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The real reasons why Fashion E-Com Companies are going “Only App”

Image credit – All owners of “Khalnayak”

I don’t think of Marie Antoinette often. She is neither my VC, nor my contact in Google, nor a rich Marwari relative. If you don’t know her, let me remind you that she was the Queen of France during the reign of her husband Louis XVI (1791) and became very infamous. When the courtiers of her palace told her that the French public was starving and did not have bread to eat, she simply said, “Then let them eat cake”. She lived in denial and was punished by the guillotine a year later. Gulp.

I did remember Marie recently when I read a high decibel proclamation of a well-known, heavily funded, stratospherically valued e-commerce fashion brand that announced they were going to be available only via their app and that were shutting down their web & mobile sites immediately!

This was Marie Antoinette saying, “Hey you! Don’t have bread? Then eat cake. And please download my app to order that cake, will you?”

When the dress doesn’t fit, lose weight!

Haven’t you been in a situation where you tried out a garment that felt tight on you and your regular size wasn’t available? What did you do? Grumpily walked out of the store? Did it occur to you to rush to the nearest gym, camp there for eleven days, lose a few kilos and then rush back and buy that tight garment? No? Then, you are stupid!

Most fashion e-commerce businesses in India lose 50% on each sale they make (public data). This includes dead stock, returns, costs of delivery, etc. Why do they lose money? The usual reasons of building audiences, loyalty and of course having so much VC money that you could propose Mukesh Ambani to buy out Antilia.

So, what happens when all of a sudden you need to become profitable? None of the businesses I know can instantly increase margins by 50% (or cut costs by 60 %) to achieve this? So what do you do?

You starve yourself out.

The largest digital properties in India (Facebook, Google) and e-commerce businesses have acknowledged that they receive 50% traffic from the web and 50% traffic via mobile (mobile web and app). comScore (the baap of digital measurement) just released a report that web traffic is growing in the same pace as the earlier quarters; while mobile traffic is growing faster.

India has 900 million mobile phones of which only 70 million are smartphones (to use apps). But the non-smartphones users heavily use the Internet!

India has just got started on digital adoption and our habits are unique. Most fashion sites have reported that their deliveries are made to offices where girls try out clothes in the washrooms before paying! Who doesn’t use company desktops, laptops and WiFi for personal use?

So, imagine if you have 100 people who visit you and buy goods of Rs. 100 from your site, daily. That’s a sales of Rs. 10,000 and a loss of Rs. 5000 every day. Now you say, “I am only available via my app (not even mobile web)”. Overnight, your visitors drop to 40 (instead of 100), you sell Rs. 4000 of goods and your losses are down to Rs. 2000!

Voila, you have saved yourself Rs. 3000 of losses daily and not lost face because you proclaim that you are so avant-garde that you are available only via your app!

Takeaway : Going “Only App” is a premeditated strategy of Fashion e-com stores to reduce sales volume and thereby control losses.

The difference between Fashion Street and Zara

If you have lived in Mumbai, you must have been to Fashion Street. It was this snaky road opposite the Bombay Gym that sold surplus tees, shorts, etc. So many traders shacked up selling the same stuff. It was indiscernible who had better goods. You had to walk up and down, keep haggling till your patience ran out and then make your purchase. Zara stores on the other hand, are quite the opposite! You buy what’s inside and you don’t haggle.

Fashion Street is my real life analogy of the Indian e-commerce market today. Everyone is the same and sells almost everything. All they do is compete on price and who blinks first. Consumers always win.

The strategy of this fashion company to suddenly go ‘all app’ is exiting Fashion Street and becoming an exclusive ‘private’ store. Think of it – inside an app, you are directed and controlled the way the app owner wants. On a public street market, you are the king.

Takeaway: Becoming ‘app only’ is good to save losses, but the sudden shift to control consumer behaviour is a risky decision. Consumers may feel stifled (we are trained to google options and price comparisons) and may never come back.

Have you tried Google Jeans?

If you haven’t read, Google is rolling out a ‘Buy Button’ that will feature next to the ads when you search for things you want to buy! Now, the (politically correct) reason Google says it’s doing this, is to make buying frictionless. Consumers will pay using a Google account and have their goods delivered to them.

