Outlier – “a person or thing differing from all other members of a particular group or set.”

 

A week ago ZDNet broke the news that Flipkart was removing its mobile website and requiring users to use their apps to make purchases. The news actually started 2 weeks ago when Myntra (Flipkart’s first acquisition) announced that they and Flipkart would be turning off their mobile websites.

There are a few things that need to be mentioned before we delve into this decision. Flipkart is an outlier and to be quite honest unlike anything I have seen in ecommerce. They have raised an enormous amount of funding from a lot of investors. To be precise they have raised  $2.5 Billion in 11 rounds from 16 investors.

“Over the past year we have come to believe that we can serve our users much better through our apps simply due to the flexibility it offers. With the app, customers can stay logged in to Flipkart at all times. This helps them save time and get smoother and faster checkouts. Our app is designed to work relatively well even in low bandwidth conditions compared to the m-site,” the Flipkart spokesperson said by email. Livemint

The article that caused all the tweets

I saw the ZDNet article, read it and then added it to my ecommerce newsletter. The point is this to me was a business decision that must have been discussed with boards and approval must have been sought for this gigantic move.

The advantage of an e-commerce app in any country makes sense. The impulse to buy anything online is clearly driven by a rich consumer experience, not something that stuttering websites with stillborn graphics can hope to match, but which an app easily lends itself to. A dissatisfying experience can in fact easily torpedo a campaign, as Flipkart found out the hard way when it launched its “The Big Billion Day” sales event in October last year and its website crashed repeatedly, alienating customers. In fact, my money is on the company having arrived speedily at this conclusion after this minor catastrophe. ZDNet

In a space of 6 hours, I saw a bunch of tweets about this article and in all honesty one of two had some insight about this decision.

The implications

Obviously this is a big change and as far as I can see the first time, a desktop based ecommerce business shutting down their mobile websites for purchases.  According to The Times of India, Myntra will take this change one step forward and also close their desktop website.

SEO and SEM are no longer a part of customer acquisition. App Installs and mobile advertising will become the core user acquisition channel. It needs to be said that Flipkart has spent millions of Dollars on Adwords and potentially have received front of mind for a large part of their customer base. If this business were going mobile only without the benefits of SEO and SEM then the lack of search engine traction would be a larger issue.

Email marketing and transactional email is now a must execute. Personalization based on purchase habits becomes critical and Flipkarts acquisition of AdlQuity is now understandable. AdlQuity also becomes a potential revenue generator for Flipkart to augment their own income. I would be surprised if Flipkart is not working on their own mobile advertising platform in which they leverage AdlQuity.

Google will lose 2 very large Adwords accounts as I suspect that the primary marketing channel will be app downloads and installations. A few weeks ago The Information (paywall) made mention of a zero rating and one can now understand why.

In response, Google engineers in recent months have talked to select app developers in emerging markets like India about the company’s plan to reduce or eliminate the mobile-phone data costs that people pay to use apps on Android-powered devices, a practice known as “zero rating,” according to one person involved in the talks and two people briefed about them.

Trak.in mentions in an Indian context

What if someone is paying for your data plans so that you can access, download and update all the apps you want? Yes, Google, according to some reports, is looking for capitalisation of data. Google has started discussing the idea called ‘zero rating’ with some app developers about reduction, and possible cost elimination of data.

In India, Google is reportedly planning the same with biggies like Redbus, Flipkart, Ola cabs and others.

Flipkart / Myntra both receive in excess of 60% of their traffic from mobile devices. If Flipkart was not as well funded and have the amount of customers they claim would they make this decision?

I also believe that geographic location is playing into this decision. India is a mobile first country as many Indians access the web from their mobile devices and not desktop computers. This was initially not an issue but as Flipkart has aged the Binsals have made mobile a bigger part of their media coverage. The one other thing that mobile brings to Flipkart / Myntra is a lack of reporting for their competitors as mobile apps are ultimately a client / server relationship. Only Flipkart / Myntra will know the real impact of this decision.

The other telling conclusion that I have come to is that Android now becomes the most important platform for Flipkart / Myntra. Apple devices are not that widely seen in India and one can also now understand why Flipkart has been hiring ex-Google product managers. Android provides huge opportunity but the returns are less in terms of customer spend in comparison to iOS.

The logistics side of Flipkart will also be under more pressure to ensure that they perform as app shoppers are more critical than normal desktop customers. If Flipkart / Myntra have any further outages or app related challenges it could have a direct effect on their bottom line.

Summary

If they do close down their desktop websites, the winner of that will be Amazon.in as that is the most visited ecommerce competitor after customers visit Flipkart (data from Alexa).

By going app only Flipkart/Myntra goes all in on Android, email and app installation advertising. Those are the primary drivers for growth and a sustainable business.

Flipkart is an outlier.

Disclosure: My current employer has a shareholding in Flipkart. I have no access to their insights and decision making. The above is my own opinion on the change in strategy from Flipkart.