Jul 09 2015

Why e-commerce companies are shutting down their websites?

Tag: GeneralSubramanyam Inkollu @ 5:26 am

When online retailers kill their websites and go app-only, they point to the ubiquitousness of mobile phones to explain their strategy. Nearly everyone has a cellphone, and smartphones are becoming commonplace, so they will claim they are just following their customers.

This much makes sense, but why eliminate the website altogether? The probable answer lies in the cookie—those byte-sized pieces of information that help construct an identikit of visitors to websites. A cookie is there for everyone to take a bite from, and online retailers are naturally not eager to share this snack with competitors. There is no such problem with an app.

“The web is an open architecture. There are a wide variety of sensors detecting what you do, and that information is easily available. In an app, you isolate your behaviour,” said angel investor Ajeet Khurana, who writes on crossborder and global e-commerce for technology firm Pitney Bowes.

The first major Indian e-commerce firm to go app-only was fashion retailer Myntra, earlier this year. The country’s largest online marketplace Flipkart is rumoured to be doing likewise, and several hyperlocal food delivery startups like Dazo and TinyOwl have an app-only strategy.

E-commerce websites subscribe to online marketers and ad exchanges to drive users to websites. The ad exchanges in turn segment users into groups and target ads by considering websites and products that people have previously visited or viewed.

But cookies are also a double-edged sword: While they can steer a customer towards a web site, they also power ads from other companies on the browser through intermediaries.

“With these third-party cookies, you win as well as you lose. But the bigger guy has more to lose,” Khurana said.

On the other hand, if a person’s intent to buy a product shifts from search engines like Google to an app, only the app becomes privy to the needs of its users and can hope to sell more to them over time.

Shamik Sharma, the chief product and technology officer of Myntra, said that for his company, the intent was not to prevent searches on Google, but exploit the advantages of being on a mobile app. “It is not an explicit attempt to stop them from searching on Google. Myntra is not so big that people will stop using Google search anyway,” he said.

The reason for fascination with apps is quite evident: Several e-commerce firms have seen exponential growth in transactions using cellphones. Snapdeal, for example, saw mobile transactions climb from 30% in 2013 to 50% in 2014. The company is now aiming at a 75% transaction rate from mobile. Flipkart, said 70-75% of its total traffic is already coming from its mobile app, compared with 6% last year.

On the other hand, there are sceptics like Ranjit Nair, CEO of social media analytics firm Germin8, who believe that shutting websites will work to the detriment of e-commerce companies.

For one, it gives the impression that companies are taking consumers for granted by closing access to an important channel. Besides, there is no guarantee that a particular app will be one of those that sits on the limited real estate on a mobile screen.

“Frankly, as a customer, I will be annoyed if I have to download an app to shop,” he said.

Source: http://timesofindia.indiatimes.com/


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