If you are fourteen years and older, you know that Google dominates everything on the web. Google is the web. By adding the ‘Buy Button’, Google will further tighten its grip on the advertisers that pay massive ransoms to appear via specific keyword searches on its sites and extract much more money than it did before.

Google is going to own the pants of the e-commerce fashion companies even before they have worn them!

By going ‘all app’, the fashion store in question is valiantly trying to defend the new onslaught that Google is proposing. Unfortunately, this company has not realized that Android (the most popular mobile phone operating system in India) is also owned by Google. What they do there next is anyone’s guess!

Take away: Do businesses that make money. Then no one can call you naked.

******

Please do comment and share your thoughts and POV?

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This Article was also featured in the Economic Times Sunday – 31.5.2015

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Sachin Bansal’s Reaction :

*****

Comment in the Economic Times on 29-6-2015 🙂

Update: ET – 24.8.2015 :))))

This just nails it (Trak.in) – dated 10.11.2015

*****

Dec 1, 2015:

First they call you retarded, and then realise they were talking about themselves :))

 ****

And exactly 7 months later (16th Feb) in the Mint

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4th May 2016 – Times of India

myntrabackdesktop

 

*****

First Published on: May 31, 2015

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47 Comments

  1. Then having skyrocketing valuation, funding, high CAC to increase market share and now going app only to decrease your revenue (losses) doesn’t makes business sense. There entire discounting strategy was flawed from begining or are we missing on some data which they have access to, to justify going app only.

  2. This was my status on Linkedin 17days back… and a big discussion started.

    “According to me the “App only” route that brands are now taking is going to hurt them as competition increases. Because there is limited real estate on the consumers phone. And if you force them to download, they might switch instead. Consumers do not like to be bound, because today they know they are the kings!”

    I also wrote (as a consultant) that…”One has to look at the category and take this call. Going fwd consumers are only going to download apps that they use on a daily basis or for emergencies. If a fashion brand decides to go “app only” they will have a tall task of ensuring loyalties which does not exist even for the most luxurious apparel brands today.”

    So I totally agree with you Alok! Nice article!

  3. Dear Alok,

    Not only this ; this weekend they are running a promotional sale, termed as “appreciate yourself”. The terms and conditions (which they expect you to read on your phone screen) are as follows :

