India: Amazon and Flipkart bank on “maxi-app” strategy
Amazon India will invest around $45 million in the start-up Tapzo, an app which comprises services from a number of other applications. This approach hopes to replicate the success of the Chinese giant WeChat (Tencent) and Amazon’s main India rival Flipkart is also working on doing the same.
Largely reported on in the Indian economic press but as yet officially unconfirmed, Amazon’s acquisition of Tapzo follows the business’ attempt to invest in Flipkart earlier in the year. However, it was Amazon’s US rival Walmart that managed to acquire the leader of Indian online sales with a deal of around $16 billion. Amazon had its India ambitions curtailed and would have otherwise had to resolve to lag behind Flipkart which has communicated its own desire to create an “everything app” for over a year and, since as early as June 2017, reported having discussions with partners in food, transport, and banking.
Swiftly recovering from its failed attempt to acquire Flipkart the American giant has decided to invest in the start-up Tapzo which was founded in 2010 and describes itself as “the first all-in-one app for India”. The smartphone application gives Indian users access to a number of applications all in one place. These include the transportation apps Uber and Ola, delivery apps Swiggy and Zomato, reservations app BookMyShow, and payments service Stilldesk.
It is payments that is at the real heart of Amazon’s investment. The online sales giant wants to boost the roll out of Amazon Pay in India. Indian online sales are growing at a rate of 51 percent a year and are set to total $120 billion by 2020. Like Flipkart, it is the daily “physical” spending that Amazon India hopes to take a leadership role in for the 462 million internet users counted in the country.
This plan to quickly build up Amazon Pay is justified based on the stiff local competition from the Apple Pay online wallet as well as Google Pay and other local services. Many players are attracted by the impressive growth seen in the Indian market; only 15 percent of the country’s population are currently connected to the internet according to the Mobile Association of India and smartphone sales are consistently on the rise.
High potential for clothing
It remains to be seen whether an approach similar to that of WeChat will gain the same level of local acceptance in India. Numerous industry experts doubt the possibility of replicating the success of the Chinese app which was originally created for messaging and social media and has benefitted from the Chinese ban on Western competitors. The service was later augmented with payment apps, booking, meetings, and online shopping tools, all facilitated by allowing third parties to develop their own apps within WeChat. The “maxi-app” has a current total of 938 million users, half of whom spend on average over 90 minutes a day using the app.
These online sales businesses are not the only ones to testify to the attractiveness of Indian consumption. There have been numerous recent signs of interest in the Indian market from international fashion brands such as Promod, Replay, Celio, Go Sport, and Ralph Lauren to name but a few which have responded to the explosion in Indian consumer demand for clothing. From around $46 billion dollars in 2016, the Indian fashion and apparel market is expected to reach $115 billion dollars by 2026 according to the consulting firm Technopak, which attributes this growth in part to India’s booming middle class.
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