How Flipkart hopes to shut out rivals by going app-only in India

Today India’s ecommerce leader Flipkart takes a big step toward going app-only. Its five-day Big Billion Day Sale is happening only in its app. In other words, all those juicy discounts to kick off the festival season can’t be accessed on Flipkart’s website or even a mobile browser.

It’s obviously designed to force more customers to download and use the Flipkart app. But why would it do that? Why lose out on sales from customers who might move on to rival site Amazon, which is also holding a Great Indian Festival Sale this week? Why risk spoiling its relationship with consumers who don’t like an app to be forced down their throats?

There are a number of reasons.

Personalization:

This was the reason given by fashion portal Myntra – acquired by Flipkart last year – when it went app-only five months ago. “Think of all the hardware and software features that one can leverage – like the camera, contacts, and location – to understand the user’s context and deliver a personalized experience,” said Mukesh Bansal, CEO of Myntra and head of commerce for Flipkart. Myntra has been trying to make the most of its app-only focus since then – from picking up delivery locations automatically via GPS to targeting recommendations and offers more precisely through notifications and messaging.

Engagement:

At a recent presentation in Bangalore, Myntra’s head of mobile business Abhishek Rajan shared some telling stats. “We had three times as much user engagement in terms of number of visits and time spent on the app vis-a-vis the website,” he said. What’s more, there was a two-fold increase in purchase frequency after a consumer moved from the web to the app. The average ticket size was larger too. The cumulative effect was to prove the doomsayers wrong – there was no loss of revenue from shutting down the website. On the contrary, “it had a positive impact on revenue because those who converted were transacting much more on the app,” said Abhishek, admitting that it surprised many inside Flipkart-Myntra too.

Connectivity:

India is expected to be the world’s second biggest smartphone market in a couple of years, overtaking the US to be second only to China. Already, a majority of people access the internet only from phones – but these are mostly on 2G networks with poor connectivity. In this mobile-first market, therefore, apps work better than mobile browsers because they are better at caching – that is, storing data on the phone to serve user requests faster.

These may be reason enough for a shift to apps in India. But for Flipkart, there’s an even bigger, more compelling reason – the mother of all reasons, in fact.

Competitive strategy

Flipkart co-founder and CEO Sachin Bansal is quite clear, in his mind, that the ecommerce war in India will be won or lost on the mobile screen – and apps are the heavy artillery that will tilt the balance. At a recent panel discussion in Bangalore, he gave a fleeting glimpse into his battle plan.

Consumer backlash

No regrets for Myntra

App commerce