    MYNTRA APPRECIATE YOURSELF SALE

    > The online “Appreciate Yourself Sale” is open and valid for all the registered end customers/participants of Myntra.com, permanently residing in India, and above the age of 18 years as on the start date of the sale.
    > This is an online sale, which shall take place only on Myntra mobile App, starting May 30th, 2015 (08:00 hours till May 31st 23:59 hours). The Appreciate Yourself Sale is subject to changes, at the absolute discretion of Myntra.
    > Appreciate Yourself Sale will not be applicable on all the styles on the Myntra Mobile App. Therefore, the Appreciate Yourself Sale is only applicable to the selected styles in the linked catalogue.
    > The Myntra Appreciate Yourself Sale shall be valid only for successful and fulfilled transactions. For the purpose of this sale a fulfilled transaction shall mean the order placed by the customers have been confirmed and received by them at their registered address.
    > The images of the products shown are for visual representation only and may vary from the actual product.
    > All the shopper/ customers shall ensure that the mobile number(s), e-mail address and/or other details provided by them to Myntra via Myntra Mobile App or otherwise are true, accurate and in use, at the time of the online retail transaction. Any liability, consequence or claim arising on account of any incorrect or outdated information provided by the participants/ shopper/ customers to Myntra, same shall solely be borne by the affected/concerned participants/ shopper/ customers. Myntra shall not and is not liable to verify the accuracy and/or correctness of the information so provided by the participants.
    > Shoppers / customers are advised to check the serviceability with the area pin code before placing any order with Myntra.
    > All taxes, duties, VAT, levies or other statutory dues and charges payable in connection with purchase of products / services on the Myntra Mobile App during Appreciate Yourself Sale shall be borne solely by the Shopper/ customer.
    > Shoppers/ customer are responsible for maintaining the confidentiality of your mobile phones, e-mail accounts and passwords.
    > Product warranty shall be regulated by the terms and conditions mentioned on the warranty card of respective products and Myntra shall not be liable or responsible to the shopper/ customer in for any indirect or consequential loss or damage.
    > This Appreciate Yourself Sale cannot be combined with any offers on Myntra mobile App.
    > My Privilege Points are not applicable to shopper/ customer during the Appreciate Yourself Sale.
    > The balance amount, after the discount has been availed, will have to be paid by the shopper/ customer at the time of purchase.
    > Myntra Return & Exchange Policy offers you the option to return or exchange items purchased on Myntra Mobile App within thirty (30) days of the receipt. In case of return of the purchased item, please refer to the “Return Policy” on our website or write toreturns@mynt…om.
    > Cash on delivery duration will be mentioned at the time of booking, but can greatly vary during the Appreciate Yourself Sale.
    > Orders may be split into separate shipments depending upon the products ordered for, despite the shopper/ customer having made one single consolidated payment against one order ID. Separate shipments, after being split, shall have separate expected delivery period.
    > By participating in this Appreciate Yourself Sale, all eligible participants shopper/ customers agree to be bound by these “Terms and Conditions”, the “Terms of Use”, “Privacy Policy” and other relevant documentation that are available on Myntra Mobile App/website including any modifications, alterations or updates that we make.
    > Myntra reserves the right to amend, modify, cancel, update or withdraw this Appreciate Yourself Sale at any time without notice. Upon such premature suspension, inconvenience, cessation, withdrawal, termination or closure of the Appreciate Yourself Sale by the Company, no person shall be entitled to claim loss of any kind whatsoever.
    > The Prices of the product shall vary during and after the Appreciate Yourself Sale is over. Thereby Myntra shall not be held liable for such difference in the Price of the product, as mentioned before and after Appreciate Yourself Sale.
    > Myntra reserves the right, in its sole discretion, to disqualify any shopper/ customer that tampers or attempts to tamper with the deals/ offers or violates these “Terms and Conditions” or acts in a disruptive manner.
    > If Myntra has suspicion or knowledge, that any shoppers/ customers has been involved in any fraudulent or illegal activity directly or indirectly during or after the “Appreciate Yourself Sale”, Myntra reserves the right to disqualify that shoppers/ customers and any related shoppers/ customers.
    > Myntra shall not be responsible if some purchase is not registered or is lost due to any network problems such as breakdown of machinery, unclear/ disruption in the network or non-receipt of payment from banks/payment gateways and/or the cost(s) charged by the network operator(s). Any dispute in connection to the same shall be settled between the end customer and the network operator without involving Myntra.
    > Myntra shall not be liable for any loss or damage due to Act of God, Governmental actions, force majeure circumstances, or any other reason beyond its control, and shall not be liable to pay any monetary compensation or otherwise for the same.
    > Myntra does not hereby warrant that the Myntra Call Center will run concurrently and error free during and/or after the “Appreciate Yourself Sale” and Myntra shall not be directly liable for issues related to technical and/or human error whatsoever. However, Myntra shall work towards the best interest of the shopper/ customer.
    > Shoppers/ customers hereby agree that Myntra has the sole right to decide all matters and disputes arising from this Appreciate Yourself Sale and that all decisions of Myntra.com are final and binding.
    > “Prices” for products and service described on Myntra Mobile App shall be final. All prices are in Indian rupees (INR). Prices for products and services may change at Myntra’s discretion.
    > Coupon Offers are applicable only on the selected styles on Myntra App.
    > Discount availed by a coupon is limited to a maximum discount cap which varies for each coupon code.
    > Appreciate Yourself Sale is subject to the laws of India and all disputes arising hereunder shall be subject to the jurisdiction of courts, tribunals or any other applicable forum at Bengaluru.
    > References to “Myntra” mean Vector E-commerce Pvt. Ltd., situated at, Maruthi Chamber, Annex Building, Rupena Agrahara, Hosur Road, Bangalore – 560068.

    Parnter Offers

    Axis Bank
    > Offer: Additional 10% cash back on all debit & credit cards
    > Minimum transaction amount to qualify: No minimum restriction
    > Max. Cashback: Rs.500 per card
    > Credit period : Within 60 working days
    > * Any disputes/escalations to be addressed within 90 days from the event.

