(hint: I'm feeling unlucky)
The reason, in a single word, is Google.
The reason why Myntra moved to an app-only strategy was that they wanted to break their dependence on Google. The move failed to pay off and was consequently discarded (the cost - in terms of lost sales, far outweighed any other benefit they may have achieved by going app-only).
To analyse this let’s summarize the benefits of an app vis a vis a website (Desktop or mobile)
- Better personalization, engagement and (consequently) higher revenues per user: Most of you who have built customer-facing websites would have lamented the inability to know much about your website visitors. Clearly, an app is by far and away the winner when it comes to collecting information about users (based on their usage patterns, needs and buying behaviour) and using that info to personalise your product. A more personalised product will over time translate into better customer loyalty and therefore, more revenues per user. Secondly, the app lets you communicate to the user directly (via notifications), whereas the most a website can do is take your email address and send you emails (which mostly go ignored in your promotions tab).
- Reduced dependence on Google: On the web, Google controls e-commerce product discovery with its search algorithm. This is especially true in the early days of e-commerce when brand awareness is not yet established and e-commerce category leaders are just being created. Let me give an example. In the earlier days (say around 8 years ago), if you wanted to buy flight tickets, you would have gone online and searched for “Flight tickets from Mumbai to Delhi” and the Google search algorithm would have exercised outsized influence on which product (cleartrip, makemytrip, AirIndia, JetAirways) gained the most. Now, the aggregators have established enough brand awareness to change consumer preferences - so that we go directly to the respective websites like Cleartrip to begin our search.
What is true for flight aggregators might not be true for fashion, and the reality of the web is that whenever user preferences are varied, diverse and idiosyncratic, Google is going to control a huge part of the traffic on your website, even if you have good brand awareness. On the app, however, you are connecting directly with the consumer and therefore, bypassing Google.
Before jumping into the motivations of going app-only, let’s consider how the buying process happens online.
The user’s funnel (and the companies’ value chain) looks like this -
Suppose I want to buy a camera. The first thing that I’m most likely to do - is - express my Need on google, Discover some links, websites, review sites and blogs, evaluate and compare the options on review sites and price comparison sites and finally buy the product on an e-commerce site. Nobody owns the user from end-to-end of the process - Google owns him at the beginning and hands him off to the review site which hands him off to the e-commerce player.
Given all of this, the motivation for owning the user from end to end is clear (you can maximize the value you capture in this chain) . For Google, that means including a ‘buy‘ button on the search results, and for the e-commerce players, it means building the widest possible product selection and building brand awareness and incorporating the tools for discovery and comparison of products to become the one-stop-shop for consumers. E-commerce players would not be happy about having to fight against other competitors for scraps from Google, about Google controlling the total size of the pie and having the power to arbitrarily change their destiny with updates to its search algorithm.
How does all this work out in fashion?
How do users buy fashion products?
My hypothesis is that they do the following
1) Some users directly go to Myntra, Amazon, Flipkart Snapdeal (app/website) etc and search for fashion products.
2) Some users go to Google and search for ‘Buy Clothes Online’, ‘Buy T-shirts online’ and click on whatever link that appears. They may also be searching on Google for something more specific - a particular brand or so.
What is Myntra’s overall traffic and sales
The overall traffic and sales of Myntra can be considered as the sum of the traffic and sales from the following two sources
- Category One - Users who know about Myntra: Users who directly visit Myntra website or app on their device/or search for the keyword ‘Myntra on Google’ and follow the link to its website
- Category Two - Users who are interested in shopping online, but don’t know Myntra/aren’t thinking about Myntra while searching: Users who search ‘Buy t shirts online’ or users who search for ‘buy jeans from Benetton’ on Google, and click on the links that appear on the search results. These are either (a) people who don’t know about Myntra, or (b) they are people who aren’t thinking about the store per se, but are thinking about the specific product they want to buy (jeans/ t shirts etc) and are thinking that Google will give them the best answers and not Myntra. Some of these people (and not all of them) will click through and land on Myntra’s website based on where it falls in the Google search results).
Implications for Myntra
Myntra would get the full share of the visitors coming to its website or app through the direct route (category of users who know Myntra and are searching on it), however, it would get only a small chunk of the visitors that search through Google (based on where it falls in the search results. Say it falls in the first page, it may get around 15% of the visitors - the rest going to the other links in the search results). It is important to note that even a small chunk of visitors through Google can potentially be larger than the number of visitors coming directly. In mathematical terms, it is tantamount to saying that 1% of a very large number can be greater than 100% of a smaller number. The reason things happen this way is because of the extent and reach of Google, and the vagaries of the consumer - who is likely to search in unpredictable ways (‘buy tshirts online cheap’ etc) - most of which are best addressed by Google and not Myntra.
