don’t want to ask you obvious question like where you are located can’t do much in absence of their app on your phone. Location-based services such as taxi hiring and food delivery depends a lot on your smartphone’s sensors to know where you are and then provide relevant & hyper-local service. In this case, websites are cost heavy for brands and poor user experience for customers.

The context differs drastically for marketplace of services such as Timesaverz or Zimmber. When we have a leaky pipe and need a plumber to fix it, we tend to search online for a nearby service provider, at that instance, forcing us to install an app is a bad idea. A mobile friendly website can be the first point of discovery by customers.

The reality of mobile realty
A ‘mega’ retail store means it’s got a thousands of square feet of real estate space on land – showrooms. On a mobile phone, the space is measured in pixels and brands can’t pay more to buy more of them! Since everyone gets the same space, this may look like a level playing field, but in reality, it hard for categories like white goods, large appliances and furniture to solely rely on mobile. This is the very reason Flipkart has cited for deferring their app only strategy. In India, if you buy a microwave oven, they send a technician home to give you a demo, with this level of tech savviness, it’s a long way to go for many categories to go solo on mobile and ditch the website completely.

The debate of space is just doesn’t end at screen, the storage capacity of phones add another dimension of limitation for app only strategy.

Beyond the obvious
For Flipkart, out of the 70 per cent sales from app, what per cent was driven by ‘exclusive discounts when you buy from our app?’ I do not know the figure, but if you look deeper, we Indians are proud of saving money, so tomorrow if a brand gives additional discount for standing in the sun for ten minutes, a huge crowd will do it. Just look at any sale of Big Bazaar or even Zara’s sale at Phoenix mall and you’ll know what’s obvious about the 70 per cent traffic source of Flipkart.

Stop saying app only is cost effective
Going app only lets brands save cost is a myth, a costly one in fact. Any brand in the e-tail or m-tail business first has to have the technology, data processing and all those algorithms in place, this is further adapted to fit a container called app. Even if the app is built ground up for each of the mobile OS, the heart of it remains the same.

To run an e-commerce / m-commerce, the saving of any cost in form technology is pittance compared to the cost of logistics, return logistics and of course, the amount of discount thrown at customers to allure them dwarfs the cost of maintaining a website.

Conclusion
Don’t let the 800 pound gorilla starve you out, it can even afford to hibernate. What works for the market leader doesn’t do well for the followers.

Being mobile first is not equal to app only, especially when the category is built on the pillar of discounts which has weakened brand loyalty towards sellers.

(Views expressed in the article are the author’s and do not reflect those of his agency / employer.)

Sreeraman Thiagarajan

Sreeraman Thiagarajan is Vice President at Publicis Beehive.
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