    CITI Bank
    > Offer: Additional 10% cash back on all debit & credit cards
    > Minimum transaction amount to qualify: Rs.1500
    > Max. Cashback: Rs.1000 per card
    > Credit period : Within 60 working days
    > * Any disputes/escalations to be addressed within 90 days from the event.

    HSBC
    > Offer: Additional 10% cash back on all debit & credit cards
    > Minimum transaction amount to qualify: Rs.2000
    > Max. Cashback: Rs.1000 per card
    > Credit period : Within 60 working days
    > * Any disputes/escalations to be addressed within 90 days from the event.

    ICICI Bank
    > Offer: Additional 10% cash back on all debit & credit cards
    > Offer stands for just one transaction per card. Multiple transactions will not be eligible for the Cashback.
    > Minimum transaction amount to qualify: Rs.1499
    > Max. Cashback: Rs.500 per card
    > Credit period : Within 60 working days
    > * Any disputes/escalations to be addressed within 90 days from the event.

    GoIBIBO
    > Offer: Flat Rs.1000 off on all transactions on Goibibo platforms
    > Eligibility: All prepaid transactions
    > Valid till: 30th June 2015
    > Voucher codes to be given out within 7 days from the end of the event
    > Only 1 voucher per account to be given. Multiple transaction will not be entertained for multiple vouchers
    > Not valid on Bus bookings
    > Valid on Domestic & International – Flights and hotel

    Mobiwik
    > Offer: Additional 15% cash back on all transactions
    > Minimum transaction amount to qualify: all transactions
    > Max. Cashback: Rs.200
    > Credit period: Within 7 working days
    > Any disputes/escalations to be addressed within 30 days from the event.

    BookMyShow
    > Offer : Flat Rs.100 off on Bookmyshow App
    > Eligibility: For the 1st one lac transactions
    > Valid till: 28th June 2015
    > Voucher codes to be given out within 7 days from the end of the event
    > Only 1 voucher per account to be given. Multiple transaction will not be entertained for multiple vouchers

    Uber
    > Offer : Free Uber ride upto Rs.600 for new UBER users
    > Eligibility: 1st one lac prepaid transactions
    > Valid till: 30th June 2015
    > Voucher codes to be given out within 7 days from the end of the event
    > Only 1 voucher per account to be given. Multiple transaction will not be entertained for multiple vouchers

    I think I would shoot myself in the head before buying on their App.

  4. :))))))))))))

  5. Thank you so much!!

  6. Correct me if I am wrong here..

    But, are customer acquisition costs lower in an app-only environment. If not lower- I’m sure its effective due to repeat buying, low retention costs..isn’t it?

  7. actually, UA costs are stratospherically higher for app users

    Its simple “why” 

    Any ad within mobile makes people NOT go the the landing page (like the web) BUT the App Page of the App on Google Play / iTunes. Thats when friction is the highest.

    Users get to read reviews, ratings and must download the app to start going.

    From ad to download > 2-3 minutes minimum and hence install rates barely reach 1% of ads served

  8. reposting from fb:

    “I’m no insider so I don’t know the exact reasons, but I have contrarian views on this topic. Yes, like you mentioned, people are still using Internet via PCs/Laptops and that will not change. However, if trends are any indication India is going to be mostly mobile first Internet economy. 65% of Internet traffic today in India is mobile vs. 20+% in US. 40% of overall e-commerce is Mobile in India vs. 15% in US; and when it comes to FK/Myntra and SnapDeal it’s over 70%. I think a big part of who wins the eCom wars in India will depend on who gets mobile right. The way I see it is this (app only) is a short-term tactical move (of course they won’t say it openly) to drive app installs and I feel (and hope) they’ll bring back the website later. FK/Myntra were web first businesses, and if I were to do something today, I’d do mobile first. So, may be, this is one way to reverse engineer being mobile first? As far as they losing sales and customers, that’s a short term worry and the best time to take some risk of this scale is pre-IPO. In India, most customers don’t give a shit about brand loyalty. If they are buying from others today because of this move, they’ll come back to FK/Myntra later if the prices are lower. The only thing, IMO, they need to watch out for is Amazon which seems to have a very different strategy for India. One of them will get it right and the other will be #2. It’s not easy being them, is it? They don’t do something different, they are copy cats; they try something different, they are wrong. Let’s give them a chance? :)”

  9. Rishi, you can’t ‘bring back the website later’. Thats the end of it.

    Of course its a prudent way to save costs, minimise burn and show that it CAN become a profitable business!

