An increasing number of people are using mobile phones as their primary online shopping device. The research firm Nielsen reported that the number of smartphone owners using mobile e-commerce apps has gone up 33% from May 2014 to May 2015, based on real-time mobile usage data across 8,000 handsets in India (source). This upward trajectory has also been confirmed by the report Law & Technology: Evolving challenges as a result of fraud in E-commerce sector by Grant Thornton and ASSOCHAM. India currently leads the world in mobile user base growth. According to a recent article in Times of India, India added at least 26 million new subscribers in Q1, 2015 (source). In the next three years, 200 million Indians will access the internet, with the majority of them accessing the Internet on mobile phones. This makes India an extremely lucrative market for app developers. With a continued mobile growth, online shopping in India is expected to increase from 20 million in 2013 to 40 million in 2016. In our recent Mobile App Landscape: India Insights June 2015 report, we analyzed the app usage of 8M Android devices in India during January – May 2015 and studied the top shopping apps in particular. We observed that all of the top shopping apps in India experienced a steady growth in terms of installs and usage. With India on track to become a forerunner in mobile usage in the future, this trend signals a shift in mobile commerce.
Growth by the Numbers
Our study shows that among the top shopping apps, Flipkart was the dominant player in terms of highest market share. It also had a 10% increase in installs during January 2015 – May 2015. Snapdeal, which came in second place for market share, saw an 8% jump in installs during this period and is now fiercely competing with Flipkart. Myntra is still in third place in terms of market share but only experienced a moderate increase in installs: 3%. Meanwhile, while Amazon India Shopping hasn’t captured a large fraction of the marketplace, it is picking up great momentum and saw a massive 12% spike in installs and usage.
A heavy chunk of shopping orders are now coming from mobile apps. Snapdeal, Flipkart, and Myntra have reported that more than 75% of their traffic comes from mobile app. These apps are now transitioning from the traditional website model to a more mobile only model. This reinstates the trend that mobile is now the way to go in this emerging economy.
What about Retention?
Mobile apps typically struggle to retain their users after a few days of install. We’ve found that an average Android app losses 77% of its daily active users within the first 3 days after install (source). As the mobile user base grows, competing apps emerge and existing apps find it hard to hold their ground. Our data shows that Flipkart, Snapdeal, Myntra, have an average retention drop of 64%, 73%, 69%, and 80% respectively in the first 3 days. While the first three have above average retention rate drops, Amazon India Shopping has a slightly below average retention drop of 80%. These numbers indicate that the shopping apps have a relatively average performance with respect to retention, with Flipkart having a slightly higher retention rate. There is definitely more room for these apps to improve engagement and retain users.
Tactics to Drive up User Engagement
In-app sales, coupons, discount codes, and fast delivery options are the key factors to drive up purchases and re-engage users. Flipkart promoted a three day sale called Big App Shopping Days from March 23-25, with discounts scaling up to 75% for only in-app purchases. Likewise, Snapdeal had its biggest app-only sales event called the App Shopping Festival on February 26. From May 30-31, the app-only company Myntra had an Appreciate Yourself sale with discounts of up to 80 per cent. Amazon India Shopping hosted The Great Indian Summer Sale from May 6-8 which featured flash deals and cashback offers, including attractive app-only promotions.
Another crucial factor for the success of these apps is their ability to handle the growing demand and have an efficient supply chain management. According to a recent Times of India article, Amazon India Shopping, Snapdeal, Paytm, and Flipkart are in the process of ramping up their workforces across various functions. Snapdeal and Paytm are aiming to double their current headcount of 5,000 by FY16. Meanwhile, Amazon is aggressively hiring and scaling up operations in the country and has committed to an investment of two billion USD in India to expand its business (source). Flipkart is planning on massive growth over the next three to five years.
The Battle Rages On
Shopping apps have now taken their position and are all set to battle it out for the top position. Stay tuned with Quettra as we report how this battle unfolds and see how India embraces this wave of mobile commerce.