India’s mobile commerce revolution

22nd Jul 2015
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An article in the ‘Times of India’ on April 6th ran the headline: ‘Myntra to shut website from May 1.’ To a casual observer, this statement might have seemed less than newsworthy. But to those of us in the mobile technology industry, it describes a profound, perhaps, watershed moment in the history of e-commerce.

Myntra, one of the top fashion e-commerce companies in India, recently shut down its website in a move to become a mobile app-only etailer. It had previously shut down its mobile website. More prominently, Myntra’s parent company, Flipkart, has also shut down its mobile site. It is considering closing its website, if the experiment works with Myntra.

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Image credit "ShutterStock"

Why is this significant? Because, Flipkart is the largest e-commerce company in India.

To e-commerce players in the developed countries, this move might seem crazy, suicidal even. But Sachin Bansal, the CEO and Co-Founder of Flipkart, believes the exact opposite. He recently tweeted: “Non-Mobile Only Strategy is the most risky thing at this time anywhere in the world.”

The reason why Bansal believes this is that there is a mobile commerce revolution taking place in India. As we shall see, this revolution only started a short time ago and is accelerating with blinding speed.

The great mobile ‘Leapfrog’

It has been often discussed how the rapid deployment of mobile infrastructure and the plummeting costs of connectivity and smartphones are leading to “mobile only” internet usage in developing countries. The Internet and Mobile Association of India estimates that as of June 2015, there will be 354 million internet users in India, 213 million of which will be mobile users (http://www.iamai.in).

But it’s not just that the majority of users in India are on mobile, it’s how far they’ve come, and how fast. Consider that as recently as June 2012 there were only 48 million mobile users in India.

In three years, the mobile user base in India has quadrupled in size! Impressive.

What’s more amazing is that this number represents only 15% of the population of India. For some perspective, Emarketer estimates that by next year, over 200 million people in India will have smartphones, replacing the United States as the second largest smartphone market in the world.

From e-commerce to m-commerce in one year

So, how has this mobile revolution affected e-commerce? The aforementioned ‘Times of India’ article stated that “Most leading Indian e-commerce players have seen mobile contribute to greater than 50-60% of transactions today from under 5% a year ago as smartphone penetration has risen exponentially.” An article on Medianama in May 2014 described how Snapdeal, the second largest homegrown etailer in India behind Flipkart, had seen its mobile sales increase 25 times in one year.

Let’s think about that for a moment: an increase of 25 times in one year. I’m not using the word “revolution” lightly.

In the cut-throat world of e-tailing, where price is king and switching costs are non-existent, the players know that a mobile app can create a more personalized, higher-touch shopping experience than the mobile web. And they are hoping that by shifting to an app-only strategy now, they will capture a greater share of the massive market opportunity to come.

This is why all of the multi-billion dollar e-commerce companies in India are betting on an app-only strategy. As the other 900 million people in India who are still not internet users come online for the first time, most of them will be doing so on a mobile device.

Lessons learned

What lessons can India’s m-commerce revolution teach mobile app developers and other players in our space? One, that despite the massive shift to mobile that has happened in such a short time frame, the game is far from over. In fact, it’s still early innings. As the mobile user base expands at an exponential rate, opportunities in m-commerce as well as in other areas will continue to multiply. In a recent study titled, ‘Technology Media and Telecommunications India Predictions 2015,’ Deloitte stated that there will be ripe opportunities for more vertically specialized m-commerce companies, as well as large potential for Uber-like ‘sharing economy’ mobile companies in both consumer as well as enterprise markets.

Two, when e-commerce becomes m-commerce, its remarkable how quickly things can change. In 2013, AT Kearney wrote a report on the global e-commerce industry in which India (link), the second most populous country in the world, did not even make their top 30 most attractive online markets. Only two years later, Morgan Stanley released a recent report in which they expect India’s e-commerce market to grow from $2.9 billion dollars in 2013 to over $100 billion by 2020, making it the fastest growing e-commerce market in the world.

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