Myntra’s move to an App-based model- our Analysis
Why would a company shut down a prospective channel of business that is still delivering revenue? Myntra has shunned its website & has gone app-only to increase loyalty. The reasons behind this move could be to narrow the gap for the customer in terms of choices. An app conforms to that principle & does not open up options for the customer coming from rivals selling similar products. We all know that E-commerce market globally is a price sensitive market, condition to the availability of stock. So, buyers have more power on websites as they can compare prices, delivery schedules, and stock position of 3-4 e-tailers & then take a decision. So, what triggered Myntra to use a single app-only channel of revenue?
What pushed Myntra to go app-only?
The answer is quite simple, let’s compare the volumes of desktop users Vs. mobile users. The mobile users are far more than desktop users & the penetration of 3G into rural areas is only going to up this number. Myntra could benefit from this model by increasing its reach & coverage, as all the users are on their app. There is also potential to upsell products as “push” marketing is simpler in just one channel. Any campaign with respect to discounts, category sale or coupons can easily be communicated to the customer via the app. Myntra has also pushed the users to a single commonplace through which they can shop, this reduces operational hassles & cuts costs for the firm.
To quote numbers, Myntra claims that 90% of traffic & 70% of the sales is already coming from the mobile app. So, Myntra is just following the market & trying to leverage on the increasing mobile users. This leaves us with an interesting argument, the steady increase in mobile phone users & app users does not necessarily mean that the desktop traffic has gone down. It still is a prospective channel for any e-commerce firm, the desktop traffic may not have decreased but has at least remained stable with a slight growth.
Another drawback of this model is the lack of “touch and feel” in certain product categories. Buyers are skeptical when it comes to online shopping & prefer to view the sample images in large aspect ratio, this might not be possible with the screen size of mobiles. So, Electronics & books can be purchased through the mobile app as it requires not much detail, but the same cannot be said about apparels.
The number of mobile Internet users in India is expected to reach 213 million by June, according to a 2014 report by lobby group Internet and Mobile Association of India and market researcher IMRB International. Estimating further, by 2017, India will have 480 million mobile Internet users. Myntra has seen this enormous opportunity that the mobile market is offering. Also as per Mausam Bhatt, Senior Director, Mobile commerce & Digital marketing at Flipkart – “Advertising on the app is cheaper compared with that of desktop”.
Other positives of the app-only model:
Personalized messages reach the users or buyers: With the mobile app, it is easier to offer a more personalized experience for the buyer. The mobile stores a lot of personal information about the buyer like location, interests, social network, habits & preferences based on previous purchases. This significant data can be tapped by Myntra to push related products, have personalized promotional offers that acts as a critical catalyst in buyer’s decision-making process.
Push notifications that encourages action: This is one of the best features that is available on the mobile app that contrasts the desktop. Myntra can push notifications that are time scheduled & provoke users to engage more with the app. This certainly does not directly relate to a revenue, but will get the buyer to click and look through the product offerings. Revenue at a later stage? Perhaps.
Lower cost of promotion & operations: As mentioned earlier, advertising costs can be cut as mobile advertising is cheaper than desktop advertising. Also, there would be a substantial cost cut in maintenance of the desktop site & its related operations. But given the funding raised by this e-commerce giant, this cost would be a very insignificant number.
Flipkart may follow Myntra shortly?
As Myntra is a subsidiary brand of Flipkart, this strategic vision of going app-only could also be a beta testing for Flipkart to follow at a later stage. Myntra deals with impulse category like fashion products, and the app might work well for them as most purchases are made out of impulse. Flipkart has probably figured out the potential of mobile market & this move by Myntra could be a strategic scheme designed by Flipkart. This also justifies the increase in mobile traffic encountered by Flipkart.
But dealing with other categories that Flipkart owns, it might be difficult to reap the same benefits as Myntra is doing. As Myntra sells only fashion category that where impulse buying is the order of the day. This also assures a better user experience & easier ability to push promotional notifications to increase sales. Also, Flipkart depends on the affiliate program & other methods to acquire customers; whereas Myntra does not have a direct dependency, so it’s easier for them to shut down the website without losing a lot of opportunities.
According to Google India, there were 35 million online shoppers in India in 2014 Q1 and is expected to cross 100 million mark by end of year 2016. Electronics and Apparel are the biggest categories in terms of sales. The market potential and the predictable mobile trend has paved the way for Myntra to take this bold decision in shutting down the desktop site. It will be interesting to see how Myntra performs in building revenue, although it has started with a dip in sales figures post app-only model. India is the third-largest internet market in the world after China and the US and with the cost reduction in smartphones & 3G providers, the number will surely increase. Perhaps a cue for other online retailers too?