Mobile devices will redefine how e-comm companies do business as more customers take to such devices for large-value transactions
MOINAK MITRA & RAHUL SATCHIDANAND
NEW DELHI | MUMBAI
You can tell the rules of the game are changing by closely observing how traditional players are viewing the mobility space. Of course, e-businesses ought to cash in on m-commerce first, but Domino’s Pizza India has a few ‘firsts’ up its sleeves. Apart from being the first to launch an e-commerce website in the food space in India three years ago, last year, the second-largest pizza brand in the world launched its mobile-ordering platform in India becoming the first among QSRs (quick service restaurants) to do so. “Already, a million apps of Domino’s mobile ordering have been downloaded, and 10% of our online sales come from our mobile ordering platform,” says Harneet Singh Rajpal, VP, marketing, Domino’s Pizza India. “I’m expecting the numbers to double by 2014. And 10% of the online business that comes from mobile transactions will also grow at a much-faster pace, roughly between 18% and 20%,” he elaborates.
In the same vein, for the country’s largest telco Airtel, its mobile interface, Airtel Money, has had phenomenal growth over the last year. Sriraman Jagannathan, CEO, m-commerce, Bharti Airtel, reveals that Airtel Money witnessed a wider acceptability over last year resulting in a YoY growth of 168% in monthly active subscriber base to 1.4 million subscribers as of September 30, 2013. “The transaction value has jumped to . 6,541 million during the quarter as against . 691 million in the same quarter last year,” he says. A total of 23.7 million transactions occurred during the quarter with an average value of . 276 per transaction.
That’s just a couple of offline players; now just toss the question to the top 3-4 e-businesses about what the explosion of mobile devices means for their business. That a tectonic shift is underway is a loud and clear message you will gather after listening to their replies. “We get a tenth of our sales off mobile phones,” says Sachin Bansal, CEO and co-founder of Flipkart. “The ticket size on this platform is comparable to the web.” According to Bansal, the mobile phone will redefine how ecommerce companies do business; it will allow them to target consumers better and create more personalised shopping experiences for them.
Bansal’s competitors, too, are witnessing the unfolding of a similar trend. “Our sales from mobile phones account for nearly a fifth of our revenues,” says Ganesh Subramanian, COO of Myntra, India’s largest fashion retailer. “This is doubled in just the past six-nine months.”
Even for Amit Somani, chief product officer for travel portal makemytrip.com, the mobile story has really unfolded over the last 12-15 months though the company started nearly four years ago with its very first native app on Nokia. “Though flight ticket and hotel charges are relatively higher (compared to online hawkers, such asbookmyshow.com who vend cinema tickets), about 20% of the transactions are on mobile,” he says. “We expect 5 million downloads of our mobile app (from 2 million now) by 2014; otherwise, we’ll be disappointed.”
And now MMT has started focusing on things which are exclusively leveraging the power of the mobile. For instance, through its location-based features (LBFs), MakeMyTrip found that a lot of people were booking hotels after landing at the airport or in transit. So, depending on the longitude and latitude of the user gauged from his/her mobile phone, the company suggested nearby hotels or restaurants.
Slowly, customers are shedding the inhibitions of using mobile for large-value transactions. “Last year, we had a customer who did a single transaction of . 2 lakh but this year, we’ve had someone who transacted . 6 lakh at one go over the mobile. If payments improve, the hockey stick is bound to go up,” says Somani. Through 2013, Ankit Khanna, as head of product management at Snapdeal, had to work hard at the mobile side of business. In the last 12 months, the mobile transactions have shot up from 4-5% to 30% but he estimates that in another 12-15 months, nearly half of transactions will be mobilebased. Already, 25-27% of Snapdeal’s total visits originate from the mobile platform (site+app). One can get an idea of how the mobile devices are growing by looking at the numbers. According to an Avendus report on India’s Mobile Internet, India has more than 160 million internet users of which 86 million access internet using their mobile devices. The number of people using 3G tots up to 22 million but the report projects 266 million 3G connections by 2016. Currently, nearly 10% of internet page views in India come from mobile devices and that’s all set to explode if India goes the China way. According to On Device Research, in China, mobile internet users now number 388 million (out of a total of 538 million total web connections) and 38% of Chinese mobile web users only access the Internet through their mobile. Surprisingly, the mobile-only trend was especially prevalent in rural areas where 45% were mobiles.
Mobile devices have a very powerful proposition for businesses. The fact that mobile devices are location-aware gadgets offers great personalisation opportunities, and studies show that mobiles are taking up a lot of a person’s leisure time (an average mobile-user checks their mobile 110 times a day).
As they experiment, businesses are discovering that conversion rates are also much better in many categories. With better, cheaper devices (both smartphones and tablets), much more affordable data connectivity connections (especially after telecom providers dropped 3G rates) and mobile revolution will transform businesses.
Even brick-and-mortar companies need to get ready with a mobile-first strategy. Globally, Mondelez has crafted a “Mobile Futures” programme, in which the company collaborates with mobile startups for better consumer engagement models and better sale conversions. In a big shift, for the global liquor giant AB InBev all marketing campaigns in 2014 will be put together based on how the brand experience will come through mobile than other media like web or TV. E-businesses globally, too, are getting ready to deal with the shift. A year-and-a-half ago, Mark Zuckerberg declared Facebook was going to be a “mobile first” company. With 874 million monthly active users (MAUs) on mobile, mobile is the cornerstone to Facebook’s monetisation strategy (62 million mobile MAU are in India in Q2 of 2013). A look at the October earnings call numbers shows that 48% of the people who used Facebook each day in September accessed Facebook only through mobile devices and approximately 49% of ad revenue was from mobile, up from 41% last quarter. If these numbers are any indicator, it’s clear that companies that don’t embrace a mobile strategy will do so at their own peril.
While mobile devices will be game-changers in 2014, they do present their own set of challenges. The biggest challenge is how to design the user interface that works with 4,000-plus devices currently available in the Indian market (Facebook works on 7,000-plus devices). Also, it’s a constant catch-up game for the tech teams sitting in dotcoms and brick-andmortar businesses because all leading operating platforms almost always remain in an upgradation mode. The third big hindrance is inadequate mobile payments infrastructure with many banks not up to date on their online payment systems.
But despite challenges, players know they need to be on top of this trend in 2014 and they are getting ready. Take, for example, Myntra, which wants to double its annual revenue run rate from $100 million to $200 million from 2013 to 2014. It says it has focused on keeping things simple with its mobile apps, allowing consumers to browse and buy products simply. “For many of our customers the mobile is their only computer, so we need to make access to keep access to Myntra as simple as possible,” he says. While the e-tailer processes some 15,000 orders daily overall, it now thinks the time is right to add some bells and whistles to its mobile offerings. “We are working on a range of solutions — fashion tips and solutions and a layer of personalisation to the mobile experience,” says Subramanian.