| Log in
Reuters Photo Credit: Reuters
TMT

Will Flipkart’s one-stop app script a WeChat-like success story?

14 June, 2017

Earlier this week, it was reported that India’s largest e-tailer Flipkart was looking to become an “everything app,” using which customers can order food, avail on-demand services, hail a cab or even buy daily essentials.

The company plans to roll out the app by the end of the year, and it has initiated talks to on-board food, cab and travel aggregators, The Economic Times reported.

The app, reportedly a brainchild of Flipkart CEO Kalyan Krishnamurthy, appears to be a confluence of two strategies—to gain an edge over competitor Amazon and to replicate WeChat’s success story outside of China. To wit, WeChat, promoted by Tencent (now an investor in Flipkart), is the largest media messaging platform in China, and it provides an array of services including search and discovery of commerce services, a fulfilment platform and an integrated payment system. It also contributes significantly to Tencent’s ad revenues.

The question is: Can Flipkart replicate the WeChat magic in India?

Different markets
While it is too early to speculate on the app’s success, industry experts broadly agree it is a difficult task. Moreover, as a market, India is markedly different from China.

“In China, the success of WeChat can be attributed to two reasons: the exit of Google over a protectionist environment in 2010 and the absence of any other linked-to-search discovery platform. There was Baidu, but it remained only a search engine,” says Anup Jain, founder and managing director of Redback Advisory Services.

Sanchit Vir Gogia of Greyhound Research echoes Jain’s sentiments, and feels that India, as an open economy, is more inclined towards adoption of global trends.

“Other global players like Google, Facebook have a thriving business here as opposed to China. Aping WeChat is a very wrong example to take here. There is a lot of trial and error involved as part of just developing this app and understanding service and delivery issues, which alone could be a 2-3 year journey,” he says.

Tough competition
By venturing into the space, Jain feels the app will be locking horns with Google, which not only has a much larger database but also the lion’s share of the search-based services discovery market.

Besides, in April, Google forayed into the hyperlocal space in India with the launch of Areo, an app that lets users order food and book home services from local electricians, painters and beauticians, among others. It has so far tied up with players such as Box8, Faasos, Zimmber and Urban Clap.

Going ahead, Google might accelerate its plans for Areo and tighten the noose around its constituents, Jain says, adding that Flipkart might have to allocate considerable resources, time and, probably, an almost-parallel organisation if it wants to replicate the success of WeChat.

Experts feel it could boil down to getting critical mass for the product, which could take a long time as the concept is yet nascent. Hence, it would perhaps make more sense for Flipkart to start off small, with a few good service providers and partners, and gradually expand.

“Maybe this is not a top priority for Flipkart at this point. Maybe they are just testing waters. They might want to start off small without much resources and gradually ramp up the tech investment based on user adoption,” said Mrigank Gutgutiya of RedSeer Consulting.

While the success of the super-app, if it happens, might give Flipkart an edge over Amazon by drawing customers, it may not actually translate into significant revenues, Gutgutiya adds.

Tech challenges
Apart from challenges on the consumer behaviour and adoption front, India lacks sound technology infrastructure. If a super-aggregator app, modelled on the lines of WeChat has to take off, the problem of bandwidth has to be addressed.

“A multi-service app modelled on WeChat has a basic requirement of brilliant bandwidth. We are still at least five years away from achieving self-sufficiency in bandwidth,” says Gogia, adding that consumers might also be wary of sharing so much data with just one provider.

A lot also rests on cracking the user interface and design elements, feel experts.
However, in all likelihood, that will not be a resource guzzler, says Gutgutiya. Any refinement in technology will be a linear function of traffic and traction, he adds.

Value-proposition for vendors
The app, which intends to capitalise on Flipkart’s customer base, is expected to boost revenues and complement its advertising business. However, a rush to on-board many players could make the app crowded, impacting service discovery as well as user interface. Execution, too, could become a challenge if it does not tie up with the right players.

“If an app-in-app strategy was so successful, Amazon ideally should not have created Amazon Prime Video as a separate offering,” Gogia says.

Even from an advertisement point of view, says Jain, Flipkart will have to demonstrate its value-proposition to vendors through reduced customer acquisition costs.

Integrated payment ecosystem
If Flipkart wants app usage to soar, it is imperative that, like WeChat, it gets its users and partners to use its native payments service ecosystem, PhonePe. However, PhonePe is yet to see traction as a payment wallet.

“In the longer run, when the platform gains enough critical mass, an integrated wallet will play out as a key differentiator as it provides more value for a customer, who can, say, access 20 different types of services by logging into just one app,” says Gutgutia.

Jain feels getting its vendor partners to transact on PhonePe will be a huge challenge for Flipkart. “The payment wallet business just does not have enough margins for every wallet to be passing on margins,” he adds.

Bright spots
While the odds seem stacked against Flipkart, experts feel the super-app, if it clicks, could give rise to a new category of services centered around discovery and fulfilment. In the long run, it could benefit the Indian consumer, who will perhaps continue to get discounts.

“Similar to the e-commerce bloodbath that took place a couple of years ago, customers are going to have a great time as there will be discounting to lure users to use the platform,” Jain says.

And there is no doubt about the app’s tremendous potential, should the script go according to plan.

Gogia feels the super-app could become an exclusive, go-to point for frequent and aggressive buyers, even if doesn’t appeal to the entire spectrum of consumers.

Like this report? Sign up for our daily newsletter to get our top reports.


Leave Your Comment
Flipkart launches 'buy now, pay later' feature

Flipkart launches ‘buy now, pay later’ feature

Vijayakumar Pitchiah 5 months ago
In yet another effort to woo customers, homegrown e-commerce major Flipkart has...
Flipkart likely to invest $50 mn into Swiggy: Report

Flipkart likely to invest $50 mn into Swiggy: Report

Homegrown e-commerce major Flipkart may invest $50 million (around Rs 327 crore)...
Flipkart invests in mobile payment gateway ngpay

Flipkart invests in mobile payment gateway ngpay

Sainul K Abudheen 3 years ago
India’s largest e-commerce company Flipkart has invested an undisclosed amount...
No Comments

Will Flipkart’s one-stop app script a WeChat-like success story?

Powered by WordPress.com VIP