    But that’s my central point too 🙂

  10. I’d agree with you in case of a mature Internet economy, but I feel it’s doable in a price sensitive (low brand loyalty) market like India where we are just getting started. 🙂

    On the cash burn/cost cutting theory, that crossed my mind but then I dismissed it. However, I’ve seen a lot of tactics used by bankers and corporates and I could see that as a possibility. If they are really wicked (I hope they aren’t) they could do it for two reasons: 1. Pre-IPO window dressing for all cost/cash burn numbers 2. Position itself a a mobile leader and risk-taker. The moment you make such move, you start with a clean slate for investors; can basically say FK 2.0 is what you look at and not the past 7 year performance.

  11. Alok,

    Not against your thought, but just being Devil’s Advocate here to understand more..
    You have neglected a fact of Customer Loyalty Built up on App and Controlled expense on Advertisements via App..!!

    I feel they are have not just reduced loss to 3000 bucks, if you have decreased figures so drastically, you got to consider expenses peripheral to the loses that are booked. They were spending huge on advertisements too and to my knowledge that has come down drastically with this, Only App based giants..!!

    Would want to understand the break up of Customer Acquisition Cost, If you can just throw some light..

    Regards,
    Gagan 

  12. Not sure where these numbers are coming from that 65% of traffic on ecom sites is coming from Mobile. In a city like Mumbai, even the 3G internet sucks and not enough to browse through these sites or make a hassle free transaction, I am wondering how is it possible in rural areas. 

  13. Hi Alok ,

    While I agree that going APP only is definitely a wrong strategy, the app is not all too bad , here are few points that I can think off for that

    1. The phone memory will certainly go up , prices will come down and specs will shoot up too

        So more and more people will have smart phones and most likely android ones. The companies will also fight for being a pre-installed app via tie up with the major players , which is already happening.

    2. With App , the experience can be personalized and targeted.

        So if my shoe size is 8 , I would just see specific options. and company can trigger personalized notifications that can actually be really meaningful and thus drive higher conversion. With web , I get to see only when I get onto browser, whereas with App , the notification will land and I will notice it more prominently. 

    So it will be a little personalized shop on fashion street which just shows what is relevant for me saving my time to run around for sizes etc.. Of course I will not have choice of looking at more shops but then I can have multiple apps or even someone will build a aggregator for that.

    The tough game is to get the app downloaded and thereafter it could be easier for targeting and converting.

    Looking forward to your views ,

    Prashant

  14. I keep hearing this a lot.. “India is a mobile first internet economy” and “Mobile strategy will define how successful a company can become” and etc etc.

    My question is Why is India mobile first economy? why are people using mobile to browse the net and not laptops? Is it because of limitations of Broadband at home and offices blocking the ecommerce sites? Or Is it because laptops/pc are costlier as compared to smartphone? Or is it because we like to buy on smartphones/apps?. The first 2 are forced whereas the third one is a choice. Can someone answer that for me, backed by data or authority stemming from knowledge? The answers to these questions and some similar ones will tell us what Indian consumer is going to do in future.

    Also, In commercial businesses, websites and apps are nothing but electronic storefronts. Depending upon what a business is selling, they need to define their storefront accordingly because I believe every business is different. I personally, would not mind playing games on an APP but would certainly like to see the clothes/elex I am buying in detail, so would want a website. I can read news in shorts on app but would love to watch tv or read a newspaper (print or on web) to get to know the story in detail.

    Regards

    Rituraj

  15. Lots of sources, including Internet Trends 2015 by Mary Meeker quote the same number. Of course no one can verify it unless they look into e-com platforms’ real stats.

    Mobile Internet doesn’t have to be on carrier network or apps alone. It could be mobile web or wifi connections too. 

    As far as rural, don’t think they are thinking that yet. And btw, it takes less data to load something on a native mobile app vs mobile web or PC.

