A couple of months ago, Myntra – India’s leading online fashion retailer – announced that their offering would soon become mobile-app only. Meaning, they would shutdown their desktop (and mobile) website, and customers could only buy Myntra’s products through the mobile app. This sparked off heated debates among customers and in media circles, with opinions from both ends of the spectrum (“Brilliant”, “Business suicide”) being offered up.

Last week, the poster-child of Indian e-commerce, (and Myntra’s holding co) Flipkart, announced their decision to go app-only from September. Flipkart’s announcement has stirred up strong opinion all over again.

So, is app-only the way forward for consumer products like Flipkart, Ola, etc?

Or should they be going more pragmatic, perhaps with a mobile-first strategy? Is it possible that Flipkart is conducting a consumer experiment, and might bring back the venerable website based on the experiment findings?
The answer, as is usually the case with strategic decisions, is quite nuanced. To appreciate the underpinnings of this decision, its necessary to understand several factors.

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Device characteristics

Mobile phones (including phablets and tablets with call capability) are vastly different from desktop computers and laptops in many ways.

• A desktop/laptop is sometimes shared between multiple users (this is more so in India) while a mobile is a personal device.
• Mobiles are ubiquitous; it’s the one device that is always on you and always on.
• Mobiles have specific capabilities such as location-awareness (GPS), cameras and motion sensors, which a mobile app can leverage to know the user better. These capabilities will only get better with advances in technology.
• In an emerging economy like India, there is a large (and growing) base of mobile-only users; Users whose first (and in many cases, only) experience of a computing device is a mobile phone. And most of these mobiles are smartphones, thanks mainly to affordable Android phones.Mobile screens are smaller. This is a challenge as well as an opportunity.

Connecting the business dots

• How do device characteristics affect user behavior on the mobile phone?
• What does this mean to an e-commerce business like Flipkart?
• Is the app-only move justified?

Lets see.
Since the mobile is a personal, unshared device, users are more uninhibited when using the Flipkart app. Moreover, the app eliminates the “anonymous user” problem of the desktop browser world. This allows FK to collect more accurate behavior data, and form a clearer picture of the user’s preferences. Since the mobile is always on the user, the app can track location, travel patterns etc, further enriching user data. Rich user data allows FK to offer a deeply customized and continuously improving user experience for their customers. This is a great “widening moat” for an ecommerce business.
The dynamics of mobile app usage are such that users rarely install more than 2-3 apps for the same purpose. This situation disproportionately favors the first movers and incumbents in every industry. The FKs and Amazons of the world, with their deep pockets and recognizable brands, are able to negotiate with phone makers for pre-installed apps, or dole out freebies & advertising rupees to encourage app installs. So, if you are the 4th best ecommerce app, then good luck with your app installs!
Once installed, the app has a direct channel with the user. A well-designed app should enhance that relationship by providing a compelling user experience, and walking the thin line between being helpful and being intrusive with its alerts & notifications. Such an app quickly grows on the user’s subconscious and becomes a habit. This makes for a very sticky product, and a challenger has his work cut out to dislodge the incumbent from the user’s consciousness.
​ A much-less important, but nice-to-have side effect of going app-only, is the engineering costs that FK would save for not maintaining the desktop/mobile website.

But is it all fairies and unicorns? Certainly not. There are flipsides and tradeoffs.

There’s a sizeable population for whom the desktop website is the habit. Going app-only is likely to alienate them. Also, a big segment of the user base is price sensitive, and will certainly compare prices before buying.

What about the potential business that’s lost from these users?

The second segment is the easier decision. Price-sensitive customers are always bad news for a business, because wooing them will only lead to a race to the bottom. So, assuming that FK has enough customers who are not price-sensitive, it isn’t too bad to risk alienating the price-sensitive crowd. There was never any loyalty to begin with!

The desktop users segment is tricky. On one hand, it is very likely that this segment comprises several high-value customers and losing them is bad for business. On the other, as mentioned already, the mobile app world is better than the desktop world…

• To create a habit-forming experience for your users.
• To collect richer and more accurate data about user behavior

The best outcome for FK would be that all users are app-only. Perhaps, if the other choices were removed, a large percentage of desktop users might (grudgingly at first) switch to the mobile app. Considering that app-only model allows FK to build a “widening moat” business with a sticky user experience, it seems like an experiment worth doing.

Is it right for everyone?

It depends on your business goals as well as the nature of your business. For a business like Zynga, which makes social media games, network effects are strategically important for keeping users hooked. So, it makes sense to have a wide funnel and support a variety of customer acquisition sources. Zynga is best served by ensuring that its games run on a variety of browsers and mobile devices.
On the other hand, for a location-based service like Foursquare, an app-only mode will provide more accurate location tracking, and hence a better user experience.
Even for FK, it is possible (but not probable) that going app-only will prove to be a wrong decision!

BLOGS

Mohan Varadarajan

Mohan has donned many a hat during his interesting and vibrant journey in IT as an Entrepreneur and Engineering Expert. Currently the Vice President, Products of Knowledge Foundry Business Solutions, he has earlier been an early stage engineer at Amazon India.

He has a rich experience spanning Product and Engineering functions in Large-Scale Distributed Systems, Web Services and Cloud Computing.