Naspers, the South African internet company that owns 17.4 per cent in Flipkart, has backed the app-based strategy of the Indian e-commerce major, which it says has over 50 million monthly active users, three times larger than that of rivals Snapdeal and Amazon in the country.
"India is an Android-first market, with an increasing shift to mobile-only solutions. I believe that app-based commerce is the way forward in this market and many others," said Bob van Dijk, chief executive officer of Naspers, in a conference call after its second-quarter results early this week.
In the September quarter, Flipkart's smartphone app, which includes that of fashion platform, Myntra, was used by about 50 million users monthly. In a presentation to analysts, it showed in a chart that rivals Snapdeal and Amazon had one-third the monthly active users in comparison, without disclosing the exact numbers. The Flipkart numbers gave a "strong lead in app-based commerce in India," said Dijk.
In July 2012¸ when Naspers made its first investment of $140 million for an 8.6 per cent stake in Flipkart, the Indian company was valued at $1.6 billion. Since then, it has increased its stake to 17.4 per cent, while the valuation of Flipkart had risen to $15 billion in July.
Among Naspers' portfolio e-tail companies, India and Southeast Asia made up 56 per cent of the total gross merchandise value during the first half of 2015-16. Despite having the backing of a major investor, Flipkart abandoned its app-only strategy and brought back its mobile website in November to attract more users. Similarly, its Myntra mobile website will open for consumers from January.
Rival Snapdeal, which continues to retain its website for desktops and mobiles, also has an app with a significant user base. "About 75 per cent of the daily orders on Snapdeal come from mobile platforms (mobile app and M-site) today," said Anand Chandrasekaran, chief product officer, Snapdeal.
Flipkart's global rival Amazon did not react to Dijk's comment on app usage. However, Amazon's India head Amit Agarwal cited third-party reports to talk about Amazon's leadership. Quoting digital analytics firm Comscore, Agarwal said Amazon had more unique users than Flipkart on the desktop. Amazon had 30 million monthly unique users on the desktop compared to Flipkart's 26 million in October, according to Comscore's report. Also, there was a 320 per cent growth in mobile app downloads for Amazon between October 2014 and October 2015, twice that of the next big player, according to App Annie, an analytics company.
India is considered a mobile-first nation, with a base of over 160 million smartphone users that is growing fast. Smartphones are already the dominant way Indians access the Internet, and e-commerce ranks third in terms of usage after messaging and social media.
For Naspers, its e-tail drove 61 per cent of the revenues across its all its portfolio companies during the first half of the year. Organic growth of e-tail revenues clocked in at 35 per cent, lower than travel, which registered 44 per cent revenue growth. Flipkart is the largest e-tail company in Naspers' global portfolio.