  16. The way I look at it: 1. There are more mobile phones and smart phones in use compared to PCs. It’s a natural transition for someone using a feature phone to move to a smart phone vs. moving to a PC so we’ve been seeing (and probably that will continue) a faster growth in smartphones here in India compared to how the growth happened in other countries like US. Numbers are out there everywhere.

    2. For the computing needs of an average Indian a smartphone is more than enough. You had to buy a PC earlier to use email, now you can buy a smartphone for email and WhatsApp etc.

    Having said all this, I don’t think PC web is dead. It will continue to grow, probably not as fast as smartphones.

  17. Hey

    Sachin Bansal’s nasty comments gone viral has worked good for the Rodinhood community, it finally prompted me to write in . … While Bansalbhai’s outburst may reflect as a phase of ‘viprit budhi vinash kalay ‘ or may be its just that they are not keen to articulate this shift . but I am thinking loudly as maybe the Bansal bandhu have this on a wider canvas in mind ?

    Note Ek miyan two talwar … factor … Flipkart is not out of fashion segment giving way to little sister Myntra . So how do the 2 siblings woe the same groom ..err the customer and the VC Baaps already forked in lot of dowry …. Thus may be internally its clear the effort and focus in maintaining supremacy over 2 mostly identical sites is limited money wise and more by the Top management’s mind share … So what next …. ?

    Unless the two are given a bit different turf will help increase the depth of the market …. or if it doesn’t works err kill slowly one of the two. which eventually we got to do it as such .

    Agreed 50% of Desi visitors do drop from their desktops ….. but mind you most of them are the newbies ..Given the next growth of internet users are from the tier 2 and tier 3 ..4 .. markets who will take further time to mature to transact online … but now that the India eCommerce is say 21 years old now but still young cause some many have just joined the bandwagon . thus I see two class of customers .. The strategy to angle a newbie ought to be different from the veterans meaning hopefully Myntra can help do a mass customization and several sleek trial and errors to match whats being done in similar to the best of the markets.

    The cost of acquisition/ retaining is way high for new customers than from a Happy satisfied repeat customers. further The Goods return are way high from first time users than from the veterans ( personal experience, don’t have any public data to validate ) .

    Loyalists ( repeat customers ) perhaps will give more interesting data for analytic and the newbies may bring just too much of noise … yes you can weed out that but there is some convenience ..

    India is a huge country ..we all know that .. chasing the sheer no is expensive and costly so why cant I stay happy with a few million loyal customers ..engage them, enchant them. ….

    So IMHO Bansals are carefully splicing the market for newbies and veterans … now this means play lot of gamble in getting it right and who has the guts to say publicly I may kill my baby and may not eventually care too much as I have another…. so politically incorrect naah !!
    So lets watch … the beginning so far is not so good ….inviting the loyalist with yet another big discount sale. I am keen to see what else beyond discounts ….

    Hmm lets see ….

  18. Isn’t it easier for the customers to switch to competitors when they are visiting the webpage of myntra rather than the app?

    I think making app only myntra is trying to lock in a customer to their app. So instead of typing myntra.com in mobile which is tedious and also many times distracting one would easily open the app to shop. 

  19. I asked the same question on FB. But I was asked “Have you even read the blog post”. Well, did not think of asking again!

  20. Alok, you have nailed it!!!

    Glad that someone has the courage to call spade a spade, while other gyan gurus are busy appreciating the a$$ only .. oops… app only strategy

  21.  IMHO, Myntra is just a guinea pig / bali ka bakra for FK..

    Go app-only =>  Sacrifice some topline => Cut the long term losses significantly => Use the data / learnings from the app-only gamble to develop a mobile PPC advertising platform for the marketplace  => Finally, IPO with a healthier bottomline and the dream of ad revenue as “FK 2.0” as Rishi correctly pointed out.

  22. IT’S PERSONAL

  23.  There was no logical reason for going app only and shutting down a popular website! Hats off to Alok for exposing the faultiness and the most probable reasons why they did what they did! Quite interesting indeed! 

    Wonder  whether Flipkart, in future,  would find it better to shut down this app, completely?! 

    May be they would come up with a grand-stand that consolidation is the way to go and pull the inventory on the App into Flipkart!