The objective of Myntra
Myntra would have thought this way:
How do we maximize our user base, increase our sales and increase the loyalty and frequency of buying from Myntra?
To answer this, if we start with the users, we proceed thus -
- Users who know about Myntra - the solution is the Myntra app - For these users - I can use the app to know them better, and personalize my product. This alone will be sufficient to meet all the above objectives for this category of users.
- Users who don’t know about Myntra and come via Google- the solution is the Myntra app backed by a massive branding campaign - For these users who don’t know about Myntra / or aren’t thinking about Myntra as the first thing when it occurs to them to search for clothes online, what if I run a massive branding campaign whose objective would be to communicate that ‘If you want to buy any sort of clothing online, just use the Myntra app and you’re set.’ If this is successfully achieved, if Myntra is able to convince everyone that it is a one-stop-shop for any sort of clothing needs, then Myntra would have bypassed Google. People who wanted to ‘buy Tshirts online’ and 'buy slim-fit jeans from benetton online' would no longer search for them on Google, they would directly go to Myntra.
An additional factor that would have tilted the balance in favour of the app-only argument is the explosion of mobile usage and the fact that Google search is not really efficient on Mobile, because typing is not efficient on mobile. All these factors would have contributed to the app only strategy.
There is one major risk in the app only strategy which is highlighted below:
Possibility of lost sales- What if the branding campaign fails to convince people that Myntra is the only thing you need for shopping for clothes online? If this were the case, i.e. if lots of people still continued to search for products via Google, then the lack of a website would lead to massive amounts of lost sales for Myntra, simply because a Myntra link was no longer present when users searched on Google.
What really happened
It is impossible for outsiders to say with certainty, but it clearly looks as if the lost sales from Google were too much to ignore (the branding campaign - if any existed, aimed at changing customer behaviour from searching on Google to searching on the Myntra app, probably didn’t do enough to mitigate the lost sales). It also reflects an overestimation of the importance of the mobile medium. It may be true that majority of our browsing happens on mobile, but until and unless new and more convenient methods of input and discovery are invented and until fundamental limitations like screen size are removed, most of the critical work regarding product discovery may continue to happen on the web and the mobile medium will be used only for the transactional and less critical part of the decision.
In short, Google is still top dog. Way too many people are still going on Google search and typing stuff like 'buy branded jeans online at lowest price' for Myntra to ignore right now.
Postscript - Overestimating the current importance of the mobile medium
The one thing that ‘mobile’ has indisputably done is it has exponentially increased the available time we have for spending on the internet. Earlier, the time spent on the internet was restricted to work and home settings (places with work stations, laptops and wifi connections), whereas now it has expanded to include our commutes, our conversations and basically every single moment that we are awake. Hence, our browsing, which was earlier more specific and intent-focussed, has now become, on an average, more exploratory (earlier, our concern was about efficiently using the available time, now, it is about discovering things that can occupy all the extra time). Assuming that the time we spend browsing on the mobile vis-a-vis the time we spend browsing on the desktop/laptop is distributed as 80%-20%, it may be natural to assume that the critical activities that we do are also distributed as 80%-20% vis a vis mobile and desktop/laptop. This assumption is debatable. At this moment, the mobile medium is still at a disadvantage for some activities as compared to the desktop and laptop, because of the small screen size and the inefficiency of typing as a mode of input. For categories where screen size and input method is important (two examples - buying clothes - it is better to explore clothes on a larger screen, and work on documents/spreadsheets etc - where typing needs to be efficient), what this means is that even though only 20% of the time is spent on laptops, that 20% time will be spent on more critical activities ( browsing and discovering products, deciding what to buy and where to buy), whereas the mobile phone will be used as a convenience only for completing the transactional aspect (pressing the buy button). In other words, the web and the desktop/laptop world is not as insignificant today as you think - the low time spent there may be spent disproportionately on critical parts of the decision, whereas the high time spent on mobile may be mostly on parts of the decision that are of peripheral importance.
The author is a Product Manager at an artificial intelligence start-up and an alumnus of IIM Indore. He has worked with Capgemini, Cognizant Business Consulting, IiAS and InsideIIM in the past. You can read his previous posts here.