  24. When i buy clothes online, I zoom the image in and out for 10 times or actually more :P..read the reviews,open the product page in a new tab( typical way of saying: bhaiya ye sahi lag raha hai,isko side mein rkhna).I can never get this experience on mobile and they have gone APP ONLY..GOD bless them 🙂 

  25. My Blog Post : Hi Tech Valuations!!!

    I had posted something similar a few weeks ago on my blog

    Nagraj Baggon

    @NiftyParadox

  26. Nice play of events!

    Sachin Bansal’s Reaction :

    *****

    Comment in the Economic Times on 29-6-2015 🙂

  27. Alok,

    Replying a bit late but being part of apps, I can say a few things now. Most of the apps now have referral program which works wonderfully. Nearly all apps have it now. And with just 100-200 Rs as the acquisition cost of user. That definitely does not mean that user will be active but will atleast make one purchase if they want to utilize that money. It is given as virtual currency.

    Your point is right though. Going publisher route is totally ineffective. Of all installs, only 25% keep the apps installed after 2 months. So there acquisition costs are very high and ineffective.

  28. And what do you guys think of Flipkart going “All Apps” 🙂 ?

  29. As a buyer, personally, I usually go with Amazon so it doesn’t affect me much.

    I can’t say if it’d have any impact to sellers. Never been one.

    As insiders, FK founders/management have more data than anyone so personally I can’t comment on their strategy and tradeoffs.

    Let me try to take a stab at it as an average Indian shopper: Yes, it’s a risky bet, but something not completely crazy IMO. In India, most people are price sensitive (vs. loyalty) and usually they go to 2-3 different sites + price comparison sites to check prices before the final purchase. Here’s how it *might* work: buyers get reviews, product specs, hi-res images and everything else they want from a website from Amazon, Snapdeal, price comparison sites/apps…and if it’s cheaper on FK, they just download the app and buy it from there.

    So by shutting down the website, if FK can pass on some savings to customers it might still work.

    What if it doesn’t work? Apologize, take some shit from buyers, and bring back the website. 🙂

    The best part about this bet IMO is that this crazy, wild experiment is something they can afford to do only before their IPO so let’s see what happens.

  30. More than that it’s very difficult to see products on such a small screen..Mostly people buy browse in desktops and then purchase from app due to the discounts!!

  31. Unless Amazon decides to go App only, they are going to clean up the demand that drops out of flipkart due to the lack of an app.

  32. Alok I also see some cost saving factors too. Like App only store like Myntra or FlipKart (for mobile user), would have been spending quote a lot of money in SMS & Email Marketing etc. But now since they have forced the serious buyers/users to install their apps. They can simply push their promotions and updates through their apps, hence saving money.

  33. Also, Like to know what do you think is future of app only.. if you have 1000 of website, will you install all these apps on your mobile, and if yes then do you need a mobile with atleast 5 to 10 GB ram and close to 1 GB to 5 GB disk space..!!

  34. I know it’s a late read, but nonetheless agree with your view. For a fashion brand to go the app way….too soon. If a ZARA and Forever 21 launch their own app, users will prefer going there to shop and not a curated fashion/lifestyle app.

    It is a good to increase awareness and get newer consumers in the app eco-system, but shutting down the site may not be required. Promoting the app, like they do is good enough.

  35. This really made me LOL!

  36. Great Post. Most of successful companies have multi channel strategy now. They try to provide uniform and seamless experience across the channel to their customers. Its up to customers to choose one channel over other and its up to companies to incentivise customers for using one over another. However, no company which has only digital presence should expect to retain customers by further forcing them to use super specialized digital channel.

    I was wondering why few e-commerce companies have announced their plans to move completely to mobile only channel. Now, it makes sense to me. One side they spend lot of money to build customer base and other side they don’t care. This is erratic and senseless to me. Mobile has begun to be useful and arguably better channel only recently. However, vast majority in India prefers to use computer to access e-commerce sites and  search products using google for price comparison.

    There is different story about customer being king. Most of the marketplace models supported by current e-commerce companies like e-bay do not make good on their promises. They are supposed to use customer feedback about sellers to remove them or punish them but they gang up with them to make fool of customer to sell used, refurbished or faulty products (while they list them as ‘new’). 

    I have written a post ” Why Ebay is a fraud company” at my linked in to describe few issues what faces e-commerce industry today.

    Today, e-commerce companies are busy acquiring sellers and customers and trying hard to bring them on their portal. However, basic of any business is to deliver quality product, experience and after sales experience to customer is lost on them. I don’t think that such companies will survive any longer. First, they have to get the basics right. They have to ensure that their portal has healthy sellers ( 50% sellers are fraud in India) and customer issues are addressed. If they do that, customers would simply use any channel to buy from them because they would know that this company would take care of them.

  37. This just nails it (Trak.in) – dated 10.11.2015

    *****

     

  38. I didn’t find the following quote on the linked DNA post, so I googled it…

    “However, apps also have their weaknesses. You have to download them and you have to keep updating..”

    Below is the full text of what Peeyush said (assuming Livemint quoted it correctly). I feel people who write news/tech blogs shouldn’t present one side just to make their case:

    “Native apps work better than websites because they give a superior customer experience. Latency is lower, there’s an icon on the home screen, scrolling is faster, customers get notifications and so on,”

    “On the mobile site, none of these things are possible. However, apps also have their weaknesses. You have to download them and you have to keep updating. Our mobile web app offers the benefits and superior experience of the app without the limitations.”

    Full text here: http://www.livemint.com/Companies/1fDSsTIdipn2Lh0HKxzVmO/Flipkart-relaunches-mobile-web-business.html

    I haven’t tried the app because it’s only available on Android, but FK Lite seems like a hybrid app (very different from a mobile website): http://tech-blog.flipkart.net/2015/11/progressive-web-app/

  39. Rishi – either its an APP or not.

    THE EXPERIENCE of a mobile site ‘mimicking’ an app is like ‘yawwwwwwwwwnnnnnn’ stuff. Check the FT (Financial Times) mobile site, mobile web app (where u save a thumbnail as a bookmark) and the mobile app itself to understand how perfection in UX works.

    My point from the beginning was – when consumers type or hit a search link of your website on their mobile browser, they CANT BE TOLD “download an app or get lost”

    I mean -sure you can tell them to get lost – and that’s because you don’t want them to buy things (lose more money) VS. Pretending that its a user experience thing.

  40. re. 1: Completely agree, because that’s been the case so far. However, that is exactly what Google/other browser vendors have been working on — afaik FK Lite is probably one of its kind partnerships to make the mobile experiences native like. If it works, it’s a win-win for both Google and Flipkart; and we will see more of those. Like I said earlier, I haven’t tried it so I can’t say if it really is different from earlier mobile web experiences.

    re. 2: Agree 🙂

    Any how, my argument was re. how media chooses to report/sensationalize things here in India, in general. Most news channels/publications sound like Fox News in US 🙂

    Coming back to FK, I may not agree with every thing FK says/does but I like the fact they are at least taking chances with some bold experiments. Who cares if the experiments are seemingly stupid or counterintuitive today as long as they win in the end? Often, as outsiders, we never know the entire story. Isn’t experimenting, failing, and succeeding the path to greatness in tech?

    Not sure if people noticed, but looks like bringing back talent from Silicon Valley seems to be working for them. Let the media talk about good things too kabhi kabhi 🙂

  41. First they call you retarded, and then realise they were talking about themselves :))

  42. Exactly 7 months ago, I was a “MORON” 🙂

    Today, this in the Mint

  43. Brilliant article and deduction as always.Many thanks.  -CP.

  44. From Ashes to Ashes, Dust to Dust

  45. Dear Myntra, no amount of about-turns will help you crawl back! You scorned us, lakhs of people who wear glasses  and our seniors (Seniors were barred from buying  for their children or grand children) by preventing us from accessing your store on a larger screen.  You prevented us from discovering brands on your store, on Google which still remains the most powerful search tool.  You were hugely egoistic, arrogant had no respect for large section of the society. If you expect that we will come back to do business on your darned relaunched website, you are living in a fool’s paradise!   You will learn the lesson, the hard way!

  46. this move was so predictive…even a fresh out MBA grad would have guessed it….thankfully, good marketing sense prevailed